Unassociated Document

<PAGE>

[LOGO OF AMERICAN FUNDS(R)]                The right choice for the long term(R)

AMERICAN FUNDS
INSURANCE SERIES(R)

PROSPECTUS
Class 1 shares

May 1,2006


The Securities and Exchange Commission has not approved or disapproved of these
securities. Further, it has not determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.

<PAGE>

American Funds Insurance Series (the "Series") consists of 14 funds, each
representing a separate fully managed diversified portfolio of securities. The
14 funds are:

   Global Discovery Fund
   Global Growth Fund
   Global Small Capitalization Fund
   Growth Fund
   International Fund
   New World Fund
   Blue Chip Income and Growth Fund
   Growth-Income Fund
   World Growth and Income Fund
   Asset Allocation Fund
   Bond Fund
   High-Income Bond Fund
   U.S. Government/AAA-Rated Securities Fund
   Cash Management Fund

Shares of the Series are currently offered to insurance company separate
accounts funding both variable annuity contracts and variable insurance
policies (the "contracts"). Interests of various contract owners participating
in the Series may be in conflict. The board of trustees of the Series will
monitor for the existence of any material conflicts and determine what action,
if any, should be taken. Shares may be purchased or redeemed by the separate
accounts without any sales or redemption charges at net asset value.

The Series offers three classes of fund shares: Class 1, Class 2 and Class 3
shares. This prospectus offers only Class 1 shares and is for use with the
contracts that make Class 1 shares available. The board of trustees may
establish additional funds and classes in the future. The investment
objective(s) and policies of each fund are discussed below. MORE INFORMATION ON
THE FUNDS IS CONTAINED IN THE SERIES' STATEMENT OF ADDITIONAL INFORMATION.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 1
                                                                             ---

<PAGE>

GLOBAL DISCOVERY FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
stocks of companies in the services and information areas of the global
economy. The fund may invest up to 25% of its assets in companies outside the
services and information areas. Companies in the services and information areas
include, for example, those involved in the fields of telecommunications,
computer systems and software, the Internet, broadcasting and publishing,
health care, advertising, leisure, tourism, financial services, distribution
and transportation. Providing you with current income is a secondary
consideration. The fund is designed for investors seeking greater capital
appreciation through investments in stocks of issuers based around the world.
Investors in the fund should have a long-term perspective and be able to
tolerate potentially wide price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks. Because the fund generally invests in securities of
issuers in the services and information areas, it may be more susceptible to
factors adversely affecting these issuers than funds that do not focus on these
areas. The fund also may be subject to additional risks because it invests in a
more limited group of sectors and industries than the broad market.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
2   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.

Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

         2002        2003        2004         2005
         ----        ----        ----         ----
       -21.41%      37.41%      10.72%       11.07%


The fund's highest/lowest quarterly results during the time period were:

HIGHEST  18.31% (quarter ended June 30, 2003)
LOWEST  -17.62% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                       LIPPER MULTI-CAP GLOBAL SERVICE
AVERAGE ANNUAL                           GROWTH FUNDS   AND INFORMATION
TOTAL RETURNS         FUND  S&P 500/1/     INDEX/2/        INDEX/3/     CPI/4/
------------------------------------------------------------------------------

1 Year               11.07%   4.91%          9.13%           7.07%      3.42%
------------------------------------------------------------------------------
5 Years               N/A     0.54%         -2.90%            N/A       2.49%
------------------------------------------------------------------------------
10 Years              N/A     9.07%          7.23%            N/A       2.52%
------------------------------------------------------------------------------
Lifetime/5/           4.90%   2.27%          0.84%           2.84%      2.26%



/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper Multi-Cap Growth Funds Index is an equally weighted index of funds
   that invest in a variety of market capitalization ranges without
   concentrating 75% of their equity assets in any one market capitalization
   range over an extended period of time. Multi-cap growth funds typically have
   an above-average price-to-earnings ratio, price-to-book ratio, and
   three-year sales-per-share growth value, compared to the S&P SuperComposite
   1500 Index. The results of the underlying funds in the index include the
   reinvestment of dividends and capital gain distributions, as well as
   brokerage commissions paid by the funds for portfolio transactions, but do
   not reflect sales charges or taxes.

/3/Global Service and Information Index is a subset of the unmanaged MSCI(R)
   World Index, which is a market-capitalization-weighted index that measures
   the returns of companies in 23 developed countries. This subset is 70%
   U.S.-weighted and consists specifically of companies in the service and
   information industries that together represent approximately 60% of the MSCI
   World Index. The index is compiled by Capital Research and Management
   Company, is unmanaged, and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/4/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.


/5/Lifetime results are as of July 5, 2001, the date the fund began investment
  operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 3
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.58%
------------------------------------------------------------------------
             Other expenses                                       0.03%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.61%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $62    $195    $340     $762



----
4   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

GLOBAL GROWTH FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
common stocks of companies located around the world. The fund is designed for
investors seeking capital appreciation through stocks. Investors in the fund
should have a long-term perspective and be able to tolerate potentially wide
price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

Investing in countries with developing economies and/or markets generally
involves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, developing countries may have
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 5
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

   1998      1999      2000     2001     2002      2003      2004      2005
   ----      ----      ----     ----     ----      ----      ----      ----
  29.03%    70.01%   -18.71%  -13.99%  -14.46%    35.63%    13.80%    14.31%



The fund's highest/lowest quarterly results during this time period were:

HIGHEST  41.03% (quarter ended December 31, 1999)
LOWEST  -20.43% (quarter ended September 30, 2001)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                     MSCI       LIPPER
                                     WORLD   GLOBAL FUNDS
AVERAGE ANNUAL TOTAL RETURNS  FUND  INDEX/1/   INDEX/2/   CPI/3/
----------------------------------------------------------------

        1 Year               14.37% 10.02%      11.89%    3.42%
----------------------------------------------------------------
        5 Years               5.37%  2.64%       2.96%    2.49%
----------------------------------------------------------------
        10 Years              N/A    7.47%       7.95%    2.52%
----------------------------------------------------------------
        Lifetime/4/          11.22%  6.59%       6.99%    2.40%



/1/MSCI World Index is a free float-adjusted market capitalization index that
   is designed to measure global developed market equity performance. The index
   consists of 23 developed market country indexes, including the United
   States. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper Global Funds Index is an equally weighted index of funds that invest
   at least 25% of their portfolios in securities traded outside the United
   States and may own U.S. Securities as well. The results of the underlying
   funds in the index include the reinvestment of dividends and capital gain
   distributions, as well as brokerage commissions paid by the funds for
   portfolio transactions, but do not reflect sales charges or taxes.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of April 30, 1997, the date the fund began
   investment operations.


----
6   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.58%
------------------------------------------------------------------------
             Other expenses                                       0.04%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.62%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $63    $199    $346     $774



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 7
                                                                             ---

<PAGE>

GLOBAL SMALL CAPITALIZATION FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
stocks of smaller companies located around the world. Normally, the fund
invests at least 80% of its assets in equity securities of companies with small
market capitalizations, measured at the time of purchase. However, the fund's
holdings of small capitalization stocks may fall below the 80% threshold due to
subsequent market action. This policy is subject to change only upon 60 days'
notice to shareholders. The investment adviser currently defines the market
capitalization range of "small market capitalization" companies as $50 million
to $2 billion. This definition is also subject to change. The fund is designed
for investors seeking capital appreciation through stocks. Investors in the
fund should have a long-term perspective and be able to tolerate potentially
wide price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks. Smaller capitalization stocks are often more difficult
to value or dispose of, more difficult to obtain information about and more
volatile than stocks of larger, more established companies.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

Investing in countries with developing economies and/or markets generally
involves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, developing countries may have
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
8   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                     [CHART]

  1999        2000        2001         2002        2003       2004      2005
  ----        ----        ----         ----        ----       ----      ----
 91.78%      -16.33%     -12.63%     -18.83%      53.92%     21.13%    25.66%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  28.90% (quarter ended December 31, 1999)
LOWEST  -28.24% (quarter ended September 30, 2001)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                               LIPPER GLOBAL
                                 S&P/CITIGROUP   SMALL-CAP
AVERAGE ANNUAL TOTAL             GLOBAL/WORLD      FUNDS
RETURNS                    FUND   INDEXES/1/    AVERAGE/2/   CPI/3/
-------------------------------------------------------------------

1 Year                    25.66%    17.24%        15.74%     3.42%
-------------------------------------------------------------------
5 Years                   10.69%    13.96%         6.50%     2.49%
-------------------------------------------------------------------
10 Years                   N/A       9.87%         9.88%     2.52%
-------------------------------------------------------------------
Lifetime/4/               14.02%     9.42%         8.18%     2.53%



/1/S&P/Citigroup Global/World Indexes reflect a combination of the
   S&P/Citigroup Global Index and two S&P/CitigroupWorld Indexes that
   corresponds to the market capitalization ranges used by the fund during
   comparable periods. The S&P/Citigroup Global Index, which tracks more than
   7,000 publicly traded stocks around the world with market capitalizations
   less than $2 billion, has been used since May 2004. This index better
   reflects the fund's investments in developing countries during this period.
   The S&P/Citigroup World Indexes, which only include stocks in developed
   countries and reflect market capitalizations less than $1.5 billion and less
   than $1.2 billion, were used from 2000 to April 2004 and from 1990 to 1999,
   respectively. These indexes are unmanaged and include reinvested dividends
   and/or distributions, but do not reflect sales charges, commissions,
   expenses or taxes.

/2/Lipper Global Small-Cap Funds Average is comprised of funds that invest at
   least 25% of their portfolios in securities with primary trading markets
   outside the United States, and that limits at least 65% of its investments
   to companies with market capitalizations of less than U.S. $1 billion at the
   time of purchase. The results of the underlying funds in the average include
   the reinvestment of dividends and capital gain distributions, as well as
   brokerage commissions paid by the funds for portfolio transactions, but do
   not reflect sales charges or taxes.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of April 30, 1998, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 9
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.74%
------------------------------------------------------------------------
             Other expenses                                       0.05%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.79%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $81    $252    $439     $978



----
10  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

GROWTH FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow by investing primarily in common
stocks of companies that appear to offer superior opportunities for growth of
capital. The fund may invest up to 15% of its assets in securities of issuers
domiciled outside the United States and Canada and not included in Standard &
Poor's 500 Composite Index. The fund is designed for investors seeking capital
appreciation through stocks. Investors in the fund should have a long-term
perspective and be able to tolerate potentially wide price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 11
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996    1997    1998    1999   2000    2001     2002    2003    2004    2005
------  ------  ------  ------  -----  ------  -------  ------  ------  ------
13.36%  30.10%  35.56%  57.61%  4.72%  -17.93% -24.27%  37.15%  12.75%  16.50%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  30.71% (quarter ended December 31, 1999)
LOWEST  -27.17% (quarter ended September 30, 2001)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                               LIPPER CAPITAL
                                                APPRECIATION  LIPPER GROWTH
AVERAGE ANNUAL TOTAL RETURNS  FUND  S&P 500/1/ FUNDS INDEX/2/ FUNDS INDEX/3/ CPI/4/
-----------------------------------------------------------------------------------

        1 Year               16.50%   4.91%         7.96%         7.24%      3.42%
-----------------------------------------------------------------------------------
        5 Years               2.28%   0.54%         0.15%        -1.36%      2.49%
-----------------------------------------------------------------------------------
        10 Years             13.96%   9.07%         7.28%         7.26%      2.52%
-----------------------------------------------------------------------------------
        Lifetime/5/          14.96%  12.83%        10.50%        10.70%      3.05%



/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper Capital Appreciation Funds Index is an equally weighted index of
   funds that aim for maximum capital appreciation. The results of the
   underlying funds in the index include the reinvestment of dividends and
   capital gain distributions, as well as brokerage commissions paid by the
   funds for portfolio transactions, but do not reflect sales charges or taxes.

/3/Lipper Growth Funds Index is an equally weighted index of growth funds.
   These funds normally invest in companies with long-term earnings expected to
   grow significantly faster than the earnings of the stocks represented in the
   major unmanaged stock indexes. The results of the underlying funds in the
   index include the reinvestment of dividends and capital gain distributions,
   as well as brokerage commissions paid by the funds for portfolio
   transactions, but do not reflect sales charges or taxes.

/4/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/5/Lifetime results are as of February 8, 1984, the date the fund began
   investment operations.


----
12  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.33%
------------------------------------------------------------------------
             Other expenses                                       0.02%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.35%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $36    $113    $197     $443



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 13
                                                                             ---

<PAGE>

INTERNATIONAL FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
common stocks of companies located outside the United States. The fund is
designed for investors seeking capital appreciation through stocks. Investors
in the fund should have a long-term perspective and be able to tolerate
potentially wide price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

Investing in countries with developing economies and/or markets generally
involves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, developing countries may have
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
14  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996   1997   1998    1999    2000     2001    2002     2003    2004    2005
------  ----- ------  ------  -------  ------  -------  ------  ------  -----
17.53%  9.06% 21.22%  76.42%  -21.85%  -19.73% -14.58%  35.12%  19.66%  21.75%

The fund's highest/lowest quarterly results during this time period were:

HIGHEST  42.33% (quarter ended December 31, 1999)
LOWEST  -19.66% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                             MSCI       LIPPER
AVERAGE ANNUAL               EAFE    INTERNATIONAL
TOTAL RETURNS         FUND  INDEX/1/ FUNDS INDEX/2/ CPI/3/
----------------------------------------------------------

1 year               21.75% 14.02%      15.67%      3.42%
----------------------------------------------------------
5 years               6.18%  4.94%       5.34%      2.49%
----------------------------------------------------------
10 years             11.20%  6.18%       7.74%      2.52%
----------------------------------------------------------
Lifetime/4/          10.41%  6.74%       7.85%      2.74%



/1/MSCI EAFE (Europe, Australasia, Far East) is a free float-adjusted market
   capitalization index that is designed to measure developed market equity
   performance, excluding the United States & Canada. This index is unmanaged
   and includes reinvested dividends and/or distributions, but does not reflect
   sales charges, commissions, expenses or taxes.

/2/Lipper International Funds Index is an equally weighted index of funds that
   invest assets in securities with primary trading markets outside the United
   States. The results of the underlying funds in the average include the
   reinvestment of dividends and capital gain distributions, as well as
   brokerage commissions paid by the funds for portfolio transactions, but do
   not reflect sales charges or taxes.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of May 1, 1990, the date the fund began investment
   operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 15
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.52%
------------------------------------------------------------------------
             Other expenses                                       0.05%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.57%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $58    $183    $318     $714



----
16  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

NEW WORLD FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
stocks of companies with significant exposure to countries with developing
economies and/or markets. The fund may also invest in debt securities of
issuers, including issuers of lower rated bonds, with exposure to these
countries. The fund is designed for investors seeking capital appreciation.
Investors in the fund should have a long-term perspective and be able to
tolerate potentially wide price fluctuations.

The fund may invest in equity securities of any company, regardless of where it
is based, if the fund's investment adviser determines that a significant
portion of the company's assets or revenues (generally 20% or more) is
attributable to developing countries. Under normal market conditions, the fund
will invest at least 35% of its assets in equity and debt securities of issuers
primarily based in qualified countries that have developing economies and/or
markets. In addition, the fund may invest up to 25% of its assets in
nonconvertible debt securities of issuers, including issuers of lower rated
bonds and government bonds, primarily based in qualified countries or that have
a significant portion of their assets or revenues attributable to developing
countries. The fund may also, to a limited extent, invest in securities of
issuers based in nonqualified developing countries.

In determining whether a country is qualified, the fund will consider such
factors as the country's per capita gross domestic product, the percentage of
the country's economy that is industrialized, market capital as a percentage of
gross domestic product, the overall regulatory environment, the presence of
government regulation limiting or banning foreign ownership, and restrictions
on repatriation of initial capital, dividends, interest and/or capital gains.
The fund's investment adviser will maintain a list of qualified countries and
securities in which the fund may invest. Qualified developing countries in
which the fund may invest currently include, but are not limited to, Argentina,
Brazil, Chile, China, Colombia, Croatia, Czech Republic, Dominican Republic,
Egypt, Hungary, India, Israel, Jordan, Malaysia, Mexico, Morocco, Panama, Peru,
Philippines, Poland, Russian Federation, South Africa, Thailand, Turkey and
Venezuela.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks. Smaller capitalization stocks are often more difficult
to value or dispose of, more difficult to obtain information about and more
volatile than stocks of larger, more established companies.

The values of most debt securities held by the fund may be affected by changing
interest rates and by changes in effective maturities and credit ratings of
these securities. For example, the values of debt securities in the fund's
portfolio generally will decline when interest rates rise and increase when
interest rates fall. In addition, falling interest rates may cause an issuer to
redeem or "call" a security before its stated maturity, which may result in the
fund having to reinvest the proceeds in lower yielding securities. Debt
securities are also subject to credit risk, which is the possibility that the
credit strength of an issuer will weaken and/or an issuer of a debt security
will fail to make timely payments of principal or interest and the security
will go into default. Lower quality or longer maturity debt securities
generally have higher rates of interest and may be subject to greater price
fluctuations than higher quality or shorter maturity debt securities. The
fund's investment adviser attempts to reduce these risks through
diversification of the portfolio and with ongoing credit analysis of each
issuer, as well as by monitoring economic and legislative developments.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 17
                                                                             ---

<PAGE>

Investing in countries with developing economies and/or markets may involve
risks in addition to and greater than those generally associated with investing
in developed countries. For instance, developing countries may have less
developed legal and accounting systems. The governments of these countries may
be more unstable and more likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
18  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


  Here are the fund's results calculated on a calendar year basis. (If insurance
  contract fees and expenses were included, results would have been lower.)

                                       [CHART]

    2000     2001     2002     2003    2004     2005
   ------   ------   ------   ------   -----   ------
  -12.43%   -3.99%   -5.45%   39.56%   19.07%   21.10%



The fund's highest/lowest quarterly results during this time period were:

HIGHEST  15.47% (quarter ended June 30, 2003)
LOWEST  -16.07% (quarter ended September 30, 2001)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                MSCI
AVERAGE ANNUAL               ALL COUNTRY
TOTAL RETURNS         FUND  WORLD INDEX/1/ CPI/2/
-------------------------------------------------

1 Year               21.10%    11.37%       3.42%
-------------------------------------------------
5 Years              12.81%     3.41%       2.49%
-------------------------------------------------
10 Years              N/A       7.44%       2.52%
-------------------------------------------------
Lifetime/3/          10.27%     2.50%       2.62%



/1/MSCI All Country World Index is a free float-adjusted market capitalization
   index that measures equity market performance in the global and emerging
   markets, consisting of 49 developed and emerging market country indexes.
   This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/3/Lifetime results are as of June 17, 1999, the date the fund began investment
   operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 19
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.84%
------------------------------------------------------------------------
             Other expenses                                       0.08%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.92%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



        1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------

Class 1  $94    $293    $509    $1,131



----
20  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

BLUE CHIP INCOME AND GROWTH FUND

RISK/RETURN SUMMARY

The fund seeks to produce income exceeding the average yield on U.S. stocks
generally (as represented by the average yield on Standard & Poor's 500
Composite Index) and to provide an opportunity for growth of principal
consistent with sound common stock investing. The fund invests primarily in
common stocks of larger, more established companies based in the United States,
with market capitalizations of $4 billion and above. The fund may also invest
up to 10% of its assets in equity securities of larger, non-U.S. companies, so
long as they are listed or traded in the United States. The fund will invest,
under normal market conditions, at least 90% of its assets in equity
securities. The fund is designed for investors seeking both income and capital
appreciation.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local regional or global
political, social or economic instability; and currency and interest rate
fluctuations.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 21
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the fund's results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

    2002         2003        2004         2005
   -------      -------     ------       ------
   -22.93%      31.24%       9.94%        7.57%


The fund's highest/lowest quarterly results during the time period were:

HIGHEST  17.08% (quarter ended June 30, 2003)
LOWEST  -20.50% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



AVERAGE ANNUAL
TOTAL RETURNS        FUND  S&P 500/1/ CPI/2/
--------------------------------------------

1 Year               7.57%   4.91%     3.42%
--------------------------------------------
5 Years               N/A    0.54%     2.49%
--------------------------------------------
10 Years              N/A    9.07%     2.52%
--------------------------------------------
Lifetime/3/          2.83%   2.27%     2.26%



/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/3/Lifetime results are as of July 5, 2001, the date the fund began investment
   operations.


----
22  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.44%
------------------------------------------------------------------------
             Other expenses                                       0.01%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.45%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $46    $144    $252     $567



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 23
                                                                             ---

<PAGE>

GROWTH-INCOME FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow and provide you with income over
time by investing primarily in common stocks or other securities that
demonstrate the potential for appreciation and/or dividends. The fund may
invest up to 15% of its assets, at the time of purchase, in securities of
issuers domiciled outside the United States and not included in Standard &
Poor's 500 Composite Index. The fund is designed for investors seeking both
capital appreciation and income.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; and currency and interest
rate fluctuations.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
24  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996    1997    1998    1999   2000   2001    2002     2003    2004    2005
------  ------  ------  ------  -----  -----  ------   ------  ------  -----
18.72%  25.83%  18.37%  11.48%  8.24%  2.78%  -18.15%  32.76%  10.66%  6.08%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  18.85% (quarter ended December 31, 1998)
LOWEST  -18.70% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                       LIPPER GROWTH
AVERAGE ANNUAL                          AND INCOME
TOTAL RETURNS         FUND  S&P 500/1/ FUNDS INDEX/2/ CPI/3/
------------------------------------------------------------

1 Year                6.08%   4.91%        6.82%      3.42%
------------------------------------------------------------
5 Years               5.57%   0.54%        2.92%      2.49%
------------------------------------------------------------
10 Years             10.84%   9.07%        8.47%      2.52%
------------------------------------------------------------
Lifetime/4/          13.06%  12.83%       11.42%      3.05%



/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper Growth and Income Funds Index is an equally weighted index of funds
   that combine a growth-of-earnings orientation and an income requirement for
   level and/or rising dividends. The results of the underlying funds in the
   index include the reinvestment of dividends and capital gain distributions,
   as well as brokerage commissions paid by the funds for portfolio
   transactions but do not reflect sales charges or taxes. This index was not
   in existence as of the date the fund's Class A shares became available;
   therefore, lifetime results are not shown.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of February 8, 1984, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 25
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.28%
------------------------------------------------------------------------
             Other expenses                                       0.01%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.29%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $30     $93    $163     $368



----
26  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>
WORLD GROWTH AND INCOME FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time and provide you with
current income by investing primarily in stocks of well-established companies
located around the world.

The fund is designed for investors seeking both capital appreciation and
income. In pursuing its objective, the fund tends to invest in stocks that the
investment adviser believes to be relatively resilient to market declines.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

Investing in countries with developing economies and/or markets generally
involves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, developing countries may have
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.

No investment results are provided since the fund had not commenced operations
as of the date of this prospectus.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 27
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.69%
------------------------------------------------------------------------
             Other expenses*                                      0.04%
------------------------------------------------------------------------
             Total annual fund operating expenses+                0.73%



*Based on estimated amounts for the current fiscal year.

+The Series' investment adviser is waiving 10% of its management fees. The
 waiver will continue at this level until further review.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS
---------------------------

Class 1       $75    $233



----
28  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

ASSET ALLOCATION FUND

RISK/RETURN SUMMARY

The fund seeks to provide you with high total return (including income and
capital gains) consistent with preservation of capital over the long term by
investing in a diversified portfolio of common stocks and other equity
securities, bonds and other intermediate and long-term debt securities, and
money market instruments (debt securities maturing in one year or less). The
fund may invest up to 15% of its assets in equity securities of issuers
domiciled outside the United States and not included in Standard & Poor's 500
Composite Index, and up to 5% of its assets in debt securities of non-U.S.
issuers. In addition, the fund may invest up to 25% of its debt assets in lower
quality debt securities (rated Ba or below by Moody's Investors Service and BB
or below by Standard & Poor's Corporation or unrated but determined to be of
equivalent quality). Under normal market conditions, the fund's investment
adviser expects (but is not required) to maintain an investment mix falling
within the following ranges: 40%-80% in equity securities, 20%-50% in debt
securities and 0%-40% in money market instruments. The fund is designed for
investors seeking above-average total return.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; and currency and interest
rate fluctuations.

Securities held by the fund may also be affected by changing market interest
rates and by changes in effective maturities and credit ratings. For example,
the prices of debt securities in the fund's portfolio generally will decline
when interest rates rise and increase when interest rates fall. In addition,
falling interest rates may cause an issuer to redeem or "call" a security
before its stated maturity, which may result in the fund having to reinvest the
proceeds in lower yielding securities. Debt securities are also subject to
credit risk, which is the possibility that the credit strength of an issuer
will weaken and/or an issuer of a debt security will fail to make timely
payments of principal or interest and the security will go into default. Lower
quality or longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than higher quality
or shorter maturity debt securities. A security backed by the U.S. Treasury or
the full faith and credit of the United States is guaranteed only as to the
timely payment of interest and principal when held to maturity. Accordingly,
the current market prices for these securities will fluctuate with changes in
interest rates.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 29
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996    1997    1998   1999   2000   2001    2002    2003    2004    2005
------  ------  ------  -----  -----  -----  -------  ------  -----   -----
15.78%  20.49%  13.13%  7.25%  4.62%  0.77%  -12.99%  22.14%  8.50%   9.45%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  12.15% (quarter ended June 30, 2003)
LOWEST  -12.34% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                      CITIGROUP BROAD
AVERAGE ANNUAL                        INVESTMENT-GRADE
TOTAL RETURNS        FUND  S&P 500/1/  BOND INDEX/2/   CPI/3/
-------------------------------------------------------------

1 Year               9.45%   4.91%          2.57%      3.42%
-------------------------------------------------------------
5 Years              5.12%   0.54%          5.93%      2.49%
-------------------------------------------------------------
10 Years             8.56%   9.07%          6.19%      2.52%
-------------------------------------------------------------
Lifetime/4/          9.38%  10.54%          7.39%      2.83%



/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Citigroup Broad Investment-Grade (BIG) Bond Index (formerly Salomon Smith
   Barney Broad Investment-Grade (BIG) Bond Index) is a market
   capitalization-weighted index that includes U.S. Treasury,
   government-sponsored, mortgage and investment-grade fixed-rate corporates
   with a maturity of one year or longer. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of August 1, 1989, the date the fund began
   investment operations.


----
30  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.34%
------------------------------------------------------------------------
             Other expenses                                       0.01%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.35%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $36    $113    $197     $443



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 31
                                                                             ---

<PAGE>

BOND FUND

RISK/RETURN SUMMARY

The fund seeks to maximize your level of current income and preserve your
capital. Normally, the fund invests at least 80% of its assets in bonds. This
policy is subject to change only upon 60 days' notice to shareholders. The fund
will invest at least 65% of its assets in investment-grade debt securities
(including cash and cash equivalents) and may invest up to 35% of its assets in
bonds rated Ba or below by Moody's Investors Service and BB or below by
Standard & Poor's Corporation or unrated but determined to be of equivalent
quality. The fund may invest in bonds of issuers domiciled outside the United
States. The fund may also invest up to 20% of its assets in preferred stocks,
including convertible and nonconvertible preferred stocks. The fund is designed
for investors seeking income and more price stability than stocks, and capital
preservation over the long term.

The values of and the income generated by most debt securities held by the fund
may be affected by changing market interest rates and by changes in effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities. Debt securities are also subject to credit risk, which is
the possibility that the credit strength of an issuer will weaken and/or an
issuer of a debt security will fail to make timely payments of principal or
interest and the security will go into default. Lower quality or longer
maturity debt securities generally have higher rates of interest and may be
subject to greater price fluctuations than higher quality or shorter maturity
debt securities. The fund's investment adviser attempts to reduce these risks
through diversification of the portfolio and with ongoing credit analysis of
each issuer, as well as by monitoring economic and legislative developments.

A security backed by the U.S. Treasury or the full faith and credit of the U.S.
government is guaranteed only as to the timely payment of interest and
principal when held to maturity. Accordingly, the current market prices for
these securities will fluctuate with changes in interest rates. Many types of
debt securities, including mortgage-related securities, are subject to
prepayment risk. For example, when interest rates fall, homeowners are more
likely to refinance their home mortgages and prepay their principal earlier
than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income.

The prices and yields of nonconvertible preferred stocks generally move with
changes in interest rates and the issuer's credit quality, similar to debt
securities. The value of convertible preferred stocks varies in response to
many factors, including, for example, the value of the underlying equity
securities, general market and economic conditions, and convertible market
valuations, as well as changes in interest rates, credit spreads and the credit
quality of the issuer.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
32  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

   1996     1997   1998    1999    2000    2001    2002    2003    2004    2005
   ----    -----   ----    -----   ----    ----     ----   ----    ----    ----
   5.84%   10.13%  4.37%   2.81%   5.22%   8.48%    4.26%  13.07%  6.04%   1.77%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  5.07% (quarter ended December 31, 2002)
LOWEST  -2.16% (quarter ended March 31, 1996)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                           CITIGROUP BROAD
AVERAGE ANNUAL             INVESTMENT-GRADE
TOTAL RETURNS        FUND   BOND INDEX/1/   CPI/2/
--------------------------------------------------

1 year               1.77%      2.57%        3.42%
--------------------------------------------------
5 years              6.65%      5.93%        2.49%
--------------------------------------------------
10 years              N/A       6.19%        2.52%
--------------------------------------------------
Lifetime/3/          6.15%      6.19%        2.52%



/1/Citigroup Broad Investment-Grade (BIG) Bond Index (formerly Salomon Smith
   Barney Broad Investment-Grade (BIG) Bond Index) is a market
   capitalization-weighted index that includes U.S. Treasury,
   government-sponsored, mortgage and investment-grade fixed-rate corporates
   with a maturity of one year or longer. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/2/Consumer Price Index (CPI) is a measure of the average change over time in
  the prices paid by urban consumers for a market basket of consumer goods and
  services. Widely used as a measure of inflation, the CPI is computed by the
  U.S. Department of Labor, Bureau of Labor Statistics.

/3/Lifetime results are as of January 2, 1996, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 33
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.43%
------------------------------------------------------------------------
             Other expenses                                       0.01%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.44%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $45    $141    $246     $555



----
34  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

HIGH-INCOME BOND FUND

RISK/RETURN SUMMARY

The fund seeks to provide you with a high level of current income and,
secondarily, capital appreciation by investing at least 65% of its assets in
higher yielding and generally lower quality debt securities (rated Ba or below
by Moody's Investors Service or BB or below by Standard & Poor's Corporation or
unrated but determined to be of equivalent quality). The fund may also invest
up to 25% of its assets in securities of non-U.S. issuers. Normally, the fund
invests at least 80% of its assets in bonds. This policy is subject to change
only upon 60 days' notice to shareholders. The fund may also invest up to 20%
of its assets in equity securities that provide an opportunity for capital
appreciation. The fund is designed for investors seeking a high level of
current income and who are able to tolerate greater credit risk and price
fluctuations than funds investing in higher quality bonds.

The values of and the income generated by most debt securities held by the fund
may be affected by changing market interest rates and by changes in effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities. Debt securities are also subject to credit risk, which is
the possibility that the credit strength of an issuer will weaken and/or an
issuer of a debt security will fail to make timely payments of principal or
interest and the security will go into default. Lower quality or longer
maturity debt securities generally have higher rates of interest and may be
subject to greater price fluctuations than higher quality or shorter maturity
debt securities.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; and currency and interest
rate fluctuations.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.
The fund's investment adviser attempts to reduce these risks through
diversification of the portfolio and with ongoing credit analysis of each
issuer, as well as by monitoring economic and legislative developments.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 35
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

  1996   1997    1998   1999    2000   2001    2002    2003    2004    2005
 ------  ------  -----  -----  ------  -----  ------  ------   -----   -----
 13.21%  12.41%  0.45%  5.80%  -3.06%  8.02%  -1.51%  29.79%   9.83%   2.46%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST 10.65% (quarter ended December 31, 2002)
LOWEST  -9.10% (quarter ended June 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                            CREDIT SUISSE                     LIPPER
                            FIRST BOSTON  CITIGROUP BROAD  HIGH CURRENT
AVERAGE ANNUAL               HIGH YIELD   INVESTMENT-GRADE  YIELD BOND
TOTAL RETURNS         FUND  BOND INDEX/1/  BOND INDEX/2/   FUNDS INDEX/3/ CPI/4/
--------------------------------------------------------------------------------

1 Year                2.46%     2.26%           2.57%          3.00%      3.42%
--------------------------------------------------------------------------------
5 Years               9.21%     9.83%           5.93%          6.76%      2.49%
--------------------------------------------------------------------------------
10 Years              7.37%     7.13%           6.19%          5.30%      2.52%
--------------------------------------------------------------------------------
Lifetime/5/          10.43%      N/A            8.80%          8.01%      3.05%



/1/Credit Suisse First Boston High Yield Bond Index is designed to mirror the
   investible universe of the U.S. dollar-denominated high-yield debt market.
   This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper High Current Yield Bond Funds Index is an equally weighted index of
   funds that aim at high (relative) current yield from fixed-income
   securities, have no quality or maturity restrictions and tend to invest in
   lower grade debt issues. The results of the underlying funds in the average
   include reinvestment of dividends and capital gain distributions, as well as
   brokerage commissions paid by the funds for portfolio transactions, but do
   not reflect sales charges or taxes.

/3/Citigroup Broad Investment-Grade (BIG) Bond Index (formerly Salomon Smith
   Barney Broad Investment-Grade (BIG) Bond Index) is a market
   capitalization-weighted index that includes U.S. Treasury,
   government-sponsored, mortgage and investment-grade fixed-rate corporates
   with a maturity of one year or longer. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/4/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/5/Lifetime results are as of February 8, 1984, the date the fund began
   investment operations.


----
36  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.49%
------------------------------------------------------------------------
             Other expenses                                       0.01%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.50%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $51    $160    $280     $628



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 37
                                                                             ---

<PAGE>

U.S. GOVERNMENT/AAA-RATED SECURITIES FUND

RISK/RETURN SUMMARY

The fund seeks to provide you with a high level of current income, as well as
to preserve your investment. Normally, the fund will invest at least 80% of its
assets in securities that are guaranteed by the "full faith and credit" pledge
of the U.S. government or debt securities that are rated Aaa by Moody's
Investors Service or AAA by Standard & Poor's Corporation or unrated but
determined to be of equivalent quality. This policy is subject to change only
upon 60 days' notice to shareholders. The fund is designed for investors
seeking income and more price stability than from investing in stocks and lower
quality debt securities, and capital preservation over the long term.

The fund may also invest a significant portion of its assets in securities
backed by pools of mortgages. Certain of these securities may not be backed by
the full faith and credit of the U.S. government and are supported only by the
credit of the issuer. Such securities may include mortgage-backed securities
issued by the Federal National Mortgage Association ("Fannie Mae") and the
Federal Home Loan Mortgage Corporation ("Freddie Mac") and are neither issued
nor guaranteed by the U.S. Treasury.

The values of and the income generated by most debt securities held by the fund
may be affected by changing market interest rates and prepayment risk. For
example, as with other debt securities, the value of U.S. government securities
generally will decline when interest rates rise and increase when interest
rates fall. In addition, falling interest rates may cause an issuer to redeem
or "call" a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest but may be subject to
greater price fluctuations than shorter maturity securities.

A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. Accordingly, the current market prices for
such securities will fluctuate.

Many types of debt securities, including mortgage-related securities, are
subject to prepayment risk. For example, when interest rates fall, homeowners
are more likely to refinance their home mortgages and prepay their principal
earlier than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
38  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

   1996   1997   1998    1999    2000   2001   2002    2003   2004    2005
  -----   -----  -----  ------  ------  -----  -----   -----  -----   -----
  3.11%   8.45%  8.19%  -0.53%  11.69%  7.24%  9.45%   2.51%  3.58%   2.70%


The fund's highest/lowest quarterly results during this time period were:

               (quarter ended September
HIGHEST  4.58% 30, 2001)
LOWEST  -2.07% (quarter ended March 31, 1996)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                           CITIGROUP
                           TREASURY/
                             GOVT.
                           SPONSORED/
AVERAGE ANNUAL              MORTGAGE
TOTAL RETURNS        FUND   INDEX/1/  CPI/2/
--------------------------------------------

1 year               2.70%   2.71%     3.42%
--------------------------------------------
5 years              5.06%   5.46%     2.49%
--------------------------------------------
10 years             5.58%   6.04%     2.52%
--------------------------------------------
Lifetime/3/          7.18%   7.88%     2.99%



/1/Citigroup Treasury/Government Sponsored/Mortgage Index (formerly Salomon
   Smith Barney Treasury/Government Sponsored/Mortgage Index) is a
   market-weighted index that includes U.S. Treasury and agency securities, as
   well as FNMAs, FHLMCs and GNMAs. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/2/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/3/Lifetime results are as of December 2, 1985, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 39
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.46%
------------------------------------------------------------------------
             Other expenses                                       0.01%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.47%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $48    $151    $263     $591



----
40  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

CASH MANAGEMENT FUND

RISK/RETURN SUMMARY

The fund seeks to provide you an opportunity to earn income on your cash
reserves while preserving the value of your investment and maintaining
liquidity. Normally, the fund invests substantially in high-quality money
market instruments, such as commercial paper, commercial bank obligations,
savings association obligations, U.S. or Canadian government securities, and
short-term corporate bonds and notes. These securities may have credit and
liquidity enhancements. Changes in the credit quality of banks and financial
institutions providing these enhancements could cause the fund to experience a
loss and may affect its share price.

In addition, the fund may invest in securities issued by non-U.S. or Canadian
entities or in securities with credit and liquidity support features provided
by non-U.S. or Canadian entities. These securities may be affected by
unfavorable political, economic or governmental developments that could affect
the repayment of principal or the payment of interest. Securities of U.S.
issuers with substantial operations outside the United States may also be
subject to similar risks.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.

The fund is not managed to maintain a stable net asset value of $1 per share.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 41
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year as well as average annual total returns for various periods.
This information provides some indication of the risks of investing in the
fund. Past results are not predictive of future results. Figures shown reflect
fees and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

1996    1997    1998    1999     2000    2001    2002    2003    2004    2005
----    ----    ----    ----     ----    ----    ----    ----    ----    ----
5.09%   5.16%   5.15%   4.83%    6.04%   3.66%   1.24%   0.67%   0.96%   2.97%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST 1.51% (quarter ended September 30, 2000)
LOWEST  0.06% (quarter ended June 30, 2004)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



AVERAGE ANNUAL
TOTAL RETURNS        FUND
--------------------------

1 year               2.97%
--------------------------
5 years              1.89%
--------------------------
10 years             3.56%
--------------------------
Lifetime*            4.93%



*Lifetime results are as of February 8, 1984, the date the fund began
 investment operations.


----
42  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 1
------------------------------------------------------------------------

             Management fees                                      0.32%
------------------------------------------------------------------------
             Other expenses                                       0.01%
------------------------------------------------------------------------
             Total annual fund operating expenses*                0.33%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 1       $34    $106    $185     $418



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 43
                                                                             ---

<PAGE>

CASH POSITION

The funds may also hold cash or money market instruments, the amount of which
will vary and will depend on various factors, including market conditions and
purchases and redemptions of fund shares. A larger amount of such holdings
could negatively affect a fund's investment results in a period of rising
market prices; conversely, it could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

MANAGEMENT AND ORGANIZATION

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the Series and
other mutual funds, including the American Funds. Capital Research and
Management Company is a wholly owned subsidiary of The Capital Group Companies,
Inc. and is located at 333 South Hope Street, Los Angeles, California 90071,
and 135 South State College Boulevard, Brea, California 92821. Capital Research
and Management Company manages the investment portfolios and business affairs
of the Series.

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the funds'
portfolio transactions. The investment adviser strives to obtain best execution
on the funds' equity and/or fixed-income portfolio transactions, taking into
account a variety of factors to produce the most favorable total price
reasonably attainable under the circumstances. These factors include the size
and type of transaction, the cost and quality of executions, and the
broker-dealer's ability to offer liquidity and anonymity. For example, with
respect to equity transactions, the funds do not consider the investment
adviser as having an obligation to obtain the lowest available commission rate
to the exclusion of price, service and qualitative considerations. Subject to
the considerations outlined above, the funds' investment adviser may place
orders for the funds' portfolio transactions with broker-dealers who have sold
shares of the funds, as well as shares of the American Funds, or who have
provided investment research, statistical or other related services to the
investment adviser. In placing orders for the funds' portfolio transactions,
the investment adviser does not commit to any specific amount of business with
any particular broker-dealer. Subject to best execution, the investment adviser
may consider investment research, statistical or other related services
provided to the adviser in placing orders for the funds' portfolio
transactions. However, when the investment adviser places orders for the funds'
portfolio transactions, it does not give any consideration to whether a
broker-dealer has sold shares of the funds or the American Funds.

PORTFOLIO MANAGEMENT

The Series relies on the professional judgment of its investment adviser,
Capital Research and Management Company, to make decisions about the funds'
portfolio investments. The basic investment philosophy of the investment
adviser is to seek to invest in attractively priced securities that, in its
opinion, represent above-average long-term investment opportunities. The
investment adviser believes that an important way to accomplish this is through
fundamental analysis, including meeting with company executives and employees,
suppliers, customers and competitors. Securities may be sold when the
investment adviser believes that they no longer represent relatively attractive
investment opportunities.

PORTFOLIO HOLDINGS

A description of the funds' policies and procedures regarding disclosure of
information about their portfolio securities is available in the statement of
additional information.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio
of a fund is divided into segments managed by individual counselors. Counselors
decide how their respective segments will be invested. In addition, Capital
Research and Management Company's investment analysts may make investment
decisions with respect to a portion of a fund's portfolio. Investment decisions
are subject to a fund's objective(s), policies and restrictions and the
oversight of Capital Research and Management Company's investment committee.


----
44  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

The primary individual portfolio counselors for each of the funds are:





                                                                     PRIMARY TITLE WITH INVESTMENT
PORTFOLIO COUNSELOR FOR THE      PORTFOLIO COUNSELOR EXPERIENCE       ADVISER (OR AFFILIATE) AND    PORTFOLIO COUNSELOR'S ROLE IN
SERIES/TITLE (IF APPLICABLE)             IN THE FUND(S)                  INVESTMENT EXPERIENCE        MANAGEMENT OF THE FUND(S)
----------------------------------------------------------------------------------------------------------------------------------

 JAMES K. DUNTON             Growth-Income Fund -- 22 years          Senior Vice President and      An equity portfolio counselor
 VICE CHAIRMAN OF THE BOARD  (since the fund's inception)            Director, Capital Research     for Growth-Income Fund and
                             Blue Chip Income and Growth             and Management Company         Blue Chip Income and Growth
                             Fund -- 5 years (since the fund's       Investment professional for    Fund
                             inception)                              44 years, all with Capital
                                                                     Research and Management
                                                                     Company or affiliate
----------------------------------------------------------------------------------------------------------------------------------
 DONALD D. O'NEAL            Growth-Income Fund -- 1 year            Senior Vice President,         An equity portfolio counselor
 PRESIDENT AND TRUSTEE                                               Capital Research and           for Growth-Income Fund
                                                                     Management Company
                                                                     Investment professional for
                                                                     21 years, all with Capital
                                                                     Research and Management
                                                                     Company or affiliate
----------------------------------------------------------------------------------------------------------------------------------
 ALAN N. BERRO               Asset Allocation Fund -- 6 years        Vice President, Capital        An equity portfolio counselor
 SENIOR VICE PRESIDENT                                               Research and Management        for Asset Allocation Fund
                                                                     Company
                                                                     Investment professional for
                                                                     20 years in total; 15 years
                                                                     with Capital Research and
                                                                     Management Company or
                                                                     affiliate
----------------------------------------------------------------------------------------------------------------------------------
 ABNER D. GOLDSTINE          Bond Fund -- 10 years (since the        Senior Vice President and      A fixed-income portfolio
 SENIOR VICE PRESIDENT       fund's inception)                       Director, Capital Research     counselor for Bond Fund and
                             High-Income Bond Fund -- 8 years        and Management Company         High-Income Bond Fund
                                                                     Investment professional for
                                                                     54 years in total; 39 years
                                                                     with Capital Research and
                                                                     Management Company or
                                                                     affiliate
----------------------------------------------------------------------------------------------------------------------------------
 JOHN H. SMET                Bond Fund -- 10 years (since the        Senior Vice President,         A fixed-income portfolio
 SENIOR VICE PRESIDENT       fund's inception)                       Capital Research and           counselor for Bond Fund and
                             U.S. Government/AAA-Rated               Management Company             U.S. Government/AAA-Rated
                             Securities Fund -- 14 years             Investment professional for    Securities Fund
                                                                     24 years in total; 23 years
                                                                     with Capital Research and
                                                                     Management Company or
                                                                     affiliate
----------------------------------------------------------------------------------------------------------------------------------
 CLAUDIA P. HUNTINGTON       Growth-Income Fund -- 12 years (plus    Senior Vice President,         An equity portfolio counselor
 VICE PRESIDENT              5 years of prior experience as an       Capital Research and           for Growth-Income Fund and
                             investment analyst for the fund)        Management Company             Global Discovery Fund
                             Global Discovery Fund -- 5 years        Investment professional for
                             (since the fund's inception)            33 years in total; 31 years
                                                                     with Capital Research and
                                                                     Management Company or
                                                                     affiliate
----------------------------------------------------------------------------------------------------------------------------------
 ROBERT W. LOVELACE          Global Growth Fund -- 9 years (since    Chairman, Capital Research     An equity portfolio counselor
 VICE PRESIDENT              the fund's inception)                   Company                        for Global Growth Fund and
                             International Fund -- 12 years          Investment professional for    New World Fund and a non-U.S.
                             New World Fund -- 7 years (since the    21 years, all with Capital     equity portfolio counselor
                             fund's inception)                       Research and Management        for International Fund
                                                                     Company or affiliate
----------------------------------------------------------------------------------------------------------------------------------
 SUSAN M. TOLSON             High-Income Bond Fund -- 11 years       Senior Vice President,         A fixed-income portfolio
 VICE PRESIDENT              (plus 2 years of prior experience as an Capital Research Company       counselor for High-Income
                             investment analyst for the fund)        Investment professional for    Bond Fund and Asset
                             Asset Allocation Fund -- 6 years        18 years in total; 16 years    Allocation Fund
                                                                     with Capital Research and
                                                                     Management Company or
                                                                     affiliate
----------------------------------------------------------------------------------------------------------------------------------
 DAVID C. BARCLAY            High-Income Bond Fund -- 13 years       Senior Vice President,         A fixed-income portfolio
                             New World Fund -- 7 years (since the    Capital Research and           counselor for High-Income
                             fund's inception)                       Management Company             Bond Fund, New World Fund and
                             Bond Fund -- 8 years                    Investment professional for    Bond Fund
                                                                     25 years in total; 18 years
                                                                     with Capital Research and
                                                                     Management Company or
                                                                     affiliate
----------------------------------------------------------------------------------------------------------------------------------
 DONNALISA BARNUM            Growth Fund -- 3 years                  Senior Vice President,         An equity portfolio counselor
                                                                     Capital Research Company       for Growth Fund
                                                                     Investment professional for
                                                                     25 years in total; 20 years
                                                                     with Capital Research and
                                                                     Management Company or
                                                                     affiliate
----------------------------------------------------------------------------------------------------------------------------------
 GORDON CRAWFORD             Global Small Capitalization Fund --     Senior Vice President and      An equity portfolio counselor
                             8 years (since the fund's inception)    Director, Capital Research     (primarily U.S.) for Global
                             Growth Fund -- 12 years (plus 5 years   and Management Company         Small Capitalization Fund,
                             of prior experience as an investment    Investment professional for    Growth Fund and Global
                             analyst for the fund)                   35 years, all with Capital     Discovery Fund
                             Global Discovery Fund -- 1 year         Research and Management
                                                                     Company or affiliate
----------------------------------------------------------------------------------------------------------------------------------
 MARK H. DALZELL             Bond Fund -- 1 year                     Senior Vice President,         [to be provided]
                                                                     Capital Research Company
                                                                     Investment professional for
                                                                     28 years in total; 18 years
                                                                     with Capital Research and
                                                                     Management Company or
                                                                     affiliate
----------------------------------------------------------------------------------------------------------------------------------
 MARK E. DENNING             Global Small Capitalization Fund --     Director, Capital Research     An equity portfolio counselor
                             8 years (since the fund's inception)    and Management Company         (primarily non-U.S.) for
                             Global Discovery Fund -- 1 year         Investment professional for    Global Small Capitalization
                                                                     24 years, all with Capital     Fund and Global Discovery Fund
                                                                     Research and Management
                                                                     Company or affiliate



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 45
                                                                             ---

<PAGE>





                                                            PRIMARY TITLE WITH INVESTMENT
PORTFOLIO COUNSELOR FOR THE  PORTFOLIO COUNSELOR EXPERIENCE  ADVISER (OR AFFILIATE) AND    PORTFOLIO COUNSELOR'S ROLE IN
SERIES/TITLE (IF APPLICABLE)        IN THE FUND(S)              INVESTMENT EXPERIENCE        MANAGEMENT OF THE FUND(S)
-------------------------------------------------------------------------------------------------------------------------

    J. BLAIR FRANK           Global Small Capitalization    Vice President, Capital        An equity portfolio counselor
                             Fund --                        Research Company               (primarily U.S.) for Global
                             3 years                        Investment professional for    Small Capitalization Fund and
                             Growth Fund -- 6 years (plus   13 years in total; 12 years    an equity portfolio counselor
                             3 years of prior experience    with Capital Research and      for
                             as an investment analyst for   Management Company or          Growth Fund
                             the fund)                      affiliate
-------------------------------------------------------------------------------------------------------------------------
    NICK J. GRACE            Global Growth Fund -- 4 years  Senior Vice President,         An equity portfolio counselor
                             (plus 4 years of prior         Capital Research Company       for Global Growth Fund
                             experience as an investment    Investment professional for
                             analyst for the fund)          16 years in total; 12 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    J. DALE HARVEY           Blue Chip Income and Growth    Vice President, Capital        An equity portfolio counselor
                             Fund -- 1 year                 Research and Management        for Blue Chip Income and
                                                            Company                        Growth Fund
                                                            Investment professional for
                                                            17 years in total; 15 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    ALWYN W. HEONG           International Fund -- 10 years Senior Vice President and      A non-U.S. equity portfolio
                                                            Director, Capital Research     counselor for International
                                                            Company                        Fund
                                                            Investment professional for
                                                            18 years in total; 14 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    THOMAS H. HOGH           U.S. Government/AAA-Rated      Vice President, Capital        A fixed-income portfolio
                             Securities Fund -- 9 years     International Research, Inc.   counselor for U.S.
                                                            Investment professional for    Government/AAA-Rated
                                                            19 years in total; 16 years    Securities Fund
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    CARL M. KAWAJA           New World Fund -- 7 years      Senior Vice President,         An equity portfolio counselor
                             (since the fund's inception)   Capital Research Company       for New World Fund
                                                            Investment professional for
                                                            18 years in total; 15 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    MICHAEL T. KERR          Asset Allocation Fund -- 1     Vice President, Capital        An equity portfolio counselor
                             year                           Research and Management        for Asset Allocation Fund
                             Growth Fund -- 1 year          Company
                                                            Investment professional for
                                                            23 years in total; 21 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    SUNG LEE                 International Fund -- less     Executive Vice President and   [to be provided]
                             than 1 year                    Director, Capital Research
                                                            Company
                                                            Investment professional for
                                                            12 years, all with Capital
                                                            Research and Management
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
    MICHAEL D. LOCKE         U.S. Government/AAA-Rated      Vice President, Capital        A fixed-income portfolio
                             Securities Fund -- 3 years     Research Company               counselor for U.S.
                             (plus 6 years of prior         Investment professional for    Government/AAA-Rated
                             experience as an investment    11 years in total; 10 years    Securities Fund
                             analyst for the fund)          with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    JAMES R. MULALLY         Asset Allocation Fund -- less  Senior Vice President,         [to be provided]
                             than 1 year                    Capital International Limited
                                                            Investment professional for
                                                            30 years in total; 26 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    RONALD B. MORROW         Growth Fund -- 3 years (plus   Senior Vice President,         An equity portfolio counselor
                             6 years of prior experience    Capital Research Company       for Growth Fund
                             as an investment analyst for   Investment professional for
                             the fund)                      38 years in total; 9 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    ROBERT G. O'DONNELL      Growth-Income Fund -- 16       Senior Vice President and      An equity portfolio counselor
                             years (plus 1 year of prior    Director, Capital Research     for Growth-Income Fund
                             experience as an investment    and Management Company
                             analyst for the fund)          Investment professional for
                                                            34 years in total; 31 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    C. ROSS SAPPENFIELD      Growth-Income Fund -- 7 years  Vice President, Capital        An equity portfolio counselor
                             Blue Chip Income and Growth    Research and Management        for Growth-Income Fund and
                             Fund -- 5 years (since the     Company                        Blue Chip Income and Growth
                             fund's inception)              Investment professional for    Fund
                                                            14 years, all with Capital
                                                            Research and Management
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
    STEVEN T. WATSON         Global Growth Fund -- 4 years  Senior Vice President and      An equity portfolio counselor
                             (plus 4 years of prior         Director, Capital Research     for Global Growth Fund
                             experience as an investment    Company
                             analyst for the fund)          Investment professional for
                                                            19 years in total; 16 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate




----
46  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

Additional information regarding the portfolio counselors' compensation,
holdings in other accounts and ownership of securities in American Funds
Insurance Series can be found in the statement of additional information.

PURCHASES AND REDEMPTIONS OF SHARES

Shares of the Series are currently offered only to insurance company separate
accounts. All such shares may be purchased or redeemed by the separate accounts
at net asset values without any sales or redemption charges. Such purchases and
redemptions are made promptly after corresponding purchases and redemptions of
units of the separate accounts.

FREQUENT TRADING OF FUND SHARES

The Series and American Funds Distributors, Inc., the Series' distributor,
reserve the right to reject any purchase order for any reason. The funds are
not designed to serve as vehicles for frequent trading in response to
short-term fluctuations in the securities markets. Accordingly, purchases,
including those that are part of exchange activity, that the Series or American
Funds Distributors, Inc. has determined could involve actual or potential harm
to any fund may be rejected. Frequent trading of fund's shares may lead to
increased costs to that fund and less efficient management of the fund's
portfolio, resulting in dilution of the value of the shares held by long-term
shareholders.

The Series' board of trustees has adopted policies and procedures with respect
to frequent purchases and redemptions of fund shares. Under a new "purchase
blocking policy," beginning on January 12, 2005, any contract owner redeeming
units representing a beneficial interest in any fund other than Cash Management
Fund (including redemptions that are part of an exchange transaction) having a
value of $5,000 or more will be precluded from investing in units of beneficial
interest in that fund (including investments that are part of an exchange
transaction) for 30 calendar days after the redemption transaction. This
prohibition will not apply to redemptions by contract owners whose units are
held on the books of insurance company separate accounts that have not adopted
procedures to implement this policy or to redemptions by other registered
investment companies sponsored by insurance companies. American Funds Service
Company, the Series' transfer agent, will work with the insurance companies to
develop such procedures or other procedures that American Funds Service Company
determines are reasonably designed to achieve the objective of the purchase
blocking policy. At the time the insurance companies adopt these procedures,
contract owners whose units are held on the books of such companies will be
subject to this general purchase blocking policy. Under this purchase blocking
policy, certain purchases will not be prevented and certain redemptions will
not trigger a purchase block, such as: systematic redemptions and purchases
where the entity maintaining the contract owner's account is able to identify
the transaction as a systematic redemption or purchase; purchases and
redemptions of units representing a beneficial interest in a fund having a
value of less than $5,000; retirement plan contributions, loans and
distributions (including hardship withdrawals) identified as such on the
retirement plan recordkeeper's system; and purchase transactions involving
transfer of assets, rollovers, Roth IRA conversions and IRA
re-characterizations, where the entity maintaining the contract owner's account
is able to identify the transaction as one of these types of transactions.

VALUING SHARES

Each fund calculates its share price, also called net asset value, each day the
New York Stock Exchange is open as of approximately 4:00 p.m. New York time,
the normal close of regular trading. Assets are valued primarily on the basis
of market quotations. However, the funds have adopted procedures for making
"fair value" determinations if market quotations are not readily available. For
example, if events occur between the close of markets outside the United States
and the close of regular trading on the New York Stock Exchange that, in the
opinion of the investment adviser, materially affect the value of the portfolio
securities of Global Discovery Fund, Global Growth Fund, Global Small
Capitalization Fund, International Fund, New World Fund and World Growth and
Income Fund (collectively, the "International Funds"), the securities will be
valued in accordance with fair value procedures. Use of these procedures is
intended to result in more appropriate net asset values. In addition, such use
will reduce, if not eliminate, potential arbitrage opportunities otherwise
available to short-term investors in the International Funds.

Because certain of the funds may hold securities that are primarily listed on
foreign exchanges that trade on weekends or days when the funds do not price
their shares, the value of securities held in the funds may change on days when
you will not be able to purchase or redeem fund shares.

Shares of the funds will be purchased or sold at the net asset value next
determined after receipt of requests from the appropriate insurance company.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 47
                                                                             ---

<PAGE>

PLANS OF DISTRIBUTION

The Series has adopted plans of distribution or "12b-1 plans" for Class 2 and
Class 3 shares. Under these plans, the Series may finance activities primarily
intended to sell shares, provided the categories of expenses are approved in
advance by the Series' board of trustees. The plans provide for annual expenses
of .25% for Class 2 shares and .18% for Class 3 shares. For these share
classes, amounts paid under the 12b-1 plans are used by insurance company
contract issuers to cover the expenses of certain contract owner services. The
12b-1 fees paid by the Series, as a percentage of average net assets, for the
previous fiscal year, are indicated above in the Annual Fund Operating Expenses
table for each fund. Since these fees are paid out of the Series' assets or
income on an ongoing basis, over time they will increase the cost and reduce
the return of an investment.

DISTRIBUTIONS AND TAXES

Each fund of the Series intends to qualify as a "regulated investment company"
under the Internal Revenue Code. In any fiscal year in which a fund so
qualifies and distributes to shareholders its investment company taxable income
and net realized capital gain, the fund itself is relieved of federal income
tax.

It is the Series' policy to distribute to the shareholders (the insurance
company separate accounts) all of its investment company taxable income and
capital gain for each fiscal year.

See the applicable contract prospectus for information regarding the federal
income tax treatment of the contracts and distributions to the separate
accounts.


----
48  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

                     [This page intentionally left blank]


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 49
                                                                             ---

<PAGE>

FINANCIAL HIGHLIGHTS/1/

The Financial Highlights table is intended to help you understand the funds'
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in a fund (assuming reinvestment of all dividends and capital gain
distributions). This information has been audited by PricewaterhouseCoopers
LLP, whose report, along with the funds' financial statements, is included in
the statement of additional information, which is available upon request.
Figures shown do not reflect insurance contract expenses. If reflected, results
would be lower.



                        Income (loss) from investment
                                operations/2/                 Dividends and distributions
                      ---------------------------------  -------------------------------------
                                  Net gains
                                 (losses) on
            Net asset    Net      securities             Dividends                    Total     Net asset         Net assets,
             value,   investment    (both     Total from (from net  Distributions   dividends    value,             end of
Period      beginning   income   realized and investment investment (from capital      and       end of   Total   period (in
ended       of period   (loss)   unrealized)  operations  income)      gains)     distributions  period   return   millions)


Global Discovery Fund/4/
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $10.79      $.14       $ 1.05      $ 1.19     $(.11)        $(.24)        $(.35)    $11.63    11.07%       $22
12/31/04       9.94       .08          .98        1.06      (.09)         (.12)         (.21)     10.79    10.72         20
12/31/03       7.26       .05         2.67        2.72      (.04)           --          (.04)      9.94    37.41         17
12/31/02       9.30       .06        (2.05)      (1.99)     (.05)           --          (.05)      7.26   (21.41)        10
12/31/01      10.00       .04         (.70)       (.66)     (.04)           --          (.04)      9.30    (6.65)        12
CLASS 2
12/31/05      10.76       .11         1.05        1.16      (.09)         (.24)         (.33)     11.59    10.80         89
12/31/04       9.92       .06          .97        1.03      (.07)         (.12)         (.19)     10.76    10.43         51
12/31/03       7.25       .02         2.67        2.69      (.02)           --          (.02)      9.92    37.11         24
12/31/02       9.30       .04        (2.05)      (2.01)     (.04)           --          (.04)      7.25   (21.67)         9
12/31/01      10.00       .02         (.69)       (.67)     (.03)           --          (.03)      9.30    (6.71)         4

Global Growth Fund
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $17.31      $.28       $ 2.19      $ 2.47     $(.15)       $   --        $ (.15)    $19.63    14.37%    $  206
12/31/04      15.30       .18         1.92        2.10      (.09)           --          (.09)     17.31    13.80        202
12/31/03      11.35       .12         3.91        4.03      (.08)           --          (.08)     15.30    35.63        188
12/31/02      13.42       .09        (2.02)      (1.93)     (.14)           --          (.14)     11.35   (14.46)       152
12/31/01      17.25       .18        (2.50)      (2.32)     (.15)        (1.36)        (1.51)     13.42   (13.99)       215
CLASS 2
12/31/05      17.23       .23         2.18        2.41      (.12)           --          (.12)     19.52    14.07      2,617
12/31/04      15.25       .14         1.91        2.05      (.07)           --          (.07)     17.23    13.49      1,796
12/31/03      11.32       .09         3.89        3.98      (.05)           --          (.05)     15.25    35.27      1,082
12/31/02      13.38       .06        (2.01)      (1.95)     (.11)           --          (.11)     11.32   (14.64)       592
12/31/01      17.21       .13        (2.49)      (2.36)     (.11)        (1.36)        (1.47)     13.38   (14.22)       600

Global Small Capitalization Fund
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $17.14     $ .13       $ 4.23      $ 4.36     $(.21)        $  --         $(.21)    $21.29    25.66%    $  231
12/31/04      14.15       .02         2.97        2.99        --            --            --      17.14    21.13        193
12/31/03       9.27     --/5/         4.97        4.97      (.09)           --          (.09)     14.15    53.92        163
12/31/02      11.52     --/5/        (2.15)      (2.15)     (.10)           --          (.10)      9.27   (18.83)       108
12/31/01      14.28       .03        (1.81)      (1.78)     (.13)         (.85)         (.98)     11.52   (12.63)       149
CLASS 2
12/31/05      17.02       .09         4.19        4.28      (.18)           --          (.18)     21.12    25.35      1,977
12/31/04      14.08      (.01)        2.95        2.94        --            --            --      17.02    20.88      1,198
12/31/03       9.23      (.03)        4.95        4.92      (.07)           --          (.07)     14.08    53.53        665
12/31/02      11.48      (.02)       (2.15)      (2.17)     (.08)           --          (.08)      9.23   (19.05)       290
12/31/01      14.24     --/5/        (1.80)      (1.80)     (.11)         (.85)         (.96)     11.48   (12.85)       274

Growth Fund
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $51.39      $.46      $  8.00     $  8.46     $(.49)      $    --       $  (.49)    $59.36    16.50%   $ 3,709
12/31/04      45.74       .32         5.51        5.83      (.18)           --          (.18)     51.39    12.75      3,744
12/31/03      33.47       .16        12.26       12.42      (.15)           --          (.15)     45.74    37.15      3,877
12/31/02      44.30       .12       (10.87)     (10.75)     (.08)           --          (.08)     33.47   (24.27)     3,195
12/31/01      73.51       .18       (11.99)     (11.81)     (.41)       (16.99)       (17.40)     44.30   (17.93)     5,207
CLASS 2
12/31/05      51.10       .34         7.92        8.26      (.38)           --          (.38)     58.98    16.19     18,343
12/31/04      45.50       .23         5.45        5.68      (.08)           --          (.08)     51.10    12.50     12,055
12/31/03      33.29       .06        12.19       12.25      (.04)           --          (.04)     45.50    36.80      7,107
12/31/02      44.09       .03       (10.82)     (10.79)     (.01)           --          (.01)     33.29   (24.46)     3,009
12/31/01      73.28       .04       (11.94)     (11.90)     (.30)       (16.99)       (17.29)     44.09   (18.15)     2,937
CLASS 3
12/31/05      51.38       .37         7.98        8.35      (.39)           --          (.39)     59.34    16.28        499
12/31/04/7/   47.74       .24         3.50        3.74      (.10)           --          (.10)     51.38     7.85        516






             Ratio of   Ratio of   Ratio of
             expenses   expenses     net
            to average to average   income
            net assets net assets (loss) to
Period        before     after     average
ended         waiver   waiver/3/  net assets


Global Discovery Fund/4/
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .61%       .56%      1.27%
12/31/04         .61        .60        .81
12/31/03         .61        .61        .55
12/31/02         .61        .61        .69
12/31/01         .31        .31        .42
CLASS 2
12/31/05         .86        .81       1.04
12/31/04         .86        .85        .60
12/31/03         .86        .86        .28
12/31/02         .86        .86        .48
12/31/01         .42        .42        .21

Global Growth Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .62%       .57%      1.56%
12/31/04         .65        .64       1.15
12/31/03         .70        .70        .94
12/31/02         .71        .71        .73
12/31/01         .70        .70       1.24
CLASS 2
12/31/05         .87        .82       1.30
12/31/04         .90        .89        .92
12/31/03         .95        .95        .68
12/31/02         .96        .96        .48
12/31/01         .95        .95        .88

Global Small Capitalization Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .79%       .73%       .72%
12/31/04         .81        .80        .15
12/31/03         .83        .83       (.03)
12/31/02         .84        .84        .04
12/31/01         .83        .83        .21
CLASS 2
12/31/05        1.04        .97        .49
12/31/04        1.06       1.05       (.07)
12/31/03        1.08       1.08       (.28)
12/31/02        1.09       1.09       (.20)
12/31/01        1.08       1.08       (.05)

Growth Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .35%       .32%       .87%
12/31/04         .36        .36        .68
12/31/03         .39        .39        .41
12/31/02         .40        .40        .30
12/31/01         .38        .38        .34
CLASS 2
12/31/05         .60        .57        .64
12/31/04         .61        .61        .50
12/31/03         .64        .64        .16
12/31/02         .65        .65        .07
12/31/01         .63        .63        .07
CLASS 3
12/31/05         .53        .50        .69
12/31/04/7/   .54/6/     .53/6/     .54/6/



----
50  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>



                        Income (loss) from investment
                                operations/2/                 Dividends and distributions
                      ---------------------------------  -------------------------------------
                                  Net gains
                                 (losses) on
            Net asset    Net      securities             Dividends                    Total     Net asset         Net assets,
             value,   investment    (both     Total from (from net  Distributions   dividends    value,             end of
Period      beginning   income   realized and investment investment (from capital      and       end of   Total   period (in
ended       of period   (loss)   unrealized)  operations  income)      gains)     distributions  period   return   millions)


International Fund
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $15.82      $.32       $ 3.11      $ 3.43     $(.29)       $   --       $ (.29)     $18.96    21.75%    $1,599
12/31/04      13.41       .22         2.41        2.63      (.22)           --         (.22)      15.82    19.66      1,495
12/31/03      10.07       .15         3.38        3.53      (.19)           --         (.19)      13.41    35.12      1,431
12/31/02      12.02       .15        (1.90)      (1.75)     (.20)           --         (.20)      10.07   (14.58)     1,236
12/31/01      20.59       .22        (3.79)      (3.57)     (.20)        (4.80)       (5.00)      12.02   (19.73)     1,772
CLASS 2
12/31/05      15.79       .28         3.11        3.39      (.26)           --         (.26)      18.92    21.50      4,790
12/31/04      13.39       .18         2.41        2.59      (.19)           --         (.19)      15.79    19.32      2,752
12/31/03      10.05       .12         3.37        3.49      (.15)           --         (.15)      13.39    34.85      1,385
12/31/02      11.97       .12        (1.89)      (1.77)     (.15)           --         (.15)      10.05   (14.84)       636
12/31/01      20.54       .15        (3.76)      (3.61)     (.16)        (4.80)       (4.96)      11.97   (19.89)       628
CLASS 3
12/31/05      15.82       .29         3.11        3.40      (.26)           --         (.26)      18.96    21.54        116
12/31/04/7/   13.76       .20         2.05        2.25      (.19)           --         (.19)      15.82    16.45        115

New World Fund
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $13.96      $.33       $ 2.58      $ 2.91     $(.20)       $   --        $(.20)     $16.67    21.10%      $ 88
12/31/04      11.99       .23         2.01        2.24      (.27)           --         (.27)      13.96    19.07         63
12/31/03       8.76       .21         3.21        3.42      (.19)           --         (.19)      11.99    39.56         47
12/31/02       9.44       .20         (.70)       (.50)     (.18)           --         (.18)       8.76    (5.45)        35
12/31/01       9.85       .24         (.63)       (.39)     (.02)           --         (.02)       9.44    (3.99)        37
CLASS 2
12/31/05      13.89       .29         2.56        2.85      (.18)           --         (.18)      16.56    20.74        677
12/31/04      11.94       .19         2.01        2.20      (.25)           --         (.25)      13.89    18.80        373
12/31/03       8.73       .19         3.19        3.38      (.17)           --         (.17)      11.94    39.18        224
12/31/02       9.41       .18         (.70)       (.52)     (.16)           --         (.16)       8.73    (5.66)       124
12/31/01       9.84       .21         (.62)       (.41)     (.02)           --         (.02)       9.41    (4.19)       116

Blue Chip Income and Growth Fund/4/
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $10.26      $.18        $ .59       $ .77     $(.12)       $   --        $(.12)     $10.91     7.57%    $  135
12/31/04       9.41       .15          .78         .93      (.08)           --         (.08)      10.26     9.94        129
12/31/03       7.17       .13         2.11        2.24        --            --           --        9.41    31.24        107
12/31/02       9.43       .16        (2.32)      (2.16)     (.10)           --         (.10)       7.17   (22.93)        54
12/31/01      10.00       .09         (.61)       (.52)     (.05)           --         (.05)       9.43    (5.23)        49
CLASS 2
12/31/05      10.20       .15          .58         .73      (.10)           --         (.10)      10.83     7.24      3,029
12/31/04       9.36       .13          .78         .91      (.07)           --         (.07)      10.20     9.74      2,349
12/31/03       7.16       .11         2.09        2.20        --            --           --        9.36    30.73      1,490
12/31/02       9.41       .14        (2.30)      (2.16)     (.09)           --         (.09)       7.16   (23.07)       426
12/31/01      10.00       .08         (.63)       (.55)     (.04)           --         (.04)       9.41    (5.38)       111

Growth-Income Fund
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $36.81      $.62       $ 1.61      $ 2.23     $(.58)      $  (.15)      $ (.73)     $38.31     6.08%   $ 3,825
12/31/04      33.61       .48         3.09        3.57      (.37)           --         (.37)      36.81    10.66      4,213
12/31/03      25.63       .42         7.96        8.38      (.40)           --         (.40)      33.61    32.76      4,402
12/31/02      31.70       .41        (6.16)      (5.75)     (.32)           --         (.32)      25.63   (18.15)     3,741
12/31/01      35.23       .51          .49        1.00      (.73)        (3.80)       (4.53)      31.70     2.78      5,428
CLASS 2
12/31/05      36.64       .53         1.60        2.13      (.50)         (.15)        (.65)      38.12     5.83     17,608
12/31/04      33.48       .41         3.06        3.47      (.31)           --         (.31)      36.64    10.37     13,105
12/31/03      25.52       .34         7.92        8.26      (.30)           --         (.30)      33.48    32.43      7,824
12/31/02      31.58       .35        (6.14)      (5.79)     (.27)           --         (.27)      25.52   (18.34)     3,632
12/31/01      35.13       .41          .52         .93      (.68)        (3.80)       (4.48)      31.58     2.56      3,187
CLASS 3
12/31/05      36.80       .56         1.61        2.17      (.51)         (.15)        (.66)      38.31     5.88        471
12/31/04      34.64       .41         2.07        2.48      (.32)           --         (.32)      36.80     7.18        537






             Ratio of   Ratio of   Ratio of
             expenses   expenses     net
            to average to average   income
            net assets net assets (loss) to
Period        before     after     average
ended         waiver   waiver/3/  net assets


International Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .57%       .52%      1.92%
12/31/04         .60        .59       1.54
12/31/03         .63        .63       1.40
12/31/02         .63        .63       1.35
12/31/01         .61        .61       1.41
CLASS 2
12/31/05         .82        .77       1.64
12/31/04         .84        .83       1.27
12/31/03         .88        .88       1.08
12/31/02         .88        .88       1.05
12/31/01         .86        .86       1.04
CLASS 3
12/31/05         .75        .70       1.74
12/31/04/7/   .77/6/     .77/6/    1.45/6/

New World Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .92%       .85%      2.22%
12/31/04         .93        .92       1.81
12/31/03         .92        .92       2.15
12/31/02         .91        .91       2.14
12/31/01         .91        .91       2.54
CLASS 2
12/31/05        1.17       1.10       1.97
12/31/04        1.18       1.17       1.57
12/31/03        1.17       1.17       1.90
12/31/02        1.16       1.16       1.89
12/31/01        1.16       1.16       2.25

Blue Chip Income and Growth Fund/4/
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .45%       .41%      1.73%
12/31/04         .46        .46       1.60
12/31/03         .52        .50       1.67
12/31/02         .52        .52       1.89
12/31/01         .25        .25        .93
CLASS 2
12/31/05         .70        .66       1.48
12/31/04         .71        .70       1.37
12/31/03         .76        .74       1.41
12/31/02         .77        .77       1.76
12/31/01         .37        .37        .82

Growth-Income Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .29%       .27%      1.68%
12/31/04         .31        .30       1.39
12/31/03         .34        .34       1.45
12/31/02         .35        .35       1.43
12/31/01         .35        .35       1.53
CLASS 2
12/31/05         .54        .52       1.44
12/31/04         .56        .55       1.19
12/31/03         .59        .59       1.18
12/31/02         .60        .60       1.22
12/31/01         .60        .60       1.25
CLASS 3
12/31/05         .47        .45       1.50
12/31/04      .49/6/     .48/6/    1.24/6/



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 51
                                                                             ---

<PAGE>



                        Income (loss) from investment
                                operations/2/                 Dividends and distributions
                      ---------------------------------  -------------------------------------
                                  Net gains
                                 (losses) on
            Net asset    Net      securities             Dividends                    Total     Net asset         Net assets,
             value,   investment    (both     Total from (from net  Distributions   dividends    value,             end of
Period      beginning   income   realized and investment investment (from capital      and       end of   Total   period (in
ended       of period   (loss)   unrealized)  operations  income)      gains)     distributions  period   return   millions)


Asset Allocation Fund
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $15.49      $.41       $ 1.05      $ 1.46      $(.39)      $  --        $ (.39)     $16.56     9.45%   $  879
12/31/04      14.58       .39          .84        1.23       (.32)         --          (.32)      15.49     8.50       899
12/31/03      12.23       .41         2.29        2.70       (.35)         --          (.35)      14.58    22.14       911
12/31/02      14.30       .45        (2.19)      (1.74)      (.33)         --          (.33)      12.23   (12.19)      797
12/31/01      15.71       .49         (.37)        .12       (.59)       (.94)        (1.53)      14.30      .77     1,012
CLASS 2
12/31/05      15.42       .37         1.04        1.41       (.36)         --          (.36)      16.47     9.14     5,120
12/31/04      14.51       .36          .84        1.20       (.29)         --          (.29)      15.42     8.34     3,797
12/31/03      12.18       .37         2.27        2.64       (.31)         --          (.31)      14.51    21.74     2,314
12/31/02      14.25       .42        (2.18)      (1.76)      (.31)         --          (.31)      12.18   (12.38)    1,056
12/31/01      15.67       .45         (.36)        .09       (.57)       (.94)        (1.51)      14.25      .52       730
CLASS 3
12/31/05      15.49       .38         1.05        1.43       (.36)         --          (.36)      16.56     9.26        76
12/31/04/7/   14.85       .36          .58         .94       (.30)         --          (.30)      15.49     6.38        81

Bond Fund
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $11.57      $.60        $(.40)      $ .20      $(.46)         --         $(.46)     $11.31     1.77%   $  182
12/31/04      11.34       .56          .10         .66       (.43)         --          (.43)      11.57     6.04       195
12/31/03      10.41       .57          .78        1.35       (.42)         --          (.42)      11.34    13.07       213
12/31/02      10.44       .67         (.24)        .43       (.46)         --          (.46)      10.41     4.26       218
12/31/01      10.18       .77          .08         .85       (.59)         --          (.59)      10.44     8.48       194
CLASS 2
12/31/05      11.48       .57         (.39)        .18       (.44)         --          (.44)      11.22     1.59     2,312
12/31/04      11.27       .53          .09         .62       (.41)         --          (.41)      11.48     5.72     1,759
12/31/03      10.36       .53          .78        1.31       (.40)         --          (.40)      11.27    12.80     1,280
12/31/02      10.40       .64         (.24)        .40       (.44)         --          (.44)      10.36     4.05       697
12/31/01      10.16       .73          .08         .81       (.57)         --          (.57)      10.40     8.15       349

High-Income Bond Fund
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $12.89     $ .85       $ (.55)      $ .30     $ (.78)         --        $ (.78)     $12.41     2.46%     $309
12/31/04      12.54       .84          .32        1.16       (.81)         --          (.81)      12.89     9.83       364
12/31/03      10.44       .90         2.12        3.02       (.92)         --          (.92)      12.54    29.79       411
12/31/02      11.78      1.01        (1.25)       (.24)     (1.10)         --         (1.10)      10.44    (1.51)      335
12/31/01      12.25      1.17         (.23)        .94      (1.41)         --         (1.41)      11.78     8.02       403
CLASS 2
12/31/05      12.81       .81         (.55)        .26       (.75)         --          (.75)      12.32     2.20       590
12/31/04      12.47       .81          .32        1.13       (.79)         --          (.79)      12.81     9.59       444
12/31/03      10.39       .86         2.12        2.98       (.90)         --          (.90)      12.47    29.51       319
12/31/02      11.74       .97        (1.25)       (.28)     (1.07)         --         (1.07)      10.39    (1.83)      183
12/31/01      12.22      1.13         (.23)        .90      (1.38)         --         (1.38)      11.74     7.73       156
CLASS 3
12/31/05      12.87       .82         (.55)        .27       (.75)         --          (.75)      12.39     2.25        37
12/31/04/7/   12.79       .78          .11         .89       (.81)         --          (.81)      12.87     7.52        46

U.S. Government/AAA-Rated Securities Fund
-----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $12.07      $.48        $(.16)      $ .32      $(.48)         --         $(.48)     $11.91     2.70%     $252
12/31/04      12.24       .45         (.03)        .42       (.59)         --          (.59)      12.07     3.58       286
12/31/03      12.37       .46         (.15)        .31       (.44)         --          (.44)      12.24     2.51       373
12/31/02      11.87       .54          .55        1.09       (.59)         --          (.59)      12.37     9.45       517
12/31/01      11.73       .66          .17         .83       (.69)         --          (.69)      11.87     7.24       386
CLASS 2
12/31/05      12.00       .45         (.16)        .29       (.46)         --          (.46)      11.83     2.41       341
12/31/04      12.17       .41         (.03)        .38       (.55)         --          (.55)      12.00     3.30       285
12/31/03      12.31       .42         (.14)        .28       (.42)         --          (.42)      12.17     2.28       273
12/31/02      11.83       .50          .55        1.05       (.57)         --          (.57)      12.31     9.15       288
12/31/01      11.70       .62          .18         .80       (.67)         --          (.67)      11.83     7.02       137
CLASS 3
12/31/05      12.05       .46         (.16)        .30       (.46)         --          (.46)      11.89     2.50        39
12/31/04/7/   12.34       .41         (.11)        .30       (.59)         --          (.59)      12.05     2.58        43






             Ratio of   Ratio of   Ratio of
             expenses   expenses     net
            to average to average   income
            net assets net assets (loss) to
Period        before     after     average
ended         waiver   waiver/3/  net assets


Asset Allocation Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .35%       .32%      2.57%
12/31/04         .38        .37       2.64
12/31/03         .42        .42       3.12
12/31/02         .45        .45       3.31
12/31/01         .45        .45       3.30
CLASS 2
12/31/05         .60        .57       2.31
12/31/04         .62        .62       2.42
12/31/03         .67        .67       2.81
12/31/02         .70        .70       3.11
12/31/01         .70        .70       3.03
CLASS 3
12/31/05         .53        .50       2.39
12/31/04/7/   .55/6/     .55/6/    2.50/6/

Bond Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .44%       .40%      5.30%
12/31/04         .45        .44       4.94
12/31/03         .47        .47       5.19
12/31/02         .49        .49       6.60
12/31/01         .49        .49       7.38
CLASS 2
12/31/05         .69        .65       5.06
12/31/04         .70        .69       4.68
12/31/03         .72        .72       4.88
12/31/02         .74        .74       6.34
12/31/01         .74        .74       7.06

High-Income Bond Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .50%       .46%      6.76%
12/31/04         .50        .50       6.74
12/31/03         .51        .51       7.74
12/31/02         .52        .52       9.55
12/31/01         .51        .51       9.60
CLASS 2
12/31/05         .75        .71       6.55
12/31/04         .75        .74       6.48
12/31/03         .76        .76       7.41
12/31/02         .77        .77       9.28
12/31/01         .76        .76       9.37
CLASS 3
12/31/05         .68        .64       6.58
12/31/04/7/   .68/6/     .68/6/    6.57/6/

U.S. Government/AAA-Rated Securities Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .47%       .43%      3.99%
12/31/04         .47        .46       3.68
12/31/03         .46        .46       3.71
12/31/02         .47        .47       4.45
12/31/01         .47        .47       5.58
CLASS 2
12/31/05         .72        .68       3.75
12/31/04         .72        .71       3.42
12/31/03         .71        .71       3.43
12/31/02         .72        .72       4.14
12/31/01         .72        .72       5.27
CLASS 3
12/31/05         .65        .61       3.81
12/31/04/7/   .65/6/     .65/6/    3.51/6/



----
52  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>



                        Income (loss) from investment
                                operations/2/                 Dividends and distributions
                      ---------------------------------- -------------------------------------
                                  Net gains
                                 (losses) on
            Net asset    Net      securities             Dividends                    Total     Net asset        Net assets,
             value,   investment    (both     Total from (from net  Distributions   dividends    value,            end of
Period      beginning   income   realized and investment investment (from capital      and       end of   Total  period (in
ended       of period   (loss)   unrealized)  operations  income)      gains)     distributions  period   return  millions)


Cash Management Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $11.09      $.33       $--/5/       $.33      $(.11)        --           $(.11)     $11.31    2.97%    $ 75
12/31/04      11.07       .11        --/5/        .11       (.09)        --            (.09)      11.09     .96       78
12/31/03      11.17       .07        --/5/        .07       (.17)        --            (.17)      11.07     .67      103
12/31/02      11.41       .14        --/5/        .14       (.38)        --            (.38)      11.17    1.24      203
12/31/01      11.65       .41          .01        .42       (.66)        --            (.66)      11.41    3.66      218
CLASS 2
12/31/05      11.05       .30        --/5/        .30       (.09)        --            (.09)      11.26    2.68      153
12/31/04      11.03       .08        --/5/        .08       (.06)        --            (.06)      11.05     .70      110
12/31/03      11.12       .05        --/5/        .05       (.14)        --            (.14)      11.03     .47       99
12/31/02      11.37       .11        --/5/        .11       (.36)        --            (.36)      11.12    1.00      133
12/31/01      11.62       .34          .05        .39       (.64)        --            (.64)      11.37    3.43      127
CLASS 3
12/31/05      11.07       .30        --/5/        .30       (.08)        --            (.08)      11.29    2.74       16
12/31/04/7/   11.07       .09        --/5/        .09       (.09)        --            (.09)      11.07     .78       20






             Ratio of   Ratio of   Ratio of
             expenses   expenses     net
            to average to average   income
            net assets net assets (loss) to
Period        before     after     average
ended         waiver   waiver/3/  net assets


Cash Management Fund
---------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         .33%       .30%      2.91%
12/31/04         .37        .36        .96
12/31/03         .47        .47        .68
12/31/02         .46        .46       1.25
12/31/01         .46        .46       3.52
CLASS 2
12/31/05         .58        .55       2.71
12/31/04         .61        .61        .76
12/31/03         .72        .72        .42
12/31/02         .71        .71       1.00
12/31/01         .71        .71       2.99
CLASS 3
12/31/05         .51        .48       2.70
12/31/04/7/   .54/6/     .54/6/     .80/6/




                                                     Year ended December 31
                                                  ----------------------------
Portfolio turnover rate for all classes of shares 2005  2004  2003  2002  2001
------------------------------------------------- ----  ----  ----  ----  ----

    Global Discovery Fund/4/                        53%   28%   30%   25%    4%
    Global Growth Fund                              26    24    27    30    38
    Global Small Capitalization Fund                47    49    51    66    65
    Growth Fund                                     29    30    34    34    31
    International Fund                              40    37    40    30    40
    New World Fund                                  26    18    19    22    31
    Blue Chip Income and Growth Fund/4/             33    13    12     8    12
    Growth-Income Fund                              20    21    21    26    34
    Asset Allocation Fund                           23    20    20    25    32
    Bond Fund                                       46    34    20    29    59
    High-Income Bond Fund                           35    38    48    45    42
    U.S. Government/AAA-Rated Securities Fund       86    68    63    53    84
    Cash Management Fund                            --    --    --    --    --


/1/Based on operations for the period shown (unless otherwise noted) and,
   accordingly, may not be representative of a full year.

/2/Based on average shares outstanding.

/3/The ratios in this column reflect the impact, if any, of certain waivers by
   Capital Research and Management Company. During the periods shown, Capital
   Research and Management Company reduced fees for investment advisory
   services for all share classes.

/4/Commenced operations July 5, 2001.

/5/Amount less than one cent.

/6/Annualized.

/7/From January 16, 2004, when Class 3 shares were first issued.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 53
                                                                             ---

<PAGE>

[LOGO OF American Funds(R)]                The right choice for the long term(R)

OTHER FUND INFORMATION

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
The shareholder reports contain additional information about the Series,
including financial statements, investment results, portfolio holdings, a
discussion of market conditions and the Series' investment strategies, and the
independent registered public accounting firm's report (in the annual report).

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS
The current SAI, as amended from time to time, contains more detailed
information on all aspects of the Series, including the funds' financial
statements, and is incorporated by reference into this prospectus. This means
that the current SAI, for legal purposes, is part of this prospectus. The codes
of ethics describe the personal investing policies adopted by the Series, the
Series' investment adviser and its affiliated companies.

The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the Series are
available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's website at
www.sec.gov or, after payment of a duplicating fee, via email request to
publicinfo@sec.gov or by writing to the SEC's Public Reference
Section,Washington, D.C. 20549-0102.

If you would like to receive a free copy of the current SAI, codes of ethics or
annual/semi-annual report to shareholders, please call American Funds at
800/421-4120 or write to the Secretary of the Series at 333 South Hope Street,
Los Angeles, California 90071.

[GRAPHIC APPEARS HERE]
Printed on recycled Paper    Litho in USA     Invested Company File No. 811-3857

THE CAPITAL GROUP COMPANIES
American Funds    Capital Research       Capital       Capital    Capital Bank
                   and Management     International   Guardian      and Trust


<PAGE>

[LOGO OF AMERICAN FUNDS(R)]                The right choice for the long term(R)

AMERICAN FUNDS
INSURANCE SERIES(R)

PROSPECTUS
Class 2 shares

May 1,2006


THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THESE
SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.



<PAGE>

American Funds Insurance Series (the "Series") consists of 14 funds, each
representing a separate fully managed diversified portfolio of securities. The
14 funds are:

   Global Discovery Fund
   Global Growth Fund
   Global Small Capitalization Fund
   Growth Fund
   International Fund
   New World Fund
   Blue Chip Income and Growth Fund
   Growth-Income Fund
   World Growth and Income Fund
   Asset Allocation Fund
   Bond Fund
   High-Income Bond Fund
   U.S. Government/AAA-Rated Securities Fund
   Cash Management Fund

Shares of the Series are currently offered to insurance company separate
accounts funding both variable annuity contracts and variable insurance
policies (the "contracts"). Interests of various contract owners participating
in the Series may be in conflict. The board of trustees of the Series will
monitor for the existence of any material conflicts and determine what action,
if any, should be taken. Shares may be purchased or redeemed by the separate
accounts without any sales or redemption charges at net asset value.

The Series offers three classes of fund shares: Class 1, Class 2 and Class 3
shares. This prospectus offers only Class 2 shares and is for use with the
contracts that make Class 2 shares available. The board of trustees may
establish additional funds and classes in the future. The investment
objective(s) and policies of each fund are discussed below. MORE INFORMATION ON
THE FUNDS IS CONTAINED IN THE SERIES' STATEMENT OF ADDITIONAL INFORMATION.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 1
                                                                             ---

<PAGE>

GLOBAL DISCOVERY FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
stocks of companies in the services and information areas of the global
economy. The fund may invest up to 25% of its assets in companies outside the
services and information areas. Companies in the services and information areas
include, for example, those involved in the fields of telecommunications,
computer systems and software, the Internet, broadcasting and publishing,
health care, advertising, leisure, tourism, financial services, distribution
and transportation. Providing you with current income is a secondary
consideration. The fund is designed for investors seeking greater capital
appreciation through investments in stocks of issuers based around the world.
Investors in the fund should have a long-term perspective and be able to
tolerate potentially wide price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks. Because the fund generally invests in securities of
issuers in the services and information areas, it may be more susceptible to
factors adversely affecting these issuers than funds that do not focus on these
areas. The fund also may be subject to additional risks because it invests in a
more limited group of sectors and industries than the broad market.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
2   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.

                                    [CHART]

Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

         2002        2003        2004         2005
         ----        ----        ----         ----
       -21.67%      37.11%      10.43%       10.80%


The fund's highest/lowest quarterly results during the time period were:

HIGHEST  18.31% (quarter ended June 30, 2003)
LOWEST  -17.62% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                       LIPPER MULTI-CAP GLOBAL SERVICE
AVERAGE ANNUAL                           GROWTH FUNDS   AND INFORMATION
TOTAL RETURNS         FUND  S&P 500/1/     INDEX/2/        INDEX/3/     CPI/4/
------------------------------------------------------------------------------

1 Year               10.80%   4.91%          9.13%           7.07%      3.42%
------------------------------------------------------------------------------
5 Years               N/A     0.54%         -2.90%            N/A       2.49%
------------------------------------------------------------------------------
10 Years              N/A     9.07%          7.23%            N/A       2.52%
------------------------------------------------------------------------------
Lifetime/5/           4.64%   2.27%          0.84%           2.84%      2.26%


/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper Multi-Cap Growth Funds Index is an equally weighted index of funds
   that invest in a variety of market capitalization ranges without
   concentrating 75% of their equity assets in any one market capitalization
   range over an extended period of time. Multi-cap growth funds typically have
   an above-average price-to-earnings ratio, price-to-book ratio, and
   three-year sales-per-share growth value, compared to the S&P SuperComposite
   1500 Index. The results of the underlying funds in the index include the
   reinvestment of dividends and capital gain distributions, as well as
   brokerage commissions paid by the funds for portfolio transactions, but do
   not reflect sales charges or taxes.

/3/Global Service and Information Index is a subset of the unmanaged MSCI(R)
   World Index, which is a market-capitalization-weighted index that measures
   the returns of companies in 23 developed countries. This subset is 70%
   U.S.-weighted and consists specifically of companies in the service and
   information industries that together represent approximately 60% of the MSCI
   World Index. The index is compiled by Capital Research and Management
   Company, is unmanaged, and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/4/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.


/5/Lifetime results are as of July 5, 2001, the date the fund began investment
  operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 3
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.58%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.03%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.86%


*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $88    $274    $477    $1,061



----
4   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

GLOBAL GROWTH FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
common stocks of companies located around the world. The fund is designed for
investors seeking capital appreciation through stocks. Investors in the fund
should have a long-term perspective and be able to tolerate potentially wide
price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

Investing in countries with developing economies and/or markets generally
involves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, developing countries may have
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 5
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

   1998      1999      2000     2001     2002      2003      2004      2005
   ----      ----      ----     ----     ----      ----      ----      ----
  28.75%    69.67%   -18.87%  -14.22%  -14.64%    35.27%    13.49%    14.07%



The fund's highest/lowest quarterly results during this time period were:

HIGHEST  41.03% (quarter ended December 31, 1999)
LOWEST  -20.43% (quarter ended September 30, 2001)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                     MSCI       LIPPER
                                     WORLD   GLOBAL FUNDS
AVERAGE ANNUAL TOTAL RETURNS  FUND  INDEX/1/   INDEX/2/   CPI/3/
----------------------------------------------------------------

        1 Year               14.07% 10.02%      11.89%    3.42%
----------------------------------------------------------------
        5 Years               5.10%  2.64%       2.96%    2.49%
----------------------------------------------------------------
        10 Years              N/A    7.47%       7.95%    2.52%
----------------------------------------------------------------
        Lifetime/4/          10.95%  6.59%       6.99%    2.40%


/1/MSCI World Index is a free float-adjusted market capitalization index that
   is designed to measure global developed market equity performance. The index
   consists of 23 developed market country indexes, including the United
   States. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper Global Funds Index is an equally weighted index of funds that invest
   at least 25% of their portfolios in securities traded outside the United
   States and may own U.S. Securities as well. The results of the underlying
   funds in the index include the reinvestment of dividends and capital gain
   distributions, as well as brokerage commissions paid by the funds for
   portfolio transactions, but do not reflect sales charges or taxes.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of April 30, 1997, the date the fund began
   investment operations.


----
6   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.58%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.04%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.87%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $89    $278    $482    $1,073



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 7
                                                                             ---

<PAGE>

GLOBAL SMALL CAPITALIZATION FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
stocks of smaller companies located around the world. Normally, the fund
invests at least 80% of its assets in equity securities of companies with small
market capitalizations, measured at the time of purchase. However, the fund's
holdings of small capitalization stocks may fall below the 80% threshold due to
subsequent market action. This policy is subject to change only upon 60 days'
notice to shareholders. The investment adviser currently defines the market
capitalization range of "small market capitalization" companies as $50 million
to $2 billion. This definition is also subject to change. The fund is designed
for investors seeking capital appreciation through stocks. Investors in the
fund should have a long-term perspective and be able to tolerate potentially
wide price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks. Smaller capitalization stocks are often more difficult
to value or dispose of, more difficult to obtain information about and more
volatile than stocks of larger, more established companies.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

Investing in countries with developing economies and/or markets generally
involves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, developing countries may have
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
8   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                     [CHART]

  1999        2000        2001         2002        2003       2004      2005
  ----        ----        ----         ----        ----       ----      ----
 91.37%      -16.53%     -12.85%     -19.05%      53.53%     20.88%    25.35%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  28.90% (quarter ended December 31, 1999)
LOWEST  -28.24% (quarter ended September 30, 2001)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                               LIPPER GLOBAL
                                 S&P/CITIGROUP   SMALL-CAP
AVERAGE ANNUAL TOTAL             GLOBAL/WORLD      FUNDS
RETURNS                    FUND   INDEXES/1/    AVERAGE/2/   CPI/3/
-------------------------------------------------------------------

1 Year                    25.35%    17.24%        15.74%     3.42%
-------------------------------------------------------------------
5 Years                   10.42%    13.96%         6.50%     2.49%
-------------------------------------------------------------------
10 Years                   N/A       9.87%         9.88%     2.52%
-------------------------------------------------------------------
Lifetime/4/               13.75%     9.42%         8.18%     2.53%


/1/S&P/Citigroup Global/World Indexes reflect a combination of the
   S&P/Citigroup Global Index and two S&P/CitigroupWorld Indexes that
   corresponds to the market capitalization ranges used by the fund during
   comparable periods. The S&P/Citigroup Global Index, which tracks more than
   7,000 publicly traded stocks around the world with market capitalizations
   less than $2 billion, has been used since May 2004. This index better
   reflects the fund's investments in developing countries during this period.
   The S&P/Citigroup World Indexes, which only include stocks in developed
   countries and reflect market capitalizations less than $1.5 billion and less
   than $1.2 billion, were used from 2000 to April 2004 and from 1990 to 1999,
   respectively. These indexes are unmanaged and include reinvested dividends
   and/or distributions, but do not reflect sales charges, commissions,
   expenses or taxes.

/2/Lipper Global Small-Cap Funds Average is comprised of funds that invest at
   least 25% of their portfolios in securities with primary trading markets
   outside the United States, and that limits at least 65% of its investments
   to companies with market capitalizations of less than U.S. $1 billion at the
   time of purchase. The results of the underlying funds in the average include
   the reinvestment of dividends and capital gain distributions, as well as
   brokerage commissions paid by the funds for portfolio transactions, but do
   not reflect sales charges or taxes.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of April 30, 1998, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 9
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.74%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.05%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 1.04%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $106   $331    $574    $1,271



----
10  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

GROWTH FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow by investing primarily in common
stocks of companies that appear to offer superior opportunities for growth of
capital. The fund may invest up to 15% of its assets in securities of issuers
domiciled outside the United States and Canada and not included in Standard &
Poor's 500 Composite Index. The fund is designed for investors seeking capital
appreciation through stocks. Investors in the fund should have a long-term
perspective and be able to tolerate potentially wide price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 11
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 2 shares were first
offered on April 30, 1997. Results prior to that date assume a hypothetical
investment in Class 1 shares, reduced by the .25% annual expense that applies
to Class 2 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of Class 2
shares because both classes invest in the same portfolio of securities.

Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996    1997    1998    1999   2000    2001     2002    2003    2004    2005
------  ------  ------  ------  -----  ------  -------  ------  ------  ------
13.07%  29.79%  35.23%  57.27%  4.47%  -18.15% -24.46%  36.80%  12.50%  16.19%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  30.71% (quarter ended December 31, 1999)
LOWEST  -27.17% (quarter ended September 30, 2001)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                               LIPPER CAPITAL
                                                APPRECIATION  LIPPER GROWTH
AVERAGE ANNUAL TOTAL RETURNS  FUND  S&P 500/1/ FUNDS INDEX/2/ FUNDS INDEX/3/ CPI/4/
-----------------------------------------------------------------------------------

        1 Year               16.19%   4.91%         7.96%         7.24%      3.42%
-----------------------------------------------------------------------------------
        5 Years               2.03%   0.54%         0.15%        -1.36%      2.49%
-----------------------------------------------------------------------------------
        10 Years             13.68%   9.07%         7.28%         7.26%      2.52%
-----------------------------------------------------------------------------------
        Lifetime/5/          14.64%  12.83%        10.50%        10.70%      3.05%


/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper Capital Appreciation Funds Index is an equally weighted index of
   funds that aim for maximum capital appreciation. The results of the
   underlying funds in the index include the reinvestment of dividends and
   capital gain distributions, as well as brokerage commissions paid by the
   funds for portfolio transactions, but do not reflect sales charges or taxes.

/3/Lipper Growth Funds Index is an equally weighted index of growth funds.
   These funds normally invest in companies with long-term earnings expected to
   grow significantly faster than the earnings of the stocks represented in the
   major unmanaged stock indexes. The results of the underlying funds in the
   index include the reinvestment of dividends and capital gain distributions,
   as well as brokerage commissions paid by the funds for portfolio
   transactions, but do not reflect sales charges or taxes.

/4/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/5/Lifetime results are as of February 8, 1984, the date the fund began
   investment operations.


----
12  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.33%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.02%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.60%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $61    $192    $335     $750



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 13
                                                                             ---

<PAGE>

INTERNATIONAL FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
common stocks of companies located outside the United States. The fund is
designed for investors seeking capital appreciation through stocks. Investors
in the fund should have a long-term perspective and be able to tolerate
potentially wide price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

Investing in countries with developing economies and/or markets generally
involves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, developing countries may have
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
14  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 2 shares were first
offered on April 30, 1997. Results prior to that date assume a hypothetical
investment in Class 1 shares, reduced by the .25% annual expense that applies
to Class 2 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of Class 2
shares because both classes invest in the same portfolio of securities.

Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996   1997   1998    1999    2000     2001    2002     2003    2004    2005
------  ----- ------  ------  -------  ------  -------  ------  ------  -----
17.23%  8.82% 20.93%  75.97%  -22.06%  -19.89% -14.84%  34.85%  19.32%  21.50%

The fund's highest/lowest quarterly results during this time period were:

HIGHEST  42.33% (quarter ended December 31, 1999)
LOWEST  -19.66% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                             MSCI       LIPPER
AVERAGE ANNUAL               EAFE    INTERNATIONAL
TOTAL RETURNS         FUND  INDEX/1/ FUNDS INDEX/2/ CPI/3/
----------------------------------------------------------

1 year               21.50% 14.02%      15.67%      3.42%
----------------------------------------------------------
5 years               5.93%  4.94%       5.34%      2.49%
----------------------------------------------------------
10 years             10.93%  6.18%       7.74%      2.52%
----------------------------------------------------------
Lifetime/4/          10.13%  6.74%       7.85%      2.74%


/1/MSCI EAFE (Europe, Australasia, Far East) is a free float-adjusted market
   capitalization index that is designed to measure developed market equity
   performance, excluding the United States & Canada. This index is unmanaged
   and includes reinvested dividends and/or distributions, but does not reflect
   sales charges, commissions, expenses or taxes.

/2/Lipper International Funds Index is an equally weighted index of funds that
   invest assets in securities with primary trading markets outside the United
   States. The results of the underlying funds in the average include the
   reinvestment of dividends and capital gain distributions, as well as
   brokerage commissions paid by the funds for portfolio transactions, but do
   not reflect sales charges or taxes.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of May 1, 1990, the date the fund began investment
   operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 15
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.52%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.05%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.82%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $84    $262    $455    $1,014



----
16  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

NEW WORLD FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
stocks of companies with significant exposure to countries with developing
economies and/or markets. The fund may also invest in debt securities of
issuers, including issuers of lower rated bonds, with exposure to these
countries. The fund is designed for investors seeking capital appreciation.
Investors in the fund should have a long-term perspective and be able to
tolerate potentially wide price fluctuations.

The fund may invest in equity securities of any company, regardless of where it
is based, if the fund's investment adviser determines that a significant
portion of the company's assets or revenues (generally 20% or more) is
attributable to developing countries. Under normal market conditions, the fund
will invest at least 35% of its assets in equity and debt securities of issuers
primarily based in qualified countries that have developing economies and/or
markets. In addition, the fund may invest up to 25% of its assets in
nonconvertible debt securities of issuers, including issuers of lower rated
bonds and government bonds, primarily based in qualified countries or that have
a significant portion of their assets or revenues attributable to developing
countries. The fund may also, to a limited extent, invest in securities of
issuers based in nonqualified developing countries.

In determining whether a country is qualified, the fund will consider such
factors as the country's per capita gross domestic product, the percentage of
the country's economy that is industrialized, market capital as a percentage of
gross domestic product, the overall regulatory environment, the presence of
government regulation limiting or banning foreign ownership, and restrictions
on repatriation of initial capital, dividends, interest and/or capital gains.
The fund's investment adviser will maintain a list of qualified countries and
securities in which the fund may invest. Qualified developing countries in
which the fund may invest currently include, but are not limited to, Argentina,
Brazil, Chile, China, Colombia, Croatia, Czech Republic, Dominican Republic,
Egypt, Hungary, India, Israel, Jordan, Malaysia, Mexico, Morocco, Panama, Peru,
Philippines, Poland, Russian Federation, South Africa, Thailand, Turkey and
Venezuela.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks. Smaller capitalization stocks are often more difficult
to value or dispose of, more difficult to obtain information about and more
volatile than stocks of larger, more established companies.

The values of most debt securities held by the fund may be affected by changing
interest rates and by changes in effective maturities and credit ratings of
these securities. For example, the values of debt securities in the fund's
portfolio generally will decline when interest rates rise and increase when
interest rates fall. In addition, falling interest rates may cause an issuer to
redeem or "call" a security before its stated maturity, which may result in the
fund having to reinvest the proceeds in lower yielding securities. Debt
securities are also subject to credit risk, which is the possibility that the
credit strength of an issuer will weaken and/or an issuer of a debt security
will fail to make timely payments of principal or interest and the security
will go into default. Lower quality or longer maturity debt securities
generally have higher rates of interest and may be subject to greater price
fluctuations than higher quality or shorter maturity debt securities. The
fund's investment adviser attempts to reduce these risks through
diversification of the portfolio and with ongoing credit analysis of each
issuer, as well as by monitoring economic and legislative developments.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 17
                                                                             ---

<PAGE>

Investing in countries with developing economies and/or markets may involve
risks in addition to and greater than those generally associated with investing
in developed countries. For instance, developing countries may have less
developed legal and accounting systems. The governments of these countries may
be more unstable and more likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
18  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


  Here are the fund's results calculated on a calendar year basis. (If insurance
  contract fees and expenses were included, results would have been lower.)

                                       [CHART]

    2000     2001     2002     2003    2004     2005
   ------   ------   ------   ------   -----   ------
  -12.70%   -4.19%   -5.66%   39.18%   18.80%   20.74%



The fund's highest/lowest quarterly results during this time period were:

HIGHEST  15.47% (quarter ended June 30, 2003)
LOWEST  -16.07% (quarter ended September 30, 2001)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                MSCI
AVERAGE ANNUAL               ALL COUNTRY
TOTAL RETURNS         FUND  WORLD INDEX/1/ CPI/2/
-------------------------------------------------

1 Year               20.74%    11.37%       3.42%
-------------------------------------------------
5 Years              12.53%     3.41%       2.49%
-------------------------------------------------
10 Years              N/A       7.44%       2.52%
-------------------------------------------------
Lifetime/3/           9.99%     2.50%       2.62%


/1/MSCI All Country World Index is a free float-adjusted market capitalization
   index that measures equity market performance in the global and emerging
   markets, consisting of 49 developed and emerging market country indexes.
   This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/3/Lifetime results are as of June 17, 1999, the date the fund began investment
   operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 19
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.84%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.08%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 1.17%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



        1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------

Class 2  $119   $372    $644    $1,420



----
20  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

BLUE CHIP INCOME AND GROWTH FUND

RISK/RETURN SUMMARY

The fund seeks to produce income exceeding the average yield on U.S. stocks
generally (as represented by the average yield on Standard & Poor's 500
Composite Index) and to provide an opportunity for growth of principal
consistent with sound common stock investing. The fund invests primarily in
common stocks of larger, more established companies based in the United States,
with market capitalizations of $4 billion and above. The fund may also invest
up to 10% of its assets in equity securities of larger, non-U.S. companies, so
long as they are listed or traded in the United States. The fund will invest,
under normal market conditions, at least 90% of its assets in equity
securities. The fund is designed for investors seeking both income and capital
appreciation.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local regional or global
political, social or economic instability; and currency and interest rate
fluctuations.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 21
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower.


Here are the fund's results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

    2002         2003        2004         2005
   -------      -------     ------       ------
   -23.07%      30.73%       9.74%        7.24%


The fund's highest/lowest quarterly results during the time period were:

HIGHEST  17.08% (quarter ended June 30, 2003)
LOWEST  -20.50% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



AVERAGE ANNUAL
TOTAL RETURNS        FUND  S&P 500/1/ CPI/2/
--------------------------------------------

1 Year               7.24%   4.91%     3.42%
--------------------------------------------
5 Years               N/A    0.54%     2.49%
--------------------------------------------
10 Years              N/A    9.07%     2.52%
--------------------------------------------
Lifetime/3/          2.55%   2.27%     2.26%


/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/3/Lifetime results are as of July 5, 2001, the date the fund began investment
   operations.


----
22  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.44%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.70%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $72    $224    $390     $871



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 23
                                                                             ---

<PAGE>

GROWTH-INCOME FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow and provide you with income over
time by investing primarily in common stocks or other securities that
demonstrate the potential for appreciation and/or dividends. The fund may
invest up to 15% of its assets, at the time of purchase, in securities of
issuers domiciled outside the United States and not included in Standard &
Poor's 500 Composite Index. The fund is designed for investors seeking both
capital appreciation and income.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; and currency and interest
rate fluctuations.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
24  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 2 shares were first
offered on April 30, 1997. Results prior to that date assume a hypothetical
investment in Class 1 shares, reduced by the .25% annual expense that applies
to Class 2 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of Class 2
shares because both classes invest in the same portfolio of securities.

Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996    1997    1998    1999   2000   2001    2002    2003    2004    2005
------  ------  ------  ------  -----  -----  ------  ------  ------  -----
18.41%  25.53%  18.09%  11.20%  7.95%  2.56%  -18.34%  32.43%  10.37%  5.83%

The fund's highest/lowest quarterly results during this time period were:

HIGHEST  18.85% (quarter ended December 31, 1998)
LOWEST  -18.70% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                       LIPPER GROWTH
AVERAGE ANNUAL                          AND INCOME
TOTAL RETURNS         FUND  S&P 500/1/ FUNDS INDEX/2/ CPI/3/
------------------------------------------------------------

1 Year                5.83%   4.91%        6.82%      3.42%
------------------------------------------------------------
5 Years               5.31%   0.54%        2.92%      2.49%
------------------------------------------------------------
10 Years             10.56%   9.07%        8.47%      2.52%
------------------------------------------------------------
Lifetime/4/          12.76%  12.83%       11.42%      3.05%


/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper Growth and Income Funds Index is an equally weighted index of funds
   that combine a growth-of-earnings orientation and an income requirement for
   level and/or rising dividends. The results of the underlying funds in the
   index include the reinvestment of dividends and capital gain distributions,
   as well as brokerage commissions paid by the funds for portfolio
   transactions but do not reflect sales charges or taxes. This index was not
   in existence as of the date the fund's Class A shares became available;
   therefore, lifetime results are not shown.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of February 8, 1984, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 25
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.28%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.54%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $55    $173    $302     $677



----
26  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

WORLD GROWTH AND INCOME FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time and provide you with
current income by investing primarily in stocks of well-established companies
located around the world.

The fund is designed for investors seeking both capital appreciation and
income. In pursuing its objective, the fund tends to invest in stocks that the
investment adviser believes to be relatively resilient to market declines.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

Investing in countries with developing economies and/or markets generally
involves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, developing countries may have
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.

No investment results are provided since the fund had not commenced operations
as of the date of this prospectus.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 27
                                                                             ---

<PAGE>
FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.69%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses*                                       0.04%
------------------------------------------------------------------------
            Total annual fund operating expenses+                 0.98%


*Based on estimated amounts for the current fiscal year.

+The Series' investment adviser is waiving 10% of its management fees. The
 waiver will continue at this level until further review.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS
---------------------------

Class 2       $100   $312



----
28  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

ASSET ALLOCATION FUND

RISK/RETURN SUMMARY

The fund seeks to provide you with high total return (including income and
capital gains) consistent with preservation of capital over the long term by
investing in a diversified portfolio of common stocks and other equity
securities, bonds and other intermediate and long-term debt securities, and
money market instruments (debt securities maturing in one year or less). The
fund may invest up to 15% of its assets in equity securities of issuers
domiciled outside the United States and not included in Standard & Poor's 500
Composite Index, and up to 5% of its assets in debt securities of non-U.S.
issuers. In addition, the fund may invest up to 25% of its debt assets in lower
quality debt securities (rated Ba or below by Moody's Investors Service and BB
or below by Standard & Poor's Corporation or unrated but determined to be of
equivalent quality). Under normal market conditions, the fund's investment
adviser expects (but is not required) to maintain an investment mix falling
within the following ranges: 40%-80% in equity securities, 20%-50% in debt
securities and 0%-40% in money market instruments. The fund is designed for
investors seeking above-average total return.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; and currency and interest
rate fluctuations.

Securities held by the fund may also be affected by changing market interest
rates and by changes in effective maturities and credit ratings. For example,
the prices of debt securities in the fund's portfolio generally will decline
when interest rates rise and increase when interest rates fall. In addition,
falling interest rates may cause an issuer to redeem or "call" a security
before its stated maturity, which may result in the fund having to reinvest the
proceeds in lower yielding securities. Debt securities are also subject to
credit risk, which is the possibility that the credit strength of an issuer
will weaken and/or an issuer of a debt security will fail to make timely
payments of principal or interest and the security will go into default. Lower
quality or longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than higher quality
or shorter maturity debt securities. A security backed by the U.S. Treasury or
the full faith and credit of the United States is guaranteed only as to the
timely payment of interest and principal when held to maturity. Accordingly,
the current market prices for these securities will fluctuate with changes in
interest rates.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 29
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 2 shares were first
offered on April 30, 1997. Results prior to that date assume a hypothetical
investment in Class 1 shares, reduced by the .25% annual expense that applies
to Class 2 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of Class 2
shares because both classes invest in the same portfolio of securities.

Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996    1997    1998   1999   2000   2001    2002    2003    2004    2005
------  ------  ------  -----  -----  -----  -------  ------  -----   -----
15.48%  20.15%  12.94%  6.92%  4.40%  0.52%  -12.38%  21.74%  8.34%   9.14%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  12.15% (quarter ended June 30, 2003)
LOWEST  -12.34% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                      CITIGROUP BROAD
AVERAGE ANNUAL                        INVESTMENT-GRADE
TOTAL RETURNS        FUND  S&P 500/1/  BOND INDEX/2/   CPI/3/
-------------------------------------------------------------

1 Year               9.14%   4.91%          2.57%      3.42%
-------------------------------------------------------------
5 Years              4.86%   0.54%          5.93%      2.49%
-------------------------------------------------------------
10 Years             8.29%   9.07%          6.19%      2.52%
-------------------------------------------------------------
Lifetime/4/          9.09%  10.54%          7.39%      2.83%


/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Citigroup Broad Investment-Grade (BIG) Bond Index (formerly Salomon Smith
   Barney Broad Investment-Grade (BIG) Bond Index) is a market
   capitalization-weighted index that includes U.S. Treasury,
   government-sponsored, mortgage and investment-grade fixed-rate corporates
   with a maturity of one year or longer. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of August 1, 1989, the date the fund began
   investment operations.


----
30  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.34%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.60%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $61    $192    $335     $750



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 31
                                                                             ---

<PAGE>

BOND FUND

RISK/RETURN SUMMARY

The fund seeks to maximize your level of current income and preserve your
capital. Normally, the fund invests at least 80% of its assets in bonds. This
policy is subject to change only upon 60 days' notice to shareholders. The fund
will invest at least 65% of its assets in investment-grade debt securities
(including cash and cash equivalents) and may invest up to 35% of its assets in
bonds rated Ba or below by Moody's Investors Service and BB or below by
Standard & Poor's Corporation or unrated but determined to be of equivalent
quality. The fund may invest in bonds of issuers domiciled outside the United
States. The fund may also invest up to 20% of its assets in preferred stocks,
including convertible and nonconvertible preferred stocks. The fund is designed
for investors seeking income and more price stability than stocks, and capital
preservation over the long term.

The values of and the income generated by most debt securities held by the fund
may be affected by changing market interest rates and by changes in effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities. Debt securities are also subject to credit risk, which is
the possibility that the credit strength of an issuer will weaken and/or an
issuer of a debt security will fail to make timely payments of principal or
interest and the security will go into default. Lower quality or longer
maturity debt securities generally have higher rates of interest and may be
subject to greater price fluctuations than higher quality or shorter maturity
debt securities. The fund's investment adviser attempts to reduce these risks
through diversification of the portfolio and with ongoing credit analysis of
each issuer, as well as by monitoring economic and legislative developments.

A security backed by the U.S. Treasury or the full faith and credit of the U.S.
government is guaranteed only as to the timely payment of interest and
principal when held to maturity. Accordingly, the current market prices for
these securities will fluctuate with changes in interest rates. Many types of
debt securities, including mortgage-related securities, are subject to
prepayment risk. For example, when interest rates fall, homeowners are more
likely to refinance their home mortgages and prepay their principal earlier
than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income.

The prices and yields of nonconvertible preferred stocks generally move with
changes in interest rates and the issuer's credit quality, similar to debt
securities. The value of convertible preferred stocks varies in response to
many factors, including, for example, the value of the underlying equity
securities, general market and economic conditions, and convertible market
valuations, as well as changes in interest rates, credit spreads and the credit
quality of the issuer.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
32  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 2 shares were first
offered on April 30, 1997. Results prior to that date assume a hypothetical
investment in Class 1 shares, reduced by the .25% annual expense that applies
to Class 2 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of Class 2
shares because both classes invest in the same portfolio of securities.


  Here are the funds results calculated on a calendar year basis. (If insurance
  contract fees and expenses were included, results would have been lower.)

                                    [CHART]

   1996    1997    1998     1999    2000    2001    2002    2003    2004    2005
   ----    ----    ----     -----   ----    ----     ----   ----    ----    ----
   5.57%   9.88%   4.11%    2.55%   4.99%   8.15%    4.05%  12.80%   5.72%   1.59%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  5.07% (quarter ended December 31, 2002)
LOWEST  -2.16% (quarter ended March 31, 1996)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                           CITIGROUP BROAD
AVERAGE ANNUAL             INVESTMENT-GRADE
TOTAL RETURNS        FUND   BOND INDEX/1/   CPI/2/
--------------------------------------------------

1 year               1.59%      2.57%        3.42%
--------------------------------------------------
5 years              6.39%      5.93%        2.49%
--------------------------------------------------
10 years              N/A       6.19%        2.52%
--------------------------------------------------
Lifetime/3/          5.89%      6.19%        2.52%


/1/Citigroup Broad Investment-Grade (BIG) Bond Index (formerly Salomon Smith
   Barney Broad Investment-Grade (BIG) Bond Index) is a market
   capitalization-weighted index that includes U.S. Treasury,
   government-sponsored, mortgage and investment-grade fixed-rate corporates
   with a maturity of one year or longer. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/2/Consumer Price Index (CPI) is a measure of the average change over time in
  the prices paid by urban consumers for a market basket of consumer goods and
  services. Widely used as a measure of inflation, the CPI is computed by the
  U.S. Department of Labor, Bureau of Labor Statistics.

/3/Lifetime results are as of January 2, 1996, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 33
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.43%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.69%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $70    $221    $384     $859



----
34  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

HIGH-INCOME BOND FUND

RISK/RETURN SUMMARY

The fund seeks to provide you with a high level of current income and,
secondarily, capital appreciation by investing at least 65% of its assets in
higher yielding and generally lower quality debt securities (rated Ba or below
by Moody's Investors Service or BB or below by Standard & Poor's Corporation or
unrated but determined to be of equivalent quality). The fund may also invest
up to 25% of its assets in securities of non-U.S. issuers. Normally, the fund
invests at least 80% of its assets in bonds. This policy is subject to change
only upon 60 days' notice to shareholders. The fund may also invest up to 20%
of its assets in equity securities that provide an opportunity for capital
appreciation. The fund is designed for investors seeking a high level of
current income and who are able to tolerate greater credit risk and price
fluctuations than funds investing in higher quality bonds.

The values of and the income generated by most debt securities held by the fund
may be affected by changing market interest rates and by changes in effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities. Debt securities are also subject to credit risk, which is
the possibility that the credit strength of an issuer will weaken and/or an
issuer of a debt security will fail to make timely payments of principal or
interest and the security will go into default. Lower quality or longer
maturity debt securities generally have higher rates of interest and may be
subject to greater price fluctuations than higher quality or shorter maturity
debt securities.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; and currency and interest
rate fluctuations.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.
The fund's investment adviser attempts to reduce these risks through
diversification of the portfolio and with ongoing credit analysis of each
issuer, as well as by monitoring economic and legislative developments.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 35
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 2 shares were first
offered on April 30, 1997. Results prior to that date assume a hypothetical
investment in Class 1 shares, reduced by the .25% annual expense that applies
to Class 2 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of Class 2
shares because both classes invest in the same portfolio of securities.

Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

  1996   1997    1998   1999    2000   2001    2002    2003    2004    2005
 ------  ------  -----  -----  ------  -----  ------  ------   -----   -----
 12.91%  12.08%  0.27%  5.53%  -3.31%  7.73%  -1.83%  29.51%   9.59%   2.20%

The fund's highest/lowest quarterly results during this time period were:

HIGHEST 10.65% (quarter ended December 31, 2002)
LOWEST  -9.10% (quarter ended June 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                            CREDIT SUISSE                     LIPPER
                            FIRST BOSTON  CITIGROUP BROAD  HIGH CURRENT
AVERAGE ANNUAL               HIGH YIELD   INVESTMENT-GRADE  YIELD BOND
TOTAL RETURNS         FUND  BOND INDEX/1/  BOND INDEX/2/   FUNDS INDEX/3/ CPI/4/
--------------------------------------------------------------------------------

1 Year                2.20%     2.26%           2.57%          3.00%      3.42%
--------------------------------------------------------------------------------
5 Years               8.94%     9.83%           5.93%          6.76%      2.49%
--------------------------------------------------------------------------------
10 Years              7.10%     7.13%           6.19%          5.30%      2.52%
--------------------------------------------------------------------------------
Lifetime/5/          10.05%      N/A            8.80%          8.01%      3.05%


/1/Credit Suisse First Boston High Yield Bond Index is designed to mirror the
   investible universe of the U.S. dollar-denominated high-yield debt market.
   This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper High Current Yield Bond Funds Index is an equally weighted index of
   funds that aim at high (relative) current yield from fixed-income
   securities, have no quality or maturity restrictions and tend to invest in
   lower grade debt issues. The results of the underlying funds in the average
   include reinvestment of dividends and capital gain distributions, as well as
   brokerage commissions paid by the funds for portfolio transactions, but do
   not reflect sales charges or taxes.

/3/Citigroup Broad Investment-Grade (BIG) Bond Index (formerly Salomon Smith
   Barney Broad Investment-Grade (BIG) Bond Index) is a market
   capitalization-weighted index that includes U.S. Treasury,
   government-sponsored, mortgage and investment-grade fixed-rate corporates
   with a maturity of one year or longer. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/4/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/5/Lifetime results are as of February 8, 1984, the date the fund began
   investment operations.


----
36  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.49%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.75%


*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $77    $240    $417     $930



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 37
                                                                             ---

<PAGE>

U.S. GOVERNMENT/AAA-RATED SECURITIES FUND

RISK/RETURN SUMMARY

The fund seeks to provide you with a high level of current income, as well as
to preserve your investment. Normally, the fund will invest at least 80% of its
assets in securities that are guaranteed by the "full faith and credit" pledge
of the U.S. government or debt securities that are rated Aaa by Moody's
Investors Service or AAA by Standard & Poor's Corporation or unrated but
determined to be of equivalent quality. This policy is subject to change only
upon 60 days' notice to shareholders. The fund is designed for investors
seeking income and more price stability than from investing in stocks and lower
quality debt securities, and capital preservation over the long term.

The fund may also invest a significant portion of its assets in securities
backed by pools of mortgages. Certain of these securities may not be backed by
the full faith and credit of the U.S. government and are supported only by the
credit of the issuer. Such securities may include mortgage-backed securities
issued by the Federal National Mortgage Association ("Fannie Mae") and the
Federal Home Loan Mortgage Corporation ("Freddie Mac") and are neither issued
nor guaranteed by the U.S. Treasury.

The values of and the income generated by most debt securities held by the fund
may be affected by changing market interest rates and prepayment risk. For
example, as with other debt securities, the value of U.S. government securities
generally will decline when interest rates rise and increase when interest
rates fall. In addition, falling interest rates may cause an issuer to redeem
or "call" a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest but may be subject to
greater price fluctuations than shorter maturity securities.

A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. Accordingly, the current market prices for
such securities will fluctuate.

Many types of debt securities, including mortgage-related securities, are
subject to prepayment risk. For example, when interest rates fall, homeowners
are more likely to refinance their home mortgages and prepay their principal
earlier than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
38  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 2 shares were first
offered on April 30, 1997. Results prior to that date assume a hypothetical
investment in Class 1 shares, reduced by the .25% annual expense that applies
to Class 2 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of Class 2
shares because both classes invest in the same portfolio of securities.

Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

   1996   1997   1998    1999    2000   2001   2002    2003   2004    2005
  -----   -----  -----  ------  ------  -----  -----   -----  -----   -----
  2.84%   8.21%  7.93%  -0.78%  11.39%  7.02%  9.15%   2.28%  3.30%   2.41%

The fund's highest/lowest quarterly results during this time period were:

               (quarter ended September
HIGHEST  4.58% 30, 2001)
LOWEST  -2.07% (quarter ended March 31, 1996)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                           CITIGROUP
                           TREASURY/
                             GOVT.
                           SPONSORED/
AVERAGE ANNUAL              MORTGAGE
TOTAL RETURNS        FUND   INDEX/1/  CPI/2/
--------------------------------------------

1 year               2.41%   2.71%     3.42%
--------------------------------------------
5 years              4.80%   5.46%     2.49%
--------------------------------------------
10 years             5.31%   6.04%     2.52%
--------------------------------------------
Lifetime/3/          6.85%   7.88%     2.99%


/1/Citigroup Treasury/Government Sponsored/Mortgage Index (formerly Salomon
   Smith Barney Treasury/Government Sponsored/Mortgage Index) is a
   market-weighted index that includes U.S. Treasury and agency securities, as
   well as FNMAs, FHLMCs and GNMAs. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/2/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/3/Lifetime results are as of December 2, 1985, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 39
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.46%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.72%


*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $74    $230    $401     $894



----
40  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

CASH MANAGEMENT FUND

RISK/RETURN SUMMARY

The fund seeks to provide you an opportunity to earn income on your cash
reserves while preserving the value of your investment and maintaining
liquidity. Normally, the fund invests substantially in high-quality money
market instruments, such as commercial paper, commercial bank obligations,
savings association obligations, U.S. or Canadian government securities, and
short-term corporate bonds and notes. These securities may have credit and
liquidity enhancements. Changes in the credit quality of banks and financial
institutions providing these enhancements could cause the fund to experience a
loss and may affect its share price.

In addition, the fund may invest in securities issued by non-U.S. or Canadian
entities or in securities with credit and liquidity support features provided
by non-U.S. or Canadian entities. These securities may be affected by
unfavorable political, economic or governmental developments that could affect
the repayment of principal or the payment of interest. Securities of U.S.
issuers with substantial operations outside the United States may also be
subject to similar risks.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.

The fund is not managed to maintain a stable net asset value of $1 per share.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 41
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year as well as average annual total returns for various periods.
This information provides some indication of the risks of investing in the
fund. Past results are not predictive of future results. Figures shown reflect
fees and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 2 shares were first
offered on April 30, 1997. Results prior to that date assume a hypothetical
investment in Class 1 shares, reduced by the .25% annual expense that applies
to Class 2 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of Class 2
shares because both classes invest in the same portfolio of securities.

                                    [CHART]
Here are the funds results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

1996    1997    1998    1999     2000    2001    2002    2003    2004    2005
----    ----    ----    ----     ----    ----    ----    ----    ----    ----
4.81%   4.92%   4.90%   4.47%    5.83%   3.43%   1.00%   0.47%   0.70%   2.68%

The fund's highest/lowest quarterly results during this time period were:

HIGHEST 1.51% (quarter ended September 30, 2000)
LOWEST  0.06% (quarter ended June 30, 2004)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



AVERAGE ANNUAL
TOTAL RETURNS        FUND
--------------------------

1 year               2.68%
--------------------------
5 years              1.65%
--------------------------
10 years             3.30%
--------------------------
Lifetime*            4.61%


*Lifetime results are as of February 8, 1984, the date the fund began
 investment operations.


----
42  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 2
------------------------------------------------------------------------

            Management fees                                       0.32%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.25%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.58%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 2       $59    $186    $324     $726



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 43
                                                                             ---

<PAGE>

CASH POSITION

The funds may also hold cash or money market instruments, the amount of which
will vary and will depend on various factors, including market conditions and
purchases and redemptions of fund shares. A larger amount of such holdings
could negatively affect a fund's investment results in a period of rising
market prices; conversely, it could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

MANAGEMENT AND ORGANIZATION

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the Series and
other mutual funds, including the American Funds. Capital Research and
Management Company is a wholly owned subsidiary of The Capital Group Companies,
Inc. and is located at 333 South Hope Street, Los Angeles, California 90071,
and 135 South State College Boulevard, Brea, California 92821. Capital Research
and Management Company manages the investment portfolios and business affairs
of the Series.

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the funds'
portfolio transactions. The investment adviser strives to obtain best execution
on the funds' equity and/or fixed-income portfolio transactions, taking into
account a variety of factors to produce the most favorable total price
reasonably attainable under the circumstances. These factors include the size
and type of transaction, the cost and quality of executions, and the
broker-dealer's ability to offer liquidity and anonymity. For example, with
respect to equity transactions, the funds do not consider the investment
adviser as having an obligation to obtain the lowest available commission rate
to the exclusion of price, service and qualitative considerations. Subject to
the considerations outlined above, the funds' investment adviser may place
orders for the funds' portfolio transactions with broker-dealers who have sold
shares of the funds, as well as shares of the American Funds, or who have
provided investment research, statistical or other related services to the
investment adviser. In placing orders for the funds' portfolio transactions,
the investment adviser does not commit to any specific amount of business with
any particular broker-dealer. Subject to best execution, the investment adviser
may consider investment research, statistical or other related services
provided to the adviser in placing orders for the funds' portfolio
transactions. However, when the investment adviser places orders for the funds'
portfolio transactions, it does not give any consideration to whether a
broker-dealer has sold shares of the funds or the American Funds.

PORTFOLIO MANAGEMENT

The Series relies on the professional judgment of its investment adviser,
Capital Research and Management Company, to make decisions about the funds'
portfolio investments. The basic investment philosophy of the investment
adviser is to seek to invest in attractively priced securities that, in its
opinion, represent above-average long-term investment opportunities. The
investment adviser believes that an important way to accomplish this is through
fundamental analysis, including meeting with company executives and employees,
suppliers, customers and competitors. Securities may be sold when the
investment adviser believes that they no longer represent relatively attractive
investment opportunities.

PORTFOLIO HOLDINGS

A description of the funds' policies and procedures regarding disclosure of
information about their portfolio securities is available in the statement of
additional information.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio
of a fund is divided into segments managed by individual counselors. Counselors
decide how their respective segments will be invested. In addition, Capital
Research and Management Company's investment analysts may make investment
decisions with respect to a portion of a fund's portfolio. Investment decisions
are subject to a fund's objective(s), policies and restrictions and the
oversight of Capital Research and Management Company's investment committee.


----
44  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

The primary individual portfolio counselors for each of the funds are:




                                                            PRIMARY TITLE WITH INVESTMENT
PORTFOLIO COUNSELOR FOR THE  PORTFOLIO COUNSELOR EXPERIENCE  ADVISER (OR AFFILIATE) AND    PORTFOLIO COUNSELOR'S ROLE IN
SERIES/TITLE (IF APPLICABLE)         IN THE FUND(S)             INVESTMENT EXPERIENCE        MANAGEMENT OF THE FUND(S)
-------------------------------------------------------------------------------------------------------------------------

 JAMES K. DUNTON              Growth-Income Fund -- 22      Senior Vice President and      An equity portfolio counselor
 VICE CHAIRMAN OF THE BOARD   years (since the fund's       Director, Capital Research     for Growth-Income Fund and
                              inception)                    and Management Company         Blue Chip Income and Growth
                              Blue Chip Income and          Investment professional for    Fund
                              Growth Fund -- 5 years        44 years, all with Capital
                              (since the fund's inception)  Research and Management
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
 DONALD D. O'NEAL             Growth-Income Fund --         Senior Vice President,         An equity portfolio counselor
 PRESIDENT AND TRUSTEE         1 year                       Capital Research and           for Growth-Income Fund
                                                            Management Company
                                                            Investment professional for
                                                            21 years, all with Capital
                                                            Research and Management
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
 ALAN N. BERRO                Asset Allocation Fund -- 6    Vice President, Capital        An equity portfolio counselor
 SENIOR VICE PRESIDENT        years                         Research and Management        for Asset Allocation Fund
                                                            Company
                                                            Investment professional for
                                                            20 years in total; 15 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 ABNER D. GOLDSTINE           Bond Fund -- 10 years         Senior Vice President and      A fixed-income portfolio
 SENIOR VICE PRESIDENT        (since the fund's inception)  Director, Capital Research     counselor for Bond Fund and
                              High-Income Bond Fund --      and Management Company         High-Income Bond Fund
                               8 years                      Investment professional for
                                                            54 years in total; 39 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 JOHN H. SMET                 Bond Fund -- 10 years         Senior Vice President,         A fixed-income portfolio
 SENIOR VICE PRESIDENT        (since the fund's inception)  Capital Research and           counselor for Bond Fund and
                              U.S. Government/AAA-          Management Company             U.S. Government/AAA-Rated
                              Rated Securities Fund -- 14   Investment professional for    Securities Fund
                              years                         24 years in total; 23 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 CLAUDIA P. HUNTINGTON        Growth-Income Fund -- 12      Senior Vice President,         An equity portfolio counselor
 VICE PRESIDENT               years (plus 5 years of prior  Capital Research and           for Growth-Income Fund and
                              experience as an investment   Management Company             Global Discovery Fund
                              analyst for the fund)         Investment professional for
                              Global Discovery Fund -- 5    33 years in total; 31 years
                              years (since the fund's       with Capital Research and
                              inception)                    Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 ROBERT W. LOVELACE           Global Growth Fund -- 9       Chairman, Capital Research     An equity portfolio counselor
 VICE PRESIDENT               years (since the fund's       Company                        for Global Growth Fund and
                              inception)                    Investment professional for    New World Fund and a non-U.S.
                              International Fund -- 12      21 years, all with Capital     equity portfolio counselor
                              years                         Research and Management        for International Fund
                              New World Fund -- 7 years     Company or affiliate
                              (since the fund's inception)
-------------------------------------------------------------------------------------------------------------------------
 SUSAN M. TOLSON              High-Income Bond Fund --      Senior Vice President,         A fixed-income portfolio
 VICE PRESIDENT                11 years (plus 2 years of    Capital Research Company       counselor for High-Income
                              prior experience as an        Investment professional for    Bond Fund and Asset
                              investment analyst for the    18 years in total; 16 years    Allocation Fund
                              fund)                         with Capital Research and
                              Asset Allocation Fund -- 6    Management Company or
                              years                         affiliate
-------------------------------------------------------------------------------------------------------------------------
 DAVID C. BARCLAY             High-Income Bond Fund --      Senior Vice President,         A fixed-income portfolio
                               13 years                     Capital Research and           counselor for High-Income
                              New World Fund -- 7 years     Management Company             Bond Fund, New World Fund and
                              (since the fund's inception)  Investment professional for    Bond Fund
                              Bond Fund -- 8 years          25 years in total; 18 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 DONNALISA BARNUM             Growth Fund -- 3 years        Senior Vice President,         An equity portfolio counselor
                                                            Capital Research Company       for Growth Fund
                                                            Investment professional for
                                                            25 years in total; 20 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 GORDON CRAWFORD              Global Small Capitalization   Senior Vice President and      An equity portfolio counselor
                              Fund --                       Director, Capital Research     (primarily U.S.) for Global
                              8 years (since the fund's     and Management Company         Small Capitalization Fund,
                              inception)                    Investment professional for    Growth Fund and Global
                              Growth Fund -- 12 years       35 years, all with Capital     Discovery Fund
                              (plus 5 years of prior        Research and Management
                              experience as an investment   Company or affiliate
                              analyst for the fund)
                              Global Discovery Fund --
                               1 year
-------------------------------------------------------------------------------------------------------------------------
 MARK H. DALZELL              Bond Fund -- 1 year           Senior Vice President,         [to be provided]
                                                            Capital Research Company
                                                            Investment professional for
                                                            28 years in total; 18 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 MARK E. DENNING              Global Small Capitalization   Director, Capital Research     An equity portfolio counselor
                              Fund --                       and Management Company         (primarily non-U.S.) for
                              8 years (since the fund's     Investment professional for    Global Small Capitalization
                              inception)                    24 years, all with Capital     Fund and Global Discovery Fund
                              Global Discovery Fund --      Research and Management
                               1 year                       Company or affiliate



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 45
                                                                             ---

<PAGE>




                                                            PRIMARY TITLE WITH INVESTMENT
PORTFOLIO COUNSELOR FOR THE  PORTFOLIO COUNSELOR EXPERIENCE  ADVISER (OR AFFILIATE) AND    PORTFOLIO COUNSELOR'S ROLE IN
SERIES/TITLE (IF APPLICABLE)        IN THE FUND(S)              INVESTMENT EXPERIENCE        MANAGEMENT OF THE FUND(S)
-------------------------------------------------------------------------------------------------------------------------

    J. BLAIR FRANK           Global Small Capitalization    Vice President, Capital        An equity portfolio counselor
                             Fund --                        Research Company               (primarily U.S.) for Global
                             3 years                        Investment professional for    Small Capitalization Fund and
                             Growth Fund -- 6 years (plus   13 years in total; 12 years    an equity portfolio counselor
                             3 years of prior experience    with Capital Research and      for
                             as an investment analyst for   Management Company or          Growth Fund
                             the fund)                      affiliate
-------------------------------------------------------------------------------------------------------------------------
    NICK J. GRACE            Global Growth Fund -- 4 years  Senior Vice President,         An equity portfolio counselor
                             (plus 4 years of prior         Capital Research Company       for Global Growth Fund
                             experience as an investment    Investment professional for
                             analyst for the fund)          16 years in total; 12 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    J. DALE HARVEY           Blue Chip Income and Growth    Vice President, Capital        An equity portfolio counselor
                             Fund -- 1 year                 Research and Management        for Blue Chip Income and
                                                            Company                        Growth Fund
                                                            Investment professional for
                                                            17 years in total; 15 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    ALWYN W. HEONG           International Fund -- 10 years Senior Vice President and      A non-U.S. equity portfolio
                                                            Director, Capital Research     counselor for International
                                                            Company                        Fund
                                                            Investment professional for
                                                            18 years in total; 14 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    THOMAS H. HOGH           U.S. Government/AAA-Rated      Vice President, Capital        A fixed-income portfolio
                             Securities Fund -- 9 years     International Research, Inc.   counselor for U.S.
                                                            Investment professional for    Government/AAA-Rated
                                                            19 years in total; 16 years    Securities Fund
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    CARL M. KAWAJA           New World Fund -- 7 years      Senior Vice President,         An equity portfolio counselor
                             (since the fund's inception)   Capital Research Company       for New World Fund
                                                            Investment professional for
                                                            18 years in total; 15 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    MICHAEL T. KERR          Asset Allocation Fund -- 1     Vice President, Capital        An equity portfolio counselor
                             year                           Research and Management        for Asset Allocation Fund
                             Growth Fund -- 1 year          Company
                                                            Investment professional for
                                                            23 years in total; 21 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    SUNG LEE                 International Fund -- less     Executive Vice President and   [to be provided]
                             than 1 year                    Director, Capital Research
                                                            Company
                                                            Investment professional for
                                                            12 years, all with Capital
                                                            Research and Management
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
    MICHAEL D. LOCKE         U.S. Government/AAA-Rated      Vice President, Capital        A fixed-income portfolio
                             Securities Fund -- 3 years     Research Company               counselor for U.S.
                             (plus 6 years of prior         Investment professional for    Government/AAA-Rated
                             experience as an investment    11 years in total; 10 years    Securities Fund
                             analyst for the fund)          with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    JAMES R. MULALLY         Asset Allocation Fund -- less  Senior Vice President,         [to be provided]
                             than 1 year                    Capital International Limited
                                                            Investment professional for
                                                            30 years in total; 26 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    RONALD B. MORROW         Growth Fund -- 3 years (plus   Senior Vice President,         An equity portfolio counselor
                             6 years of prior experience    Capital Research Company       for Growth Fund
                             as an investment analyst for   Investment professional for
                             the fund)                      38 years in total; 9 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    ROBERT G. O'DONNELL      Growth-Income Fund -- 16       Senior Vice President and      An equity portfolio counselor
                             years (plus 1 year of prior    Director, Capital Research     for Growth-Income Fund
                             experience as an investment    and Management Company
                             analyst for the fund)          Investment professional for
                                                            34 years in total; 31 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    C. ROSS SAPPENFIELD      Growth-Income Fund -- 7 years  Vice President, Capital        An equity portfolio counselor
                             Blue Chip Income and Growth    Research and Management        for Growth-Income Fund and
                             Fund -- 5 years (since the     Company                        Blue Chip Income and Growth
                             fund's inception)              Investment professional for    Fund
                                                            14 years, all with Capital
                                                            Research and Management
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
    STEVEN T. WATSON         Global Growth Fund -- 4 years  Senior Vice President and      An equity portfolio counselor
                             (plus 4 years of prior         Director, Capital Research     for Global Growth Fund
                             experience as an investment    Company
                             analyst for the fund)          Investment professional for
                                                            19 years in total; 16 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate




----
46  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

Additional information regarding the portfolio counselors' compensation,
holdings in other accounts and ownership of securities in American Funds
Insurance Series can be found in the statement of additional information.

PURCHASES AND REDEMPTIONS OF SHARES

Shares of the Series are currently offered only to insurance company separate
accounts. All such shares may be purchased or redeemed by the separate accounts
at net asset values without any sales or redemption charges. Such purchases and
redemptions are made promptly after corresponding purchases and redemptions of
units of the separate accounts.

FREQUENT TRADING OF FUND SHARES

The Series and American Funds Distributors, Inc., the Series' distributor,
reserve the right to reject any purchase order for any reason. The funds are
not designed to serve as vehicles for frequent trading in response to
short-term fluctuations in the securities markets. Accordingly, purchases,
including those that are part of exchange activity, that the Series or American
Funds Distributors, Inc. has determined could involve actual or potential harm
to any fund may be rejected. Frequent trading of fund's shares may lead to
increased costs to that fund and less efficient management of the fund's
portfolio, resulting in dilution of the value of the shares held by long-term
shareholders.

The Series' board of trustees has adopted policies and procedures with respect
to frequent purchases and redemptions of fund shares. Under a new "purchase
blocking policy," beginning on January 12, 2005, any contract owner redeeming
units representing a beneficial interest in any fund other than Cash Management
Fund (including redemptions that are part of an exchange transaction) having a
value of $5,000 or more will be precluded from investing in units of beneficial
interest in that fund (including investments that are part of an exchange
transaction) for 30 calendar days after the redemption transaction. This
prohibition will not apply to redemptions by contract owners whose units are
held on the books of insurance company separate accounts that have not adopted
procedures to implement this policy or to redemptions by other registered
investment companies sponsored by insurance companies. American Funds Service
Company, the Series' transfer agent, will work with the insurance companies to
develop such procedures or other procedures that American Funds Service Company
determines are reasonably designed to achieve the objective of the purchase
blocking policy. At the time the insurance companies adopt these procedures,
contract owners whose units are held on the books of such companies will be
subject to this general purchase blocking policy. Under this purchase blocking
policy, certain purchases will not be prevented and certain redemptions will
not trigger a purchase block, such as: systematic redemptions and purchases
where the entity maintaining the contract owner's account is able to identify
the transaction as a systematic redemption or purchase; purchases and
redemptions of units representing a beneficial interest in a fund having a
value of less than $5,000; retirement plan contributions, loans and
distributions (including hardship withdrawals) identified as such on the
retirement plan recordkeeper's system; and purchase transactions involving
transfer of assets, rollovers, Roth IRA conversions and IRA
re-characterizations, where the entity maintaining the contract owner's account
is able to identify the transaction as one of these types of transactions.


VALUING SHARES

Each fund calculates its share price, also called net asset value, each day the
New York Stock Exchange is open as of approximately 4:00 p.m. New York time,
the normal close of regular trading. Assets are valued primarily on the basis
of market quotations. However, the funds have adopted procedures for making
"fair value" determinations if market quotations are not readily available. For
example, if events occur between the close of markets outside the United States
and the close of regular trading on the New York Stock Exchange that, in the
opinion of the investment adviser, materially affect the value of the portfolio
securities of Global Discovery Fund, Global Growth Fund, Global Small
Capitalization Fund, International Fund, New World Fund and World Growth and
Income Fund (collectively, the "International Funds"), the securities will be
valued in accordance with fair value procedures. Use of these procedures is
intended to result in more appropriate net asset values. In addition, such use
will reduce, if not eliminate, potential arbitrage opportunities otherwise
available to short-term investors in the International Funds.


Because certain of the funds may hold securities that are primarily listed on
foreign exchanges that trade on weekends or days when the funds do not price
their shares, the value of securities held in the funds may change on days when
you will not be able to purchase or redeem fund shares.

Shares of the funds will be purchased or sold at the net asset value next
determined after receipt of requests from the appropriate insurance company.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 47
                                                                             ---

<PAGE>

PLANS OF DISTRIBUTION

The Series has adopted plans of distribution or "12b-1 plans" for Class 2 and
Class 3 shares. Under these plans, the Series may finance activities primarily
intended to sell shares, provided the categories of expenses are approved in
advance by the Series' board of trustees. The plans provide for annual expenses
of .25% for Class 2 shares and .18% for Class 3 shares. For these share
classes, amounts paid under the 12b-1 plans are used by insurance company
contract issuers to cover the expenses of certain contract owner services. The
12b-1 fees paid by the Series, as a percentage of average net assets, for the
previous fiscal year, are indicated above in the Annual Fund Operating Expenses
table for each fund. Since these fees are paid out of the Series' assets or
income on an ongoing basis, over time they will increase the cost and reduce
the return of an investment.


DISTRIBUTIONS AND TAXES

Each fund of the Series intends to qualify as a "regulated investment company"
under the Internal Revenue Code. In any fiscal year in which a fund so
qualifies and distributes to shareholders its investment company taxable income
and net realized capital gain, the fund itself is relieved of federal income
tax.

It is the Series' policy to distribute to the shareholders (the insurance
company separate accounts) all of its investment company taxable income and
capital gain for each fiscal year.

See the applicable contract prospectus for information regarding the federal
income tax treatment of the contracts and distributions to the separate
accounts.


----
48  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

                     [This page intentionally left blank]


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 49
                                                                             ---

<PAGE>

FINANCIAL HIGHLIGHTS/1/

The Financial Highlights table is intended to help you understand the funds'
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in a fund (assuming reinvestment of all dividends and capital gain
distributions). This information has been audited by PricewaterhouseCoopers
LLP, whose report, along with the funds' financial statements, is included in
the statement of additional information, which is available upon request.
Figures shown do not reflect insurance contract expenses. If reflected, results
would be lower.



                      Income (loss) from investment operations/2/      Dividends and distributions
                      ------------------------------------------  -------------------------------------

                                      Net gains
            Net asset    Net         (losses) on                  Dividends                    Total     Net asset
             value,   investment   securities (both   Total from  (from net  Distributions   dividends    value,
Period      beginning   income       realized and     investment  investment (from capital      and       end of   Total
ended       of period   (loss)       unrealized)      operations   income)      gains)     distributions  period   return


Global Discovery Fund/4/
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $10.79      $.14           $ 1.05          $ 1.19      $(.11)        $(.24)        $(.35)    $11.63    11.07%
12/31/04       9.94       .08              .98            1.06       (.09)         (.12)         (.21)     10.79    10.72
12/31/03       7.26       .05             2.67            2.72       (.04)           --          (.04)      9.94    37.41
12/31/02       9.30       .06            (2.05)          (1.99)      (.05)           --          (.05)      7.26   (21.41)
12/31/01      10.00       .04             (.70)           (.66)      (.04)           --          (.04)      9.30    (6.65)
CLASS 2
12/31/05      10.76       .11             1.05            1.16       (.09)         (.24)         (.33)     11.59    10.80
12/31/04       9.92       .06              .97            1.03       (.07)         (.12)         (.19)     10.76    10.43
12/31/03       7.25       .02             2.67            2.69       (.02)           --          (.02)      9.92    37.11
12/31/02       9.30       .04            (2.05)          (2.01)      (.04)           --          (.04)      7.25   (21.67)
12/31/01      10.00       .02             (.69)           (.67)      (.03)           --          (.03)      9.30    (6.71)

Global Growth Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $17.31      $.28           $ 2.19          $ 2.47      $(.15)       $   --        $ (.15)    $19.63    14.37%
12/31/04      15.30       .18             1.92            2.10       (.09)           --          (.09)     17.31    13.80
12/31/03      11.35       .12             3.91            4.03       (.08)           --          (.08)     15.30    35.63
12/31/02      13.42       .09            (2.02)          (1.93)      (.14)           --          (.14)     11.35   (14.46)
12/31/01      17.25       .18            (2.50)          (2.32)      (.15)        (1.36)        (1.51)     13.42   (13.99)
CLASS 2
12/31/05      17.23       .23             2.18            2.41       (.12)           --          (.12)     19.52    14.07
12/31/04      15.25       .14             1.91            2.05       (.07)           --          (.07)     17.23    13.49
12/31/03      11.32       .09             3.89            3.98       (.05)           --          (.05)     15.25    35.27
12/31/02      13.38       .06            (2.01)          (1.95)      (.11)           --          (.11)     11.32   (14.64)
12/31/01      17.21       .13            (2.49)          (2.36)      (.11)        (1.36)        (1.47)     13.38   (14.22)

Global Small Capitalization Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $17.14     $ .13           $ 4.23          $ 4.36      $(.21)        $  --         $(.21)    $21.29    25.66%
12/31/04      14.15       .02             2.97            2.99         --            --            --      17.14    21.13
12/31/03       9.27     --/5/             4.97            4.97       (.09)           --          (.09)     14.15    53.92
12/31/02      11.52     --/5/            (2.15)          (2.15)      (.10)           --          (.10)      9.27   (18.83)
12/31/01      14.28       .03            (1.81)          (1.78)      (.13)         (.85)         (.98)     11.52   (12.63)
CLASS 2
12/31/05      17.02       .09             4.19            4.28       (.18)           --          (.18)     21.12    25.35
12/31/04      14.08      (.01)            2.95            2.94         --            --            --      17.02    20.88
12/31/03       9.23      (.03)            4.95            4.92       (.07)           --          (.07)     14.08    53.53
12/31/02      11.48      (.02)           (2.15)          (2.17)      (.08)           --          (.08)      9.23   (19.05)
12/31/01      14.24     --/5/            (1.80)          (1.80)      (.11)         (.85)         (.96)     11.48   (12.85)

Growth Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $51.39      $.46          $  8.00         $  8.46      $(.49)      $    --       $  (.49)    $59.36    16.50%
12/31/04      45.74       .32             5.51            5.83       (.18)           --          (.18)     51.39    12.75
12/31/03      33.47       .16            12.26           12.42       (.15)           --          (.15)     45.74    37.15
12/31/02      44.30       .12           (10.87)         (10.75)      (.08)           --          (.08)     33.47   (24.27)
12/31/01      73.51       .18           (11.99)         (11.81)      (.41)       (16.99)       (17.40)     44.30   (17.93)
CLASS 2
12/31/05      51.10       .34             7.92            8.26       (.38)           --          (.38)     58.98    16.19
12/31/04      45.50       .23             5.45            5.68       (.08)           --          (.08)     51.10    12.50
12/31/03      33.29       .06            12.19           12.25       (.04)           --          (.04)     45.50    36.80
12/31/02      44.09       .03           (10.82)         (10.79)      (.01)           --          (.01)     33.29   (24.46)
12/31/01      73.28       .04           (11.94)         (11.90)      (.30)       (16.99)       (17.29)     44.09   (18.15)
CLASS 3
12/31/05      51.38       .37             7.98            8.35       (.39)           --          (.39)     59.34    16.28
12/31/04/7/   47.74       .24             3.50            3.74       (.10)           --          (.10)     51.38     7.85





                         Ratio of   Ratio of   Ratio of
                         expenses   expenses     net
            Net assets, to average to average   income
              end of    net assets net assets (loss) to
Period      period (in    before     after     average
ended        millions)    waiver   waiver/3/  net assets


Global Discovery Fund/4/
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05          $22        .61%       .56%      1.27%
12/31/04           20        .61        .60        .81
12/31/03           17        .61        .61        .55
12/31/02           10        .61        .61        .69
12/31/01           12        .31        .31        .42
CLASS 2
12/31/05           89        .86        .81       1.04
12/31/04           51        .86        .85        .60
12/31/03           24        .86        .86        .28
12/31/02            9        .86        .86        .48
12/31/01            4        .42        .42        .21

Global Growth Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05       $  206        .62%       .57%      1.56%
12/31/04          202        .65        .64       1.15
12/31/03          188        .70        .70        .94
12/31/02          152        .71        .71        .73
12/31/01          215        .70        .70       1.24
CLASS 2
12/31/05        2,617        .87        .82       1.30
12/31/04        1,796        .90        .89        .92
12/31/03        1,082        .95        .95        .68
12/31/02          592        .96        .96        .48
12/31/01          600        .95        .95        .88

Global Small Capitalization Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05       $  231        .79%       .73%       .72%
12/31/04          193        .81        .80        .15
12/31/03          163        .83        .83       (.03)
12/31/02          108        .84        .84        .04
12/31/01          149        .83        .83        .21
CLASS 2
12/31/05        1,977       1.04        .97        .49
12/31/04        1,198       1.06       1.05       (.07)
12/31/03          665       1.08       1.08       (.28)
12/31/02          290       1.09       1.09       (.20)
12/31/01          274       1.08       1.08       (.05)

Growth Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05      $ 3,709        .35%       .32%       .87%
12/31/04        3,744        .36        .36        .68
12/31/03        3,877        .39        .39        .41
12/31/02        3,195        .40        .40        .30
12/31/01        5,207        .38        .38        .34
CLASS 2
12/31/05       18,343        .60        .57        .64
12/31/04       12,055        .61        .61        .50
12/31/03        7,107        .64        .64        .16
12/31/02        3,009        .65        .65        .07
12/31/01        2,937        .63        .63        .07
CLASS 3
12/31/05          499        .53        .50        .69
12/31/04/7/       516     .54/6/     .53/6/     .54/6/



----
50  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>



                      Income (loss) from investment operations/2/      Dividends and distributions
                      ------------------------------------------  -------------------------------------

                                      Net gains
            Net asset    Net         (losses) on                  Dividends                    Total     Net asset
             value,   investment   securities (both   Total from  (from net  Distributions   dividends    value,
Period      beginning   income       realized and     investment  investment (from capital      and       end of   Total
ended       of period   (loss)       unrealized)      operations   income)      gains)     distributions  period   return


International Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $15.82      $.32           $ 3.11          $ 3.43      $(.29)       $   --       $ (.29)     $18.96    21.75%
12/31/04      13.41       .22             2.41            2.63       (.22)           --         (.22)      15.82    19.66
12/31/03      10.07       .15             3.38            3.53       (.19)           --         (.19)      13.41    35.12
12/31/02      12.02       .15            (1.90)          (1.75)      (.20)           --         (.20)      10.07   (14.58)
12/31/01      20.59       .22            (3.79)          (3.57)      (.20)        (4.80)       (5.00)      12.02   (19.73)
CLASS 2
12/31/05      15.79       .28             3.11            3.39       (.26)           --         (.26)      18.92    21.50
12/31/04      13.39       .18             2.41            2.59       (.19)           --         (.19)      15.79    19.32
12/31/03      10.05       .12             3.37            3.49       (.15)           --         (.15)      13.39    34.85
12/31/02      11.97       .12            (1.89)          (1.77)      (.15)           --         (.15)      10.05   (14.84)
12/31/01      20.54       .15            (3.76)          (3.61)      (.16)        (4.80)       (4.96)      11.97   (19.89)
CLASS 3
12/31/05      15.82       .29             3.11            3.40       (.26)           --         (.26)      18.96    21.54
12/31/04/7/   13.76       .20             2.05            2.25       (.19)           --         (.19)      15.82    16.45

New World Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $13.96      $.33           $ 2.58          $ 2.91      $(.20)       $   --        $(.20)     $16.67    21.10%
12/31/04      11.99       .23             2.01            2.24       (.27)           --         (.27)      13.96    19.07
12/31/03       8.76       .21             3.21            3.42       (.19)           --         (.19)      11.99    39.56
12/31/02       9.44       .20             (.70)           (.50)      (.18)           --         (.18)       8.76    (5.45)
12/31/01       9.85       .24             (.63)           (.39)      (.02)           --         (.02)       9.44    (3.99)
CLASS 2
12/31/05      13.89       .29             2.56            2.85       (.18)           --         (.18)      16.56    20.74
12/31/04      11.94       .19             2.01            2.20       (.25)           --         (.25)      13.89    18.80
12/31/03       8.73       .19             3.19            3.38       (.17)           --         (.17)      11.94    39.18
12/31/02       9.41       .18             (.70)           (.52)      (.16)           --         (.16)       8.73    (5.66)
12/31/01       9.84       .21             (.62)           (.41)      (.02)           --         (.02)       9.41    (4.19)

Blue Chip Income and Growth Fund/4/
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $10.26      $.18            $ .59           $ .77      $(.12)       $   --        $(.12)     $10.91     7.57%
12/31/04       9.41       .15              .78             .93       (.08)           --         (.08)      10.26     9.94
12/31/03       7.17       .13             2.11            2.24         --            --           --        9.41    31.24
12/31/02       9.43       .16            (2.32)          (2.16)      (.10)           --         (.10)       7.17   (22.93)
12/31/01      10.00       .09             (.61)           (.52)      (.05)           --         (.05)       9.43    (5.23)
CLASS 2
12/31/05      10.20       .15              .58             .73       (.10)           --         (.10)      10.83     7.24
12/31/04       9.36       .13              .78             .91       (.07)           --         (.07)      10.20     9.74
12/31/03       7.16       .11             2.09            2.20         --            --           --        9.36    30.73
12/31/02       9.41       .14            (2.30)          (2.16)      (.09)           --         (.09)       7.16   (23.07)
12/31/01      10.00       .08             (.63)           (.55)      (.04)           --         (.04)       9.41    (5.38)

Growth-Income Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $36.81      $.62           $ 1.61          $ 2.23      $(.58)      $  (.15)      $ (.73)     $38.31     6.08%
12/31/04      33.61       .48             3.09            3.57       (.37)           --         (.37)      36.81    10.66
12/31/03      25.63       .42             7.96            8.38       (.40)           --         (.40)      33.61    32.76
12/31/02      31.70       .41            (6.16)          (5.75)      (.32)           --         (.32)      25.63   (18.15)
12/31/01      35.23       .51              .49            1.00       (.73)        (3.80)       (4.53)      31.70     2.78
CLASS 2
12/31/05      36.64       .53             1.60            2.13       (.50)         (.15)        (.65)      38.12     5.83
12/31/04      33.48       .41             3.06            3.47       (.31)           --         (.31)      36.64    10.37
12/31/03      25.52       .34             7.92            8.26       (.30)           --         (.30)      33.48    32.43
12/31/02      31.58       .35            (6.14)          (5.79)      (.27)           --         (.27)      25.52   (18.34)
12/31/01      35.13       .41              .52             .93       (.68)        (3.80)       (4.48)      31.58     2.56
CLASS 3
12/31/05      36.80       .56             1.61            2.17       (.51)         (.15)        (.66)      38.31     5.88
12/31/04      34.64       .41             2.07            2.48       (.32)           --         (.32)      36.80     7.18





                         Ratio of   Ratio of   Ratio of
                         expenses   expenses     net
            Net assets, to average to average   income
              end of    net assets net assets (loss) to
Period      period (in    before     after     average
ended        millions)    waiver   waiver/3/  net assets


International Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05       $1,599        .57%       .52%      1.92%
12/31/04        1,495        .60        .59       1.54
12/31/03        1,431        .63        .63       1.40
12/31/02        1,236        .63        .63       1.35
12/31/01        1,772        .61        .61       1.41
CLASS 2
12/31/05        4,790        .82        .77       1.64
12/31/04        2,752        .84        .83       1.27
12/31/03        1,385        .88        .88       1.08
12/31/02          636        .88        .88       1.05
12/31/01          628        .86        .86       1.04
CLASS 3
12/31/05          116        .75        .70       1.74
12/31/04/7/       115     .77/6/     .77/6/    1.45/6/

New World Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05         $ 88        .92%       .85%      2.22%
12/31/04           63        .93        .92       1.81
12/31/03           47        .92        .92       2.15
12/31/02           35        .91        .91       2.14
12/31/01           37        .91        .91       2.54
CLASS 2
12/31/05          677       1.17       1.10       1.97
12/31/04          373       1.18       1.17       1.57
12/31/03          224       1.17       1.17       1.90
12/31/02          124       1.16       1.16       1.89
12/31/01          116       1.16       1.16       2.25

Blue Chip Income and Growth Fund/4/
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05       $  135        .45%       .41%      1.73%
12/31/04          129        .46        .46       1.60
12/31/03          107        .52        .50       1.67
12/31/02           54        .52        .52       1.89
12/31/01           49        .25        .25        .93
CLASS 2
12/31/05        3,029        .70        .66       1.48
12/31/04        2,349        .71        .70       1.37
12/31/03        1,490        .76        .74       1.41
12/31/02          426        .77        .77       1.76
12/31/01          111        .37        .37        .82

Growth-Income Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05      $ 3,825        .29%       .27%      1.68%
12/31/04        4,213        .31        .30       1.39
12/31/03        4,402        .34        .34       1.45
12/31/02        3,741        .35        .35       1.43
12/31/01        5,428        .35        .35       1.53
CLASS 2
12/31/05       17,608        .54        .52       1.44
12/31/04       13,105        .56        .55       1.19
12/31/03        7,824        .59        .59       1.18
12/31/02        3,632        .60        .60       1.22
12/31/01        3,187        .60        .60       1.25
CLASS 3
12/31/05          471        .47        .45       1.50
12/31/04          537     .49/6/     .48/6/    1.24/6/



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 51
                                                                             ---

<PAGE>



                      Income (loss) from investment operations/2/      Dividends and distributions
                      ------------------------------------------  -------------------------------------

                                      Net gains
            Net asset    Net         (losses) on                  Dividends                    Total     Net asset
             value,   investment   securities (both   Total from  (from net  Distributions   dividends    value,
Period      beginning   income       realized and     investment  investment (from capital      and       end of   Total
ended       of period   (loss)       unrealized)      operations   income)      gains)     distributions  period   return


Asset Allocation Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $15.49      $.41           $ 1.05          $ 1.46       $(.39)      $  --        $ (.39)     $16.56     9.45%
12/31/04      14.58       .39              .84            1.23        (.32)         --          (.32)      15.49     8.50
12/31/03      12.23       .41             2.29            2.70        (.35)         --          (.35)      14.58    22.14
12/31/02      14.30       .45            (2.19)          (1.74)       (.33)         --          (.33)      12.23   (12.19)
12/31/01      15.71       .49             (.37)            .12        (.59)       (.94)        (1.53)      14.30      .77
CLASS 2
12/31/05      15.42       .37             1.04            1.41        (.36)         --          (.36)      16.47     9.14
12/31/04      14.51       .36              .84            1.20        (.29)         --          (.29)      15.42     8.34
12/31/03      12.18       .37             2.27            2.64        (.31)         --          (.31)      14.51    21.74
12/31/02      14.25       .42            (2.18)          (1.76)       (.31)         --          (.31)      12.18   (12.38)
12/31/01      15.67       .45             (.36)            .09        (.57)       (.94)        (1.51)      14.25      .52
CLASS 3
12/31/05      15.49       .38             1.05            1.43        (.36)         --          (.36)      16.56     9.26
12/31/04/7/   14.85       .36              .58             .94        (.30)         --          (.30)      15.49     6.38

Bond Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $11.57      $.60            $(.40)          $ .20       $(.46)         --         $(.46)     $11.31     1.77%
12/31/04      11.34       .56              .10             .66        (.43)         --          (.43)      11.57     6.04
12/31/03      10.41       .57              .78            1.35        (.42)         --          (.42)      11.34    13.07
12/31/02      10.44       .67             (.24)            .43        (.46)         --          (.46)      10.41     4.26
12/31/01      10.18       .77              .08             .85        (.59)         --          (.59)      10.44     8.48
CLASS 2
12/31/05      11.48       .57             (.39)            .18        (.44)         --          (.44)      11.22     1.59
12/31/04      11.27       .53              .09             .62        (.41)         --          (.41)      11.48     5.72
12/31/03      10.36       .53              .78            1.31        (.40)         --          (.40)      11.27    12.80
12/31/02      10.40       .64             (.24)            .40        (.44)         --          (.44)      10.36     4.05
12/31/01      10.16       .73              .08             .81        (.57)         --          (.57)      10.40     8.15

High-Income Bond Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $12.89     $ .85           $ (.55)          $ .30      $ (.78)         --        $ (.78)     $12.41     2.46%
12/31/04      12.54       .84              .32            1.16        (.81)         --          (.81)      12.89     9.83
12/31/03      10.44       .90             2.12            3.02        (.92)         --          (.92)      12.54    29.79
12/31/02      11.78      1.01            (1.25)           (.24)      (1.10)         --         (1.10)      10.44    (1.51)
12/31/01      12.25      1.17             (.23)            .94       (1.41)         --         (1.41)      11.78     8.02
CLASS 2
12/31/05      12.81       .81             (.55)            .26        (.75)         --          (.75)      12.32     2.20
12/31/04      12.47       .81              .32            1.13        (.79)         --          (.79)      12.81     9.59
12/31/03      10.39       .86             2.12            2.98        (.90)         --          (.90)      12.47    29.51
12/31/02      11.74       .97            (1.25)           (.28)      (1.07)         --         (1.07)      10.39    (1.83)
12/31/01      12.22      1.13             (.23)            .90       (1.38)         --         (1.38)      11.74     7.73
CLASS 3
12/31/05      12.87       .82             (.55)            .27        (.75)         --          (.75)      12.39     2.25
12/31/04/7/   12.79       .78              .11             .89        (.81)         --          (.81)      12.87     7.52

U.S. Government/AAA-Rated Securities Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $12.07      $.48            $(.16)          $ .32       $(.48)         --         $(.48)     $11.91     2.70%
12/31/04      12.24       .45             (.03)            .42        (.59)         --          (.59)      12.07     3.58
12/31/03      12.37       .46             (.15)            .31        (.44)         --          (.44)      12.24     2.51
12/31/02      11.87       .54              .55            1.09        (.59)         --          (.59)      12.37     9.45
12/31/01      11.73       .66              .17             .83        (.69)         --          (.69)      11.87     7.24
CLASS 2
12/31/05      12.00       .45             (.16)            .29        (.46)         --          (.46)      11.83     2.41
12/31/04      12.17       .41             (.03)            .38        (.55)         --          (.55)      12.00     3.30
12/31/03      12.31       .42             (.14)            .28        (.42)         --          (.42)      12.17     2.28
12/31/02      11.83       .50              .55            1.05        (.57)         --          (.57)      12.31     9.15
12/31/01      11.70       .62              .18             .80        (.67)         --          (.67)      11.83     7.02
CLASS 3
12/31/05      12.05       .46             (.16)            .30        (.46)         --          (.46)      11.89     2.50
12/31/04/7/   12.34       .41             (.11)            .30        (.59)         --          (.59)      12.05     2.58





                         Ratio of   Ratio of   Ratio of
                         expenses   expenses     net
            Net assets, to average to average   income
              end of    net assets net assets (loss) to
Period      period (in    before     after     average
ended        millions)    waiver   waiver/3/  net assets


Asset Allocation Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05      $  879         .35%       .32%      2.57%
12/31/04         899         .38        .37       2.64
12/31/03         911         .42        .42       3.12
12/31/02         797         .45        .45       3.31
12/31/01       1,012         .45        .45       3.30
CLASS 2
12/31/05       5,120         .60        .57       2.31
12/31/04       3,797         .62        .62       2.42
12/31/03       2,314         .67        .67       2.81
12/31/02       1,056         .70        .70       3.11
12/31/01         730         .70        .70       3.03
CLASS 3
12/31/05          76         .53        .50       2.39
12/31/04/7/       81      .55/6/     .55/6/    2.50/6/

Bond Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05      $  182         .44%       .40%      5.30%
12/31/04         195         .45        .44       4.94
12/31/03         213         .47        .47       5.19
12/31/02         218         .49        .49       6.60
12/31/01         194         .49        .49       7.38
CLASS 2
12/31/05       2,312         .69        .65       5.06
12/31/04       1,759         .70        .69       4.68
12/31/03       1,280         .72        .72       4.88
12/31/02         697         .74        .74       6.34
12/31/01         349         .74        .74       7.06

High-Income Bond Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05        $309         .50%       .46%      6.76%
12/31/04         364         .50        .50       6.74
12/31/03         411         .51        .51       7.74
12/31/02         335         .52        .52       9.55
12/31/01         403         .51        .51       9.60
CLASS 2
12/31/05         590         .75        .71       6.55
12/31/04         444         .75        .74       6.48
12/31/03         319         .76        .76       7.41
12/31/02         183         .77        .77       9.28
12/31/01         156         .76        .76       9.37
CLASS 3
12/31/05          37         .68        .64       6.58
12/31/04/7/       46      .68/6/     .68/6/    6.57/6/

U.S. Government/AAA-Rated Securities Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05        $252         .47%       .43%      3.99%
12/31/04         286         .47        .46       3.68
12/31/03         373         .46        .46       3.71
12/31/02         517         .47        .47       4.45
12/31/01         386         .47        .47       5.58
CLASS 2
12/31/05         341         .72        .68       3.75
12/31/04         285         .72        .71       3.42
12/31/03         273         .71        .71       3.43
12/31/02         288         .72        .72       4.14
12/31/01         137         .72        .72       5.27
CLASS 3
12/31/05          39         .65        .61       3.81
12/31/04/7/       43      .65/6/     .65/6/    3.51/6/



----
52  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>



                      Income (loss) from investment operations/2/      Dividends and distributions
                      ------------------------------------------- -------------------------------------

                                      Net gains
            Net asset    Net         (losses) on                  Dividends                    Total     Net asset
             value,   investment   securities (both   Total from  (from net  Distributions   dividends    value,
Period      beginning   income       realized and     investment  investment (from capital      and       end of   Total
ended       of period   (loss)       unrealized)      operations   income)      gains)     distributions  period   return


Cash Management Fund
-------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $11.09      $.33           $--/5/           $.33       $(.11)        --           $(.11)     $11.31    2.97%
12/31/04      11.07       .11            --/5/            .11        (.09)        --            (.09)      11.09     .96
12/31/03      11.17       .07            --/5/            .07        (.17)        --            (.17)      11.07     .67
12/31/02      11.41       .14            --/5/            .14        (.38)        --            (.38)      11.17    1.24
12/31/01      11.65       .41              .01            .42        (.66)        --            (.66)      11.41    3.66
CLASS 2
12/31/05      11.05       .30            --/5/            .30        (.09)        --            (.09)      11.26    2.68
12/31/04      11.03       .08            --/5/            .08        (.06)        --            (.06)      11.05     .70
12/31/03      11.12       .05            --/5/            .05        (.14)        --            (.14)      11.03     .47
12/31/02      11.37       .11            --/5/            .11        (.36)        --            (.36)      11.12    1.00
12/31/01      11.62       .34              .05            .39        (.64)        --            (.64)      11.37    3.43
CLASS 3
12/31/05      11.07       .30            --/5/            .30        (.08)        --            (.08)      11.29    2.74
12/31/04/7/   11.07       .09            --/5/            .09        (.09)        --            (.09)      11.07     .78





                         Ratio of   Ratio of   Ratio of
                         expenses   expenses     net
            Net assets, to average to average   income
              end of    net assets net assets (loss) to
Period      period (in    before     after     average
ended        millions)    waiver   waiver/3/  net assets


Cash Management Fund
------------------------------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05       $ 75          .33%       .30%      2.91%
12/31/04         78          .37        .36        .96
12/31/03        103          .47        .47        .68
12/31/02        203          .46        .46       1.25
12/31/01        218          .46        .46       3.52
CLASS 2
12/31/05        153          .58        .55       2.71
12/31/04        110          .61        .61        .76
12/31/03         99          .72        .72        .42
12/31/02        133          .71        .71       1.00
12/31/01        127          .71        .71       2.99
CLASS 3
12/31/05         16          .51        .48       2.70
12/31/04/7/      20       .54/6/     .54/6/     .80/6/




                                                     Year ended December 31
                                                  ----------------------------
Portfolio turnover rate for all classes of shares 2005  2004  2003  2002  2001
------------------------------------------------- ----  ----  ----  ----  ----

    Global Discovery Fund/4/                        53%   28%   30%   25%    4%
    Global Growth Fund                              26    24    27    30    38
    Global Small Capitalization Fund                47    49    51    66    65
    Growth Fund                                     29    30    34    34    31
    International Fund                              40    37    40    30    40
    New World Fund                                  26    18    19    22    31
    Blue Chip Income and Growth Fund/4/             33    13    12     8    12
    Growth-Income Fund                              20    21    21    26    34
    Asset Allocation Fund                           23    20    20    25    32
    Bond Fund                                       46    34    20    29    59
    High-Income Bond Fund                           35    38    48    45    42
    U.S. Government/AAA-Rated Securities Fund       86    68    63    53    84
    Cash Management Fund                            --    --    --    --    --


/1/Based on operations for the period shown (unless otherwise noted) and,
   accordingly, may not be representative of a full year.

/2/Based on average shares outstanding.

/3/The ratios in this column reflect the impact, if any, of certain waivers by
   Capital Research and Management Company. During the periods shown, Capital
   Research and Management Company reduced fees for investment advisory
   services for all share classes.

/4/Commenced operations July 5, 2001.

/5/Amount less than one cent.

/6/Annualized.

/7/From January 16, 2004, when Class 3 shares were first issued.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 53
                                                                             ---


<PAGE>

[LOGO OF American Funds(R)]                The right choice for the long term(R)

OTHER FUND INFORMATION

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
The shareholder reports contain additional information about the Series,
including financial statements, investment results, portfolio holdings, a
discussion of market conditions and the Series' investment strategies, and the
independent registered public accounting firm's report (in the annual report).

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS
The current SAI, as amended from time to time, contains more detailed
information on all aspects of the Series, including the funds' financial
statements, and is incorporated by reference into this prospectus. This means
that the current SAI, for legal purposes, is part of this prospectus. The codes
of ethics describe the personal investing policies adopted by the Series, the
Series' investment adviser and its affiliated companies.

The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the Series are
available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's website at
www.sec.gov or, after payment of a duplicating fee, via email request to
publicinfo@sec.gov or by writing to the SEC's Public Reference
Section,Washington, D.C. 20549-0102.

If you would like to receive a free copy of the current SAI, codes of ethics or
annual/semi-annual report to shareholders, please call American Funds at
800/421-4120 or write to the Secretary of the Series at 333 South Hope Street,
Los Angeles, California 90071.

[GRAPHIC APPEARS HERE]
Printed on recycled Paper    Litho in USA     Invested Company File No. 811-3857

THE CAPITAL GROUP COMPANIES
American Funds    Capital Research       Capital       Capital    Capital Bank
                   and Management     International   Guardian      and Trust



<PAGE>

[LOGO OF AMERICAN FUNDS(R)]                The right choice for the long term(R)

AMERICAN FUNDS
INSURANCE SERIES(R)

PROSPECTUS
Class 3 shares

May 1,2006


The Securities and Exchange Commission has not approved or disapproved of these
securities. Further, it has not determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.

<PAGE>

American Funds Insurance Series (the "Series") consists of 14 funds, each
representing a separate fully managed diversified portfolio of securities. The
14 funds are:

   Growth Fund
   International Fund
   Growth-Income Fund
   Asset Allocation Fund
   High-Income Bond Fund
   U.S. Government/AAA-Rated Securities Fund
   Cash Management Fund

Shares of the Series are currently offered to insurance company separate
accounts funding both variable annuity contracts and variable insurance
policies (the "contracts"). Interests of various contract owners participating
in the Series may be in conflict. The board of trustees of the Series will
monitor for the existence of any material conflicts and determine what action,
if any, should be taken. Shares may be purchased or redeemed by the separate
accounts without any sales or redemption charges at net asset value.

The Series offers three classes of fund shares: Class 1, Class 2 and Class 3
shares. This prospectus offers only Class 3 shares and is for use with the
contracts that make Class 3 shares available. The board of trustees may
establish additional funds and classes in the future. The investment
objective(s) and policies of each fund are discussed below. MORE INFORMATION ON
THE FUNDS IS CONTAINED IN THE SERIES' STATEMENT OF ADDITIONAL INFORMATION.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 1
                                                                             ---

<PAGE>

GROWTH FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow by investing primarily in common
stocks of companies that appear to offer superior opportunities for growth of
capital. The fund may invest up to 15% of its assets in securities of issuers
domiciled outside the United States and Canada and not included in Standard &
Poor's 500 Composite Index. The fund is designed for investors seeking capital
appreciation through stocks. Investors in the fund should have a long-term
perspective and be able to tolerate potentially wide price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
2   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 3 shares were first
offered on January 16, 2004. Results prior to that date assume a hypothetical
investment in Class 1 shares, but reflect the .18% annual expense that applies
to Class 3 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of
Class 3 shares because both classes invest in the same portfolio of
securities.

Here are the fund's results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996    1997    1998    1999   2000    2001     2002    2003    2004    2005
------  ------  ------  ------  -----  ------  -------  ------  ------  ------
13.15%  29.87%  35.30%  57.33%  4.53%  -18.08% -24.41%  36.90%  12.56%  16.28%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  30.71% (quarter ended December 31, 1999)
LOWEST  -27.15% (quarter ended September 30, 2001)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                               LIPPER CAPITAL
                                                APPRECIATION  LIPPER GROWTH
AVERAGE ANNUAL TOTAL RETURNS  FUND  S&P 500/1/ FUNDS INDEX/2/ FUNDS INDEX/3/ CPI/4/
-----------------------------------------------------------------------------------

        1 Year               16.28%   4.91%         7.96%         7.24%      3.42%
-----------------------------------------------------------------------------------
        5 Years               2.10%   0.54%         0.15%        -1.36%      2.49%
-----------------------------------------------------------------------------------
        10 Years             13.76%   9.07%         7.28%         7.26%      2.52%
-----------------------------------------------------------------------------------
        Lifetime/5/          14.75%  12.83%        10.50%        10.70%      3.05%



/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper Capital Appreciation Funds Index is an equally weighted index of
   funds that aim for maximum capital appreciation. The results of the
   underlying funds in the index include the reinvestment of dividends and
   capital gain distributions, as well as brokerage commissions paid by the
   funds for portfolio transactions, but do not reflect sales charges or taxes.

/3/Lipper Growth Funds Index is an equally weighted index of growth funds.
   These funds normally invest in companies with long-term earnings expected to
   grow significantly faster than the earnings of the stocks represented in the
   major unmanaged stock indexes. The results of the underlying funds in the
   index include the reinvestment of dividends and capital gain distributions,
   as well as brokerage commissions paid by the funds for portfolio
   transactions, but do not reflect sales charges or taxes.

/4/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/5/Lifetime results are as of February 8, 1984, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 3
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 3
------------------------------------------------------------------------

            Management fees                                       0.33%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.18%
------------------------------------------------------------------------
            Other expenses                                        0.02%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.53%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 3       $54    $170    $296     $665



----
4   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INTERNATIONAL FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
common stocks of companies located outside the United States. The fund is
designed for investors seeking capital appreciation through stocks. Investors
in the fund should have a long-term perspective and be able to tolerate
potentially wide price fluctuations.

The prices of securities held by the fund may decline in response to certain
events, including, for example, those directly involving the companies whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; and currency and interest rate fluctuations. The growth-oriented,
equity-type securities generally purchased by the fund may involve large price
swings and potential for loss.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

Investing in countries with developing economies and/or markets generally
involves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, developing countries may have
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and less
liquid than securities issued in countries with more developed economies or
markets.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 5
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 3 shares were first
offered on January 16, 2004. Results prior to that date assume a hypothetical
investment in Class 1 shares, but reflect the .18% annual expense that applies
to Class 3 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of
Class 3 shares because both classes invest in the same portfolio of
securities.

Here are the fund's results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996   1997   1998    1999    2000     2001    2002     2003    2004    2005
------  ----- ------  ------  -------  ------  -------  ------  ------  -----
17.32%  8.86% 21.00%  76.11%  -21.99%  -19.88% -14.73%  34.88%  19.48%  21.54%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  42.39% (quarter ended December 31, 1999)
LOWEST  -19.64% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                             MSCI       LIPPER
AVERAGE ANNUAL               EAFE    INTERNATIONAL
TOTAL RETURNS         FUND  INDEX/1/ FUNDS INDEX/2/ CPI/3/
----------------------------------------------------------

1 year               21.54% 14.02%      15.67%      3.42%
----------------------------------------------------------
5 years               6.00%  4.94%       5.34%      2.49%
----------------------------------------------------------
10 years             11.01%  6.18%       7.74%      2.52%
----------------------------------------------------------
Lifetime/4/          10.22%  6.74%       7.85%      2.74%



/1/MSCI EAFE (Europe, Australasia, Far East) is a free float-adjusted market
   capitalization index that is designed to measure developed market equity
   performance, excluding the United States & Canada. This index is unmanaged
   and includes reinvested dividends and/or distributions, but does not reflect
   sales charges, commissions, expenses or taxes.

/2/Lipper International Funds Index is an equally weighted index of funds that
   invest assets in securities with primary trading markets outside the United
   States. The results of the underlying funds in the average include the
   reinvestment of dividends and capital gain distributions, as well as
   brokerage commissions paid by the funds for portfolio transactions, but do
   not reflect sales charges or taxes.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of May 1, 1990, the date the fund began investment
   operations.


----
6   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 3
------------------------------------------------------------------------

            Management fees                                       0.52%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.18%
------------------------------------------------------------------------
            Other expenses                                        0.05%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.75%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 3       $77    $240    $417     $930



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 7
                                                                             ---

<PAGE>

GROWTH-INCOME FUND

RISK/RETURN SUMMARY

The fund seeks to make your investment grow and provide you with income over
time by investing primarily in common stocks or other securities that
demonstrate the potential for appreciation and/or dividends. The fund may
invest up to 15% of its assets, at the time of purchase, in securities of
issuers domiciled outside the United States and not included in Standard &
Poor's 500 Composite Index. The fund is designed for investors seeking both
capital appreciation and income.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; and currency and interest
rate fluctuations.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
8   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 3 shares were first
offered on January 16, 2004. Results prior to that date assume a hypothetical
investment in Class 1 shares, but reflect the .18% annual expense that applies
to Class 3 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of
Class 3 shares because both classes invest in the same portfolio of
securities.

Here are the fund's results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996    1997    1998    1999   2000   2001    2002    2003    2004    2005
------  ------  ------  ------  -----  -----  ------  ------  ------  -----
18.51%  25.61%  18.16%  11.27%  8.05%  2.59%  -18.29  32.52%  10.46%  5.88%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  18.86% (quarter ended December 31, 1998)
LOWEST  -18.67% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                       LIPPER GROWTH
AVERAGE ANNUAL                          AND INCOME
TOTAL RETURNS         FUND  S&P 500/1/ FUNDS INDEX/2/ CPI/3/
------------------------------------------------------------

1 Year                5.88%   4.91%        6.82%      3.42%
------------------------------------------------------------
5 Years               5.37%   0.54%        2.92%      2.49%
------------------------------------------------------------
10 Years             10.64%   9.07%        8.47%      2.52%
------------------------------------------------------------
Lifetime/4/          12.88%  12.83%       11.42%      3.05%



/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper Growth and Income Funds Index is an equally weighted index of funds
   that combine a growth-of-earnings orientation and an income requirement for
   level and/or rising dividends. The results of the underlying funds in the
   index include the reinvestment of dividends and capital gain distributions,
   as well as brokerage commissions paid by the funds for portfolio
   transactions but do not reflect sales charges or taxes. This index was not
   in existence as of the date the fund's Class A shares became available;
   therefore, lifetime results are not shown.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of February 8, 1984, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 9
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 3
------------------------------------------------------------------------

            Management fees                                       0.28%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.18%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.47%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 3       $48    $151    $263     $591



----
10  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

ASSET ALLOCATION FUND

RISK/RETURN SUMMARY

The fund seeks to provide you with high total return (including income and
capital gains) consistent with preservation of capital over the long term by
investing in a diversified portfolio of common stocks and other equity
securities, bonds and other intermediate and long-term debt securities, and
money market instruments (debt securities maturing in one year or less). The
fund may invest up to 15% of its assets in equity securities of issuers
domiciled outside the United States and not included in Standard & Poor's 500
Composite Index, and up to 5% of its assets in debt securities of non-U.S.
issuers. In addition, the fund may invest up to 25% of its debt assets in lower
quality debt securities (rated Ba or below by Moody's Investors Service and BB
or below by Standard & Poor's Corporation or unrated but determined to be of
equivalent quality). Under normal market conditions, the fund's investment
adviser expects (but is not required) to maintain an investment mix falling
within the following ranges: 40%-80% in equity securities, 20%-50% in debt
securities and 0%-40% in money market instruments. The fund is designed for
investors seeking above-average total return.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; and currency and interest
rate fluctuations.

Securities held by the fund may also be affected by changing market interest
rates and by changes in effective maturities and credit ratings. For example,
the prices of debt securities in the fund's portfolio generally will decline
when interest rates rise and increase when interest rates fall. In addition,
falling interest rates may cause an issuer to redeem or "call" a security
before its stated maturity, which may result in the fund having to reinvest the
proceeds in lower yielding securities. Debt securities are also subject to
credit risk, which is the possibility that the credit strength of an issuer
will weaken and/or an issuer of a debt security will fail to make timely
payments of principal or interest and the security will go into default. Lower
quality or longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than higher quality
or shorter maturity debt securities. A security backed by the U.S. Treasury or
the full faith and credit of the United States is guaranteed only as to the
timely payment of interest and principal when held to maturity. Accordingly,
the current market prices for these securities will fluctuate with changes in
interest rates.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 11
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 3 shares were first
offered on January 16, 2004. Results prior to that date assume a hypothetical
investment in Class 1 shares, but reflect the .18% annual expense that applies
to Class 3 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of
Class 3 shares because both classes invest in the same portfolio of
securities.

Here are the fund's results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

 1996    1997    1998   1999   2000   2001    2002    2003    2004    2005
------  ------  ------  -----  -----  -----  -------  ------  -----   -----
15.57%  20.27%  12.93%  7.06%  4.43%  0.59%  -12.35%  21.92%  8.34%   9.26%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST  12.19% (quarter ended June 30, 2003)
LOWEST  -12.32% (quarter ended September 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                                      CITIGROUP BROAD
AVERAGE ANNUAL                        INVESTMENT-GRADE
TOTAL RETURNS        FUND  S&P 500/1/  BOND INDEX/2/   CPI/3/
-------------------------------------------------------------

1 Year               9.26%   4.91%          2.57%      3.42%
-------------------------------------------------------------
5 Years              4.94%   0.54%          5.93%      2.49%
-------------------------------------------------------------
10 Years             8.37%   9.07%          6.19%      2.52%
-------------------------------------------------------------
Lifetime/4/          9.19%  10.54%          7.39%      2.83%



/1/Standard and Poor's 500 Composite Index is a market capitalization-weighted
   index based on the average weighted performance of 500 widely held common
   stocks. This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Citigroup Broad Investment-Grade (BIG) Bond Index (formerly Salomon Smith
   Barney Broad Investment-Grade (BIG) Bond Index) is a market
   capitalization-weighted index that includes U.S. Treasury,
   government-sponsored, mortgage and investment-grade fixed-rate corporates
   with a maturity of one year or longer. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/3/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/4/Lifetime results are as of August 1, 1989, the date the fund began
   investment operations.


----
12  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 3
------------------------------------------------------------------------

            Management fees                                       0.34%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.18%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.53%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 3       $54    $170    $296     $665



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 13
                                                                             ---

<PAGE>

HIGH-INCOME BOND FUND

RISK/RETURN SUMMARY

The fund seeks to provide you with a high level of current income and,
secondarily, capital appreciation by investing at least 65% of its assets in
higher yielding and generally lower quality debt securities (rated Ba or below
by Moody's Investors Service or BB or below by Standard & Poor's Corporation or
unrated but determined to be of equivalent quality). The fund may also invest
up to 25% of its assets in securities of non-U.S. issuers. Normally, the fund
invests at least 80% of its assets in bonds. This policy is subject to change
only upon 60 days' notice to shareholders. The fund may also invest up to 20%
of its assets in equity securities that provide an opportunity for capital
appreciation. The fund is designed for investors seeking a high level of
current income and who are able to tolerate greater credit risk and price
fluctuations than funds investing in higher quality bonds.

The values of and the income generated by most debt securities held by the fund
may be affected by changing market interest rates and by changes in effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities. Debt securities are also subject to credit risk, which is
the possibility that the credit strength of an issuer will weaken and/or an
issuer of a debt security will fail to make timely payments of principal or
interest and the security will go into default. Lower quality or longer
maturity debt securities generally have higher rates of interest and may be
subject to greater price fluctuations than higher quality or shorter maturity
debt securities.

The prices of and the income generated by securities held by the fund may
decline in response to certain events, including, for example, those directly
involving the companies whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; and currency and interest
rate fluctuations.

Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent and may also be
affected by other issues and events, such as currency controls; different
accounting, auditing, financial reporting and legal standards and practices in
some countries; expropriation; changes in tax policy; greater market
volatility; differing securities market structures; higher transaction costs;
and various administrative difficulties, such as delays in clearing and
settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.
The fund's investment adviser attempts to reduce these risks through
diversification of the portfolio and with ongoing credit analysis of each
issuer, as well as by monitoring economic and legislative developments.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


----
14  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 3 shares were first
offered on January 16, 2004. Results prior to that date assume a hypothetical
investment in Class 1 shares, but reflect the .18% annual expense that applies
to Class 3 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of
Class 3 shares because both classes invest in the same portfolio of
securities.

Here are the fund's results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

  1996   1997    1998   1999    2000   2001    2002    2003    2004    2005
 ------  ------  -----  -----  ------  -----  ------  ------   -----   -----
 13.00%  12.21%  0.26%  5.61%  -3.23%  7.82%  -1.69%  29.55%   9.66%   2.25%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST 10.78% (quarter ended December 31, 2002)
LOWEST  -9.08% (quarter ended June 30, 2002)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                            CREDIT SUISSE                     LIPPER
                            FIRST BOSTON  CITIGROUP BROAD  HIGH CURRENT
AVERAGE ANNUAL               HIGH YIELD   INVESTMENT-GRADE  YIELD BOND
TOTAL RETURNS         FUND  BOND INDEX/1/  BOND INDEX/2/   FUNDS INDEX/3/ CPI/4/
--------------------------------------------------------------------------------

1 Year                2.25%     2.26%           2.57%          3.00%      3.42%
--------------------------------------------------------------------------------
5 Years               9.02%     9.83%           5.93%          6.76%      2.49%
--------------------------------------------------------------------------------
10 Years              7.18%     7.13%           6.19%          5.30%      2.52%
--------------------------------------------------------------------------------
Lifetime/5/          10.23%      N/A            8.80%          8.01%      3.05%



/1/Credit Suisse First Boston High Yield Bond Index is designed to mirror the
   investible universe of the U.S. dollar-denominated high-yield debt market.
   This index is unmanaged and includes reinvested dividends and/or
   distributions, but does not reflect sales charges, commissions, expenses or
   taxes.

/2/Lipper High Current Yield Bond Funds Index is an equally weighted index of
   funds that aim at high (relative) current yield from fixed-income
   securities, have no quality or maturity restrictions and tend to invest in
   lower grade debt issues. The results of the underlying funds in the average
   include reinvestment of dividends and capital gain distributions, as well as
   brokerage commissions paid by the funds for portfolio transactions, but do
   not reflect sales charges or taxes.

/3/Citigroup Broad Investment-Grade (BIG) Bond Index (formerly Salomon Smith
   Barney Broad Investment-Grade (BIG) Bond Index) is a market
   capitalization-weighted index that includes U.S. Treasury,
   government-sponsored, mortgage and investment-grade fixed-rate corporates
   with a maturity of one year or longer. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/4/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/5/Lifetime results are as of February 8, 1984, the date the fund began
   investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 15
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 3
------------------------------------------------------------------------

            Management fees                                       0.49%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.18%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.68%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 3       $77    $240    $417     $930



----
16  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

U.S. GOVERNMENT/AAA-RATED SECURITIES FUND

RISK/RETURN SUMMARY

The fund seeks to provide you with a high level of current income, as well as
to preserve your investment. Normally, the fund will invest at least 80% of its
assets in securities that are guaranteed by the "full faith and credit" pledge
of the U.S. government or debt securities that are rated Aaa by Moody's
Investors Service or AAA by Standard & Poor's Corporation or unrated but
determined to be of equivalent quality. This policy is subject to change only
upon 60 days' notice to shareholders. The fund is designed for investors
seeking income and more price stability than from investing in stocks and lower
quality debt securities, and capital preservation over the long term.

The fund may also invest a significant portion of its assets in securities
backed by pools of mortgages. Certain of these securities may not be backed by
the full faith and credit of the U.S. government and are supported only by the
credit of the issuer. Such securities may include mortgage-backed securities
issued by the Federal National Mortgage Association ("Fannie Mae") and the
Federal Home Loan Mortgage Corporation ("Freddie Mac") and are neither issued
nor guaranteed by the U.S. Treasury.

The values of and the income generated by most debt securities held by the fund
may be affected by changing market interest rates and prepayment risk. For
example, as with other debt securities, the value of U.S. government securities
generally will decline when interest rates rise and increase when interest
rates fall. In addition, falling interest rates may cause an issuer to redeem
or "call" a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest but may be subject to
greater price fluctuations than shorter maturity securities.

A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. Accordingly, the current market prices for
such securities will fluctuate.

Many types of debt securities, including mortgage-related securities, are
subject to prepayment risk. For example, when interest rates fall, homeowners
are more likely to refinance their home mortgages and prepay their principal
earlier than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 17
                                                                             ---

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 3 shares were first
offered on January 16, 2004. Results prior to that date assume a hypothetical
investment in Class 1 shares, but reflect the .18% annual expense that applies
to Class 3 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of
Class 3 shares because both classes invest in the same portfolio of
securities.

Here are the fund's results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

   1996   1997   1998    1999    2000   2001   2002    2003   2004    2005
  -----   -----  -----  ------  ------  -----  -----   -----  -----   -----
  2.92%   8.26%  7.99%  -0.70%  11.49%  7.05%  9.26%   2.33%  3.41%   2.50%


The fund's highest/lowest quarterly results during this time period were:

               (quarter ended September
HIGHEST  4.52% 30, 2001)
LOWEST  -2.05% (quarter ended March 31, 1996)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



                           CITIGROUP
                           TREASURY/
                             GOVT.
                           SPONSORED/
AVERAGE ANNUAL              MORTGAGE
TOTAL RETURNS        FUND   INDEX/1/  CPI/2/
--------------------------------------------

1 year               2.50%   2.71%     3.42%
--------------------------------------------
5 years              4.87%   5.46%     2.49%
--------------------------------------------
10 years             5.39%   6.04%     2.52%
--------------------------------------------
Lifetime/3/          6.98%   7.88%     2.99%



/1/Citigroup Treasury/Government Sponsored/Mortgage Index (formerly Salomon
   Smith Barney Treasury/Government Sponsored/Mortgage Index) is a
   market-weighted index that includes U.S. Treasury and agency securities, as
   well as FNMAs, FHLMCs and GNMAs. This index is unmanaged and includes
   reinvested dividends and/or distributions, but does not reflect sales
   charges, commissions, expenses or taxes.

/2/Consumer Price Index (CPI) is a measure of the average change over time in
   the prices paid by urban consumers for a market basket of consumer goods and
   services. Widely used as a measure of inflation, the CPI is computed by the
   U.S. Department of Labor, Bureau of Labor Statistics.

/3/Lifetime results are as of December 2, 1985, the date the fund began
   investment operations.


----
18  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 3
------------------------------------------------------------------------

            Management fees                                       0.46%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.18%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.65%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 3       $66    $208    $362     $810



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 19
                                                                             ---

<PAGE>

CASH MANAGEMENT FUND

RISK/RETURN SUMMARY

The fund seeks to provide you an opportunity to earn income on your cash
reserves while preserving the value of your investment and maintaining
liquidity. Normally, the fund invests substantially in high-quality money
market instruments, such as commercial paper, commercial bank obligations,
savings association obligations, U.S. or Canadian government securities, and
short-term corporate bonds and notes. These securities may have credit and
liquidity enhancements. Changes in the credit quality of banks and financial
institutions providing these enhancements could cause the fund to experience a
loss and may affect its share price.

In addition, the fund may invest in securities issued by non-U.S. or Canadian
entities or in securities with credit and liquidity support features provided
by non-U.S. or Canadian entities. These securities may be affected by
unfavorable political, economic or governmental developments that could affect
the repayment of principal or the payment of interest. Securities of U.S.
issuers with substantial operations outside the United States may also be
subject to similar risks.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.

The fund is not managed to maintain a stable net asset value of $1 per share.


----
20  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year as well as average annual total returns for various periods.
This information provides some indication of the risks of investing in the
fund. Past results are not predictive of future results. Figures shown reflect
fees and expenses associated with an investment in the fund but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were reflected, results would have been lower. Class 3 shares were first
offered on January 16, 2004. Results prior to that date assume a hypothetical
investment in Class 1 shares, but reflect the .18% annual expense that applies
to Class 3 shares and is described in the "Plans of distribution" section of
this prospectus. Results for Class 1 shares are comparable to those of
Class 3 shares because both classes invest in the same portfolio of
securities.

                                    [CHART]
Here are the fund's results calculated on a calendar year basis. (If insurance
contract fees and expenses were included, results would have been lower.)

                                    [CHART]

1996    1997    1998    1999     2000    2001    2002    2003    2004    2005
----    ----    ----    ----     ----    ----    ----    ----    ----    ----
4.89%   4.97%   4.96%   4.64%    5.85%   3.48%   1.06%   0.49%   0.77%   2.74%


The fund's highest/lowest quarterly results during this time period were:

HIGHEST 1.52% (quarter ended December 31, 2000)
LOWEST  0.04% (quarter ended September 30, 2003)

The fund's cumulative total return for the three months ended March 31, 2006,
was   %.

For periods ended December 31, 2005:



AVERAGE ANNUAL
TOTAL RETURNS        FUND
--------------------------

1 year               2.74%
--------------------------
5 years              1.70%
--------------------------
10 years             3.37%
--------------------------
Lifetime*            4.74%


*Lifetime results are as of February 8, 1984, the date the fund began
 investment operations.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 21
                                                                             ---

<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses associated with an investment in the
fund. It does not reflect insurance contract fees and expenses. If reflected,
expenses shown would be higher.



ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS) CLASS 3
------------------------------------------------------------------------

            Management fees                                       0.32%
------------------------------------------------------------------------
            Distribution and/or service (12b-1) fees              0.18%
------------------------------------------------------------------------
            Other expenses                                        0.01%
------------------------------------------------------------------------
            Total annual fund operating expenses*                 0.51%



*The Series' investment adviser began waiving 5% of its management fees on
 September 1, 2004. Beginning April 1, 2005, this waiver increased to 10% and
 will continue at this level until further review. Total annual fund operating
 expenses do not reflect this waiver. The effect of the waiver on total
 operating expenses can be found in the Financial Highlights table in this
 prospectus and in the audited financial statements in the Series' annual
 report.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect insurance contract expenses
or the impact of any fee waivers or expense reimbursements. If insurance
contract expenses were reflected, expenses shown would be higher. If waivers or
reimbursements were reflected, expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:



             1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------

Class 3       $52    $164    $285     $640



----
22  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

CASH POSITION

The funds may also hold cash or money market instruments, the amount of which
will vary and will depend on various factors, including market conditions and
purchases and redemptions of fund shares. A larger amount of such holdings
could negatively affect a fund's investment results in a period of rising
market prices; conversely, it could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

MANAGEMENT AND ORGANIZATION

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the Series and
other mutual funds, including the American Funds. Capital Research and
Management Company is a wholly owned subsidiary of The Capital Group Companies,
Inc. and is located at 333 South Hope Street, Los Angeles, California 90071,
and 135 South State College Boulevard, Brea, California 92821. Capital Research
and Management Company manages the investment portfolios and business affairs
of the Series.

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the funds'
portfolio transactions. The investment adviser strives to obtain best execution
on the funds' equity and/or fixed-income portfolio transactions, taking into
account a variety of factors to produce the most favorable total price
reasonably attainable under the circumstances. These factors include the size
and type of transaction, the cost and quality of executions, and the
broker-dealer's ability to offer liquidity and anonymity. For example, with
respect to equity transactions, the funds do not consider the investment
adviser as having an obligation to obtain the lowest available commission rate
to the exclusion of price, service and qualitative considerations. Subject to
the considerations outlined above, the funds' investment adviser may place
orders for the funds' portfolio transactions with broker-dealers who have sold
shares of the funds, as well as shares of the American Funds, or who have
provided investment research, statistical or other related services to the
investment adviser. In placing orders for the funds' portfolio transactions,
the investment adviser does not commit to any specific amount of business with
any particular broker-dealer. Subject to best execution, the investment adviser
may consider investment research, statistical or other related services
provided to the adviser in placing orders for the funds' portfolio
transactions. However, when the investment adviser places orders for the funds'
portfolio transactions, it does not give any consideration to whether a
broker-dealer has sold shares of the funds or the American Funds.

PORTFOLIO MANAGEMENT

The Series relies on the professional judgment of its investment adviser,
Capital Research and Management Company, to make decisions about the funds'
portfolio investments. The basic investment philosophy of the investment
adviser is to seek to invest in attractively priced securities that, in its
opinion, represent above-average long-term investment opportunities. The
investment adviser believes that an important way to accomplish this is through
fundamental analysis, including meeting with company executives and employees,
suppliers, customers and competitors. Securities may be sold when the
investment adviser believes that they no longer represent relatively attractive
investment opportunities.

PORTFOLIO HOLDINGS

A description of the funds' policies and procedures regarding disclosure of
information about their portfolio securities is available in the statement of
additional information.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio
of a fund is divided into segments managed by individual counselors. Counselors
decide how their respective segments will be invested. In addition, Capital
Research and Management Company's investment analysts may make investment
decisions with respect to a portion of a fund's portfolio. Investment decisions
are subject to a fund's objective(s), policies and restrictions and the
oversight of Capital Research and Management Company's investment committee.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 23
                                                                             ---

<PAGE>

The primary individual portfolio counselors for each of the funds are:




                                                            PRIMARY TITLE WITH INVESTMENT
PORTFOLIO COUNSELOR FOR THE  PORTFOLIO COUNSELOR EXPERIENCE  ADVISER (OR AFFILIATE) AND    PORTFOLIO COUNSELOR'S ROLE IN
SERIES/TITLE (IF APPLICABLE)        IN THE FUND(S)              INVESTMENT EXPERIENCE        MANAGEMENT OF THE FUND(S)
-------------------------------------------------------------------------------------------------------------------------

 JAMES K. DUNTON             Growth-Income Fund -- 22       Senior Vice President and      An equity portfolio counselor
 VICE CHAIRMAN OF THE BOARD  years (since the fund's        Director, Capital Research     for Growth-Income Fund and
                             inception)                     and Management Company         Blue Chip Income and Growth
                             Blue Chip Income and Growth    Investment professional for    Fund
                             Fund -- 5 years (since the     44 years, all with Capital
                             fund's inception)              Research and Management
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
 DONALD D. O'NEAL            Growth-Income Fund -- 1 year   Senior Vice President,         An equity portfolio counselor
 PRESIDENT AND TRUSTEE                                      Capital Research and           for Growth-Income Fund
                                                            Management Company
                                                            Investment professional for
                                                            21 years, all with Capital
                                                            Research and Management
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
 ALAN N. BERRO               Asset Allocation Fund -- 6     Vice President, Capital        An equity portfolio counselor
 SENIOR VICE PRESIDENT       years                          Research and Management        for Asset Allocation Fund
                                                            Company
                                                            Investment professional for
                                                            20 years in total; 15 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 ABNER D. GOLDSTINE          Bond Fund -- 10 years (since   Senior Vice President and      A fixed-income portfolio
 SENIOR VICE PRESIDENT       the fund's inception)          Director, Capital Research     counselor for Bond Fund and
                             High-Income Bond Fund -- 8     and Management Company         High-Income Bond Fund
                             years                          Investment professional for
                                                            54 years in total; 39 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 JOHN H. SMET                Bond Fund -- 10 years (since   Senior Vice President,         A fixed-income portfolio
 SENIOR VICE PRESIDENT       the fund's inception)          Capital Research and           counselor for Bond Fund and
                             U.S. Government/AAA-Rated      Management Company             U.S. Government/AAA-Rated
                             Securities Fund -- 14 years    Investment professional for    Securities Fund
                                                            24 years in total; 23 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 CLAUDIA P. HUNTINGTON       Growth-Income Fund -- 12       Senior Vice President,         An equity portfolio counselor
 VICE PRESIDENT              years (plus 5 years of prior   Capital Research and           for Growth-Income Fund and
                             experience as an investment    Management Company             Global Discovery Fund
                             analyst for the fund)          Investment professional for
                             Global Discovery Fund -- 5     33 years in total; 31 years
                             years (since the fund's        with Capital Research and
                             inception)                     Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 ROBERT W. LOVELACE          Global Growth Fund -- 9 years  Chairman, Capital Research     An equity portfolio counselor
 VICE PRESIDENT              (since the fund's inception)   Company                        for Global Growth Fund and
                             International Fund -- 12 years Investment professional for    New World Fund and a non-U.S.
                             New World Fund -- 7 years      21 years, all with Capital     equity portfolio counselor
                             (since the fund's inception)   Research and Management        for International Fund
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
 SUSAN M. TOLSON             High-Income Bond Fund -- 11    Senior Vice President,         A fixed-income portfolio
 VICE PRESIDENT              years (plus 2 years of prior   Capital Research Company       counselor for High-Income
                             experience as an investment    Investment professional for    Bond Fund and Asset
                             analyst for the fund)          18 years in total; 16 years    Allocation Fund
                             Asset Allocation Fund -- 6     with Capital Research and
                             years                          Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 DAVID C. BARCLAY            High-Income Bond Fund -- 13    Senior Vice President,         A fixed-income portfolio
                             years                          Capital Research and           counselor for High-Income
                             New World Fund -- 7 years      Management Company             Bond Fund, New World Fund and
                             (since the fund's inception)   Investment professional for    Bond Fund
                             Bond Fund -- 8 years           25 years in total; 18 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 DONNALISA BARNUM            Growth Fund -- 3 years         Senior Vice President,         An equity portfolio counselor
                                                            Capital Research Company       for Growth Fund
                                                            Investment professional for
                                                            25 years in total; 20 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 GORDON CRAWFORD             Global Small Capitalization    Senior Vice President and      An equity portfolio counselor
                             Fund --                        Director, Capital Research     (primarily U.S.) for Global
                             8 years (since the fund's      and Management Company         Small Capitalization Fund,
                             inception)                     Investment professional for    Growth Fund and Global
                             Growth Fund -- 12 years (plus  35 years, all with Capital     Discovery Fund
                             5 years of prior experience    Research and Management
                             as an investment analyst for   Company or affiliate
                             the fund)
                             Global Discovery
                             Fund -- 1 year
-------------------------------------------------------------------------------------------------------------------------
 MARK H. DALZELL             Bond Fund -- 1 year            Senior Vice President,         [to be provided]
                                                            Capital Research Company
                                                            Investment professional for
                                                            28 years in total; 18 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
 MARK E. DENNING             Global Small Capitalization    Director, Capital Research     An equity portfolio counselor
                             Fund --                        and Management Company         (primarily non-U.S.) for
                             8 years (since the fund's      Investment professional for    Global Small Capitalization
                             inception)                     24 years, all with Capital     Fund and Global Discovery Fund
                             Global Discovery               Research and Management
                             Fund -- 1 year                 Company or affiliate



----
24  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>




                                                            PRIMARY TITLE WITH INVESTMENT
PORTFOLIO COUNSELOR FOR THE  PORTFOLIO COUNSELOR EXPERIENCE  ADVISER (OR AFFILIATE) AND    PORTFOLIO COUNSELOR'S ROLE IN
SERIES/TITLE (IF APPLICABLE)        IN THE FUND(S)              INVESTMENT EXPERIENCE        MANAGEMENT OF THE FUND(S)
-------------------------------------------------------------------------------------------------------------------------

    J. BLAIR FRANK           Global Small Capitalization    Vice President, Capital        An equity portfolio counselor
                             Fund --                        Research Company               (primarily U.S.) for Global
                             3 years                        Investment professional for    Small Capitalization Fund and
                             Growth Fund -- 6 years (plus   13 years in total; 12 years    an equity portfolio counselor
                             3 years of prior experience    with Capital Research and      for
                             as an investment analyst for   Management Company or          Growth Fund
                             the fund)                      affiliate
-------------------------------------------------------------------------------------------------------------------------
    NICK J. GRACE            Global Growth Fund -- 4 years  Senior Vice President,         An equity portfolio counselor
                             (plus 4 years of prior         Capital Research Company       for Global Growth Fund
                             experience as an investment    Investment professional for
                             analyst for the fund)          16 years in total; 12 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    J. DALE HARVEY           Blue Chip Income and Growth    Vice President, Capital        An equity portfolio counselor
                             Fund -- 1 year                 Research and Management        for Blue Chip Income and
                                                            Company                        Growth Fund
                                                            Investment professional for
                                                            17 years in total; 15 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    ALWYN W. HEONG           International Fund -- 10 years Senior Vice President and      A non-U.S. equity portfolio
                                                            Director, Capital Research     counselor for International
                                                            Company                        Fund
                                                            Investment professional for
                                                            18 years in total; 14 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    THOMAS H. HOGH           U.S. Government/AAA-Rated      Vice President, Capital        A fixed-income portfolio
                             Securities Fund -- 9 years     International Research, Inc.   counselor for U.S.
                                                            Investment professional for    Government/AAA-Rated
                                                            19 years in total; 16 years    Securities Fund
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    CARL M. KAWAJA           New World Fund -- 7 years      Senior Vice President,         An equity portfolio counselor
                             (since the fund's inception)   Capital Research Company       for New World Fund
                                                            Investment professional for
                                                            18 years in total; 15 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    MICHAEL T. KERR          Asset Allocation Fund -- 1     Vice President, Capital        An equity portfolio counselor
                             year                           Research and Management        for Asset Allocation Fund
                             Growth Fund -- 1 year          Company
                                                            Investment professional for
                                                            23 years in total; 21 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    SUNG LEE                 International Fund -- less     Executive Vice President and   [to be provided]
                             than 1 year                    Director, Capital Research
                                                            Company
                                                            Investment professional for
                                                            12 years, all with Capital
                                                            Research and Management
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
    MICHAEL D. LOCKE         U.S. Government/AAA-Rated      Vice President, Capital        A fixed-income portfolio
                             Securities Fund -- 3 years     Research Company               counselor for U.S.
                             (plus 6 years of prior         Investment professional for    Government/AAA-Rated
                             experience as an investment    11 years in total; 10 years    Securities Fund
                             analyst for the fund)          with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    JAMES R. MULALLY         Asset Allocation Fund -- less  Senior Vice President,         [to be provided]
                             than 1 year                    Capital International Limited
                                                            Investment professional for
                                                            30 years in total; 26 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    RONALD B. MORROW         Growth Fund -- 3 years (plus   Senior Vice President,         An equity portfolio counselor
                             6 years of prior experience    Capital Research Company       for Growth Fund
                             as an investment analyst for   Investment professional for
                             the fund)                      38 years in total; 9 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    ROBERT G. O'DONNELL      Growth-Income Fund -- 16       Senior Vice President and      An equity portfolio counselor
                             years (plus 1 year of prior    Director, Capital Research     for Growth-Income Fund
                             experience as an investment    and Management Company
                             analyst for the fund)          Investment professional for
                                                            34 years in total; 31 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate
-------------------------------------------------------------------------------------------------------------------------
    C. ROSS SAPPENFIELD      Growth-Income Fund -- 7 years  Vice President, Capital        An equity portfolio counselor
                             Blue Chip Income and Growth    Research and Management        for Growth-Income Fund and
                             Fund -- 5 years (since the     Company                        Blue Chip Income and Growth
                             fund's inception)              Investment professional for    Fund
                                                            14 years, all with Capital
                                                            Research and Management
                                                            Company or affiliate
-------------------------------------------------------------------------------------------------------------------------
    STEVEN T. WATSON         Global Growth Fund -- 4 years  Senior Vice President and      An equity portfolio counselor
                             (plus 4 years of prior         Director, Capital Research     for Global Growth Fund
                             experience as an investment    Company
                             analyst for the fund)          Investment professional for
                                                            19 years in total; 16 years
                                                            with Capital Research and
                                                            Management Company or
                                                            affiliate



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 25
                                                                             ---

<PAGE>

Additional information regarding the portfolio counselors' compensation,
holdings in other accounts and ownership of securities in American Funds
Insurance Series can be found in the statement of additional information.

PURCHASES AND REDEMPTIONS OF SHARES

Shares of the Series are currently offered only to insurance company separate
accounts. All such shares may be purchased or redeemed by the separate accounts
at net asset values without any sales or redemption charges. Such purchases and
redemptions are made promptly after corresponding purchases and redemptions of
units of the separate accounts.

FREQUENT TRADING OF FUND SHARES

The Series and American Funds Distributors, Inc., the Series' distributor,
reserve the right to reject any purchase order for any reason. The funds are
not designed to serve as vehicles for frequent trading in response to
short-term fluctuations in the securities markets. Accordingly, purchases,
including those that are part of exchange activity, that the Series or American
Funds Distributors, Inc. has determined could involve actual or potential harm
to any fund may be rejected. Frequent trading of fund's shares may lead to
increased costs to that fund and less efficient management of the fund's
portfolio, resulting in dilution of the value of the shares held by long-term
shareholders.

The Series' board of trustees has adopted policies and procedures with respect
to frequent purchases and redemptions of fund shares. Under a new "purchase
blocking policy," beginning on January 12, 2005, any contract owner redeeming
units representing a beneficial interest in any fund other than Cash Management
Fund (including redemptions that are part of an exchange transaction) having a
value of $5,000 or more will be precluded from investing in units of beneficial
interest in that fund (including investments that are part of an exchange
transaction) for 30 calendar days after the redemption transaction. This
prohibition will not apply to redemptions by contract owners whose units are
held on the books of insurance company separate accounts that have not adopted
procedures to implement this policy or to redemptions by other registered
investment companies sponsored by insurance companies. American Funds Service
Company, the Series' transfer agent, will work with the insurance companies to
develop such procedures or other procedures that American Funds Service Company
determines are reasonably designed to achieve the objective of the purchase
blocking policy. At the time the insurance companies adopt these procedures,
contract owners whose units are held on the books of such companies will be
subject to this general purchase blocking policy. Under this purchase blocking
policy, certain purchases will not be prevented and certain redemptions will
not trigger a purchase block, such as: systematic redemptions and purchases
where the entity maintaining the contract owner's account is able to identify
the transaction as a systematic redemption or purchase; purchases and
redemptions of units representing a beneficial interest in a fund having a
value of less than $5,000; retirement plan contributions, loans and
distributions (including hardship withdrawals) identified as such on the
retirement plan recordkeeper's system; and purchase transactions involving
transfer of assets, rollovers, Roth IRA conversions and IRA
re-characterizations, where the entity maintaining the contract owner's account
is able to identify the transaction as one of these types of transactions.

VALUING SHARES

Each fund calculates its share price, also called net asset value, each day the
New York Stock Exchange is open as of approximately 4:00 p.m. New York time,
the normal close of regular trading. Assets are valued primarily on the basis
of market quotations. However, the funds have adopted procedures for making
"fair value" determinations if market quotations are not readily available. For
example, if events occur between the close of markets outside the United States
and the close of regular trading on the New York Stock Exchange that, in the
opinion of the investment adviser, materially affect the value of the portfolio
securities of Global Discovery Fund, Global Growth Fund, Global Small
Capitalization Fund, International Fund, New World Fund and World Growth and
Income Fund (collectively, the "International Funds"), the securities will be
valued in accordance with fair value procedures. Use of these procedures is
intended to result in more appropriate net asset values. In addition, such use
will reduce, if not eliminate, potential arbitrage opportunities otherwise
available to short-term investors in the International Funds.

Because certain of the funds may hold securities that are primarily listed on
foreign exchanges that trade on weekends or days when the funds do not price
their shares, the value of securities held in the funds may change on days when
you will not be able to purchase or redeem fund shares.

Shares of the funds will be purchased or sold at the net asset value next
determined after receipt of requests from the appropriate insurance company.


----
26  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

PLANS OF DISTRIBUTION

The Series has adopted plans of distribution or "12b-1 plans" for Class 2 and
Class 3 shares. Under these plans, the Series may finance activities primarily
intended to sell shares, provided the categories of expenses are approved in
advance by the Series' board of trustees. The plans provide for annual expenses
of .25% for Class 2 shares and .18% for Class 3 shares. For these share
classes, amounts paid under the 12b-1 plans are used by insurance company
contract issuers to cover the expenses of certain contract owner services. The
12b-1 fees paid by the Series, as a percentage of average net assets, for the
previous fiscal year, are indicated above in the Annual Fund Operating Expenses
table for each fund. Since these fees are paid out of the Series' assets or
income on an ongoing basis, over time they will increase the cost and reduce
the return of an investment.

DISTRIBUTIONS AND TAXES

Each fund of the Series intends to qualify as a "regulated investment company"
under the Internal Revenue Code. In any fiscal year in which a fund so
qualifies and distributes to shareholders its investment company taxable income
and net realized capital gain, the fund itself is relieved of federal income
tax.

It is the Series' policy to distribute to the shareholders (the insurance
company separate accounts) all of its investment company taxable income and
capital gain for each fiscal year.

See the applicable contract prospectus for information regarding the federal
income tax treatment of the contracts and distributions to the separate
accounts.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 27
                                                                             ---

<PAGE>

FINANCIAL HIGHLIGHTS/1/

The Financial Highlights table is intended to help you understand the funds'
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in a fund (assuming reinvestment of all dividends and capital gain
distributions). This information has been audited by PricewaterhouseCoopers
LLP, whose report, along with the funds' financial statements, is included in
the statement of additional information, which is available upon request.
Figures shown do not reflect insurance contract expenses. If reflected, results
would be lower.



                      Income (loss) from investment operations/2/      Dividends and distributions
                      ------------------------------------------  -------------------------------------

                                      Net gains
            Net asset    Net         (losses) on                  Dividends                    Total     Net asset
             value,   investment   securities (both   Total from  (from net  Distributions   dividends    value,
Period      beginning   income       realized and     investment  investment (from capital      and       end of   Total
ended       of period   (loss)       unrealized)      operations   income)      gains)     distributions  period   return


Global Discovery Fund/4/
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $10.79      $.14           $ 1.05          $ 1.19      $(.11)        $(.24)        $(.35)    $11.63    11.07%
12/31/04       9.94       .08              .98            1.06       (.09)         (.12)         (.21)     10.79    10.72
12/31/03       7.26       .05             2.67            2.72       (.04)           --          (.04)      9.94    37.41
12/31/02       9.30       .06            (2.05)          (1.99)      (.05)           --          (.05)      7.26   (21.41)
12/31/01      10.00       .04             (.70)           (.66)      (.04)           --          (.04)      9.30    (6.65)
CLASS 2
12/31/05      10.76       .11             1.05            1.16       (.09)         (.24)         (.33)     11.59    10.80
12/31/04       9.92       .06              .97            1.03       (.07)         (.12)         (.19)     10.76    10.43
12/31/03       7.25       .02             2.67            2.69       (.02)           --          (.02)      9.92    37.11
12/31/02       9.30       .04            (2.05)          (2.01)      (.04)           --          (.04)      7.25   (21.67)
12/31/01      10.00       .02             (.69)           (.67)      (.03)           --          (.03)      9.30    (6.71)

Global Growth Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $17.31      $.28           $ 2.19          $ 2.47      $(.15)       $   --        $ (.15)    $19.63    14.37%
12/31/04      15.30       .18             1.92            2.10       (.09)           --          (.09)     17.31    13.80
12/31/03      11.35       .12             3.91            4.03       (.08)           --          (.08)     15.30    35.63
12/31/02      13.42       .09            (2.02)          (1.93)      (.14)           --          (.14)     11.35   (14.46)
12/31/01      17.25       .18            (2.50)          (2.32)      (.15)        (1.36)        (1.51)     13.42   (13.99)
CLASS 2
12/31/05      17.23       .23             2.18            2.41       (.12)           --          (.12)     19.52    14.07
12/31/04      15.25       .14             1.91            2.05       (.07)           --          (.07)     17.23    13.49
12/31/03      11.32       .09             3.89            3.98       (.05)           --          (.05)     15.25    35.27
12/31/02      13.38       .06            (2.01)          (1.95)      (.11)           --          (.11)     11.32   (14.64)
12/31/01      17.21       .13            (2.49)          (2.36)      (.11)        (1.36)        (1.47)     13.38   (14.22)

Global Small Capitalization Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $17.14     $ .13           $ 4.23          $ 4.36      $(.21)        $  --         $(.21)    $21.29    25.66%
12/31/04      14.15       .02             2.97            2.99         --            --            --      17.14    21.13
12/31/03       9.27     --/5/             4.97            4.97       (.09)           --          (.09)     14.15    53.92
12/31/02      11.52     --/5/            (2.15)          (2.15)      (.10)           --          (.10)      9.27   (18.83)
12/31/01      14.28       .03            (1.81)          (1.78)      (.13)         (.85)         (.98)     11.52   (12.63)
CLASS 2
12/31/05      17.02       .09             4.19            4.28       (.18)           --          (.18)     21.12    25.35
12/31/04      14.08      (.01)            2.95            2.94         --            --            --      17.02    20.88
12/31/03       9.23      (.03)            4.95            4.92       (.07)           --          (.07)     14.08    53.53
12/31/02      11.48      (.02)           (2.15)          (2.17)      (.08)           --          (.08)      9.23   (19.05)
12/31/01      14.24     --/5/            (1.80)          (1.80)      (.11)         (.85)         (.96)     11.48   (12.85)

Growth Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $51.39      $.46          $  8.00         $  8.46      $(.49)      $    --       $  (.49)    $59.36    16.50%
12/31/04      45.74       .32             5.51            5.83       (.18)           --          (.18)     51.39    12.75
12/31/03      33.47       .16            12.26           12.42       (.15)           --          (.15)     45.74    37.15
12/31/02      44.30       .12           (10.87)         (10.75)      (.08)           --          (.08)     33.47   (24.27)
12/31/01      73.51       .18           (11.99)         (11.81)      (.41)       (16.99)       (17.40)     44.30   (17.93)
CLASS 2
12/31/05      51.10       .34             7.92            8.26       (.38)           --          (.38)     58.98    16.19
12/31/04      45.50       .23             5.45            5.68       (.08)           --          (.08)     51.10    12.50
12/31/03      33.29       .06            12.19           12.25       (.04)           --          (.04)     45.50    36.80
12/31/02      44.09       .03           (10.82)         (10.79)      (.01)           --          (.01)     33.29   (24.46)
12/31/01      73.28       .04           (11.94)         (11.90)      (.30)       (16.99)       (17.29)     44.09   (18.15)
CLASS 3
12/31/05      51.38       .37             7.98            8.35       (.39)           --          (.39)     59.34    16.28
12/31/04/7/   47.74       .24             3.50            3.74       (.10)           --          (.10)     51.38     7.85





                         Ratio of   Ratio of   Ratio of
                         expenses   expenses     net
            Net assets, to average to average   income
              end of    net assets net assets (loss) to
Period      period (in    before     after     average
ended        millions)    waiver   waiver/3/  net assets


Global Discovery Fund/4/
--------------------------------------------------------------------------------
CLASS 1
12/31/05          $22        .61%       .56%      1.27%
12/31/04           20        .61        .60        .81
12/31/03           17        .61        .61        .55
12/31/02           10        .61        .61        .69
12/31/01           12        .31        .31        .42
CLASS 2
12/31/05           89        .86        .81       1.04
12/31/04           51        .86        .85        .60
12/31/03           24        .86        .86        .28
12/31/02            9        .86        .86        .48
12/31/01            4        .42        .42        .21

Global Growth Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/05       $  206        .62%       .57%      1.56%
12/31/04          202        .65        .64       1.15
12/31/03          188        .70        .70        .94
12/31/02          152        .71        .71        .73
12/31/01          215        .70        .70       1.24
CLASS 2
12/31/05        2,617        .87        .82       1.30
12/31/04        1,796        .90        .89        .92
12/31/03        1,082        .95        .95        .68
12/31/02          592        .96        .96        .48
12/31/01          600        .95        .95        .88

Global Small Capitalization Fund
---------------------------------------------------------------------------------------------------
CLASS 1
12/31/05       $  231        .79%       .73%       .72%
12/31/04          193        .81        .80        .15
12/31/03          163        .83        .83       (.03)
12/31/02          108        .84        .84        .04
12/31/01          149        .83        .83        .21
CLASS 2
12/31/05        1,977       1.04        .97        .49
12/31/04        1,198       1.06       1.05       (.07)
12/31/03          665       1.08       1.08       (.28)
12/31/02          290       1.09       1.09       (.20)
12/31/01          274       1.08       1.08       (.05)

Growth Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/05      $ 3,709        .35%       .32%       .87%
12/31/04        3,744        .36        .36        .68
12/31/03        3,877        .39        .39        .41
12/31/02        3,195        .40        .40        .30
12/31/01        5,207        .38        .38        .34
CLASS 2
12/31/05       18,343        .60        .57        .64
12/31/04       12,055        .61        .61        .50
12/31/03        7,107        .64        .64        .16
12/31/02        3,009        .65        .65        .07
12/31/01        2,937        .63        .63        .07
CLASS 3
12/31/05          499        .53        .50        .69
12/31/04/7/       516     .54/6/     .53/6/     .54/6/



----
28  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>



                      Income (loss) from investment operations/2/      Dividends and distributions
                      ------------------------------------------  -------------------------------------

                                      Net gains
            Net asset    Net         (losses) on                  Dividends                    Total     Net asset
             value,   investment   securities (both   Total from  (from net  Distributions   dividends    value,
Period      beginning   income       realized and     investment  investment (from capital      and       end of   Total
ended       of period   (loss)       unrealized)      operations   income)      gains)     distributions  period   return


International Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $15.82      $.32           $ 3.11          $ 3.43      $(.29)       $   --       $ (.29)     $18.96    21.75%
12/31/04      13.41       .22             2.41            2.63       (.22)           --         (.22)      15.82    19.66
12/31/03      10.07       .15             3.38            3.53       (.19)           --         (.19)      13.41    35.12
12/31/02      12.02       .15            (1.90)          (1.75)      (.20)           --         (.20)      10.07   (14.58)
12/31/01      20.59       .22            (3.79)          (3.57)      (.20)        (4.80)       (5.00)      12.02   (19.73)
CLASS 2
12/31/05      15.79       .28             3.11            3.39       (.26)           --         (.26)      18.92    21.50
12/31/04      13.39       .18             2.41            2.59       (.19)           --         (.19)      15.79    19.32
12/31/03      10.05       .12             3.37            3.49       (.15)           --         (.15)      13.39    34.85
12/31/02      11.97       .12            (1.89)          (1.77)      (.15)           --         (.15)      10.05   (14.84)
12/31/01      20.54       .15            (3.76)          (3.61)      (.16)        (4.80)       (4.96)      11.97   (19.89)
CLASS 3
12/31/05      15.82       .29             3.11            3.40       (.26)           --         (.26)      18.96    21.54
12/31/04/7/   13.76       .20             2.05            2.25       (.19)           --         (.19)      15.82    16.45

New World Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $13.96      $.33           $ 2.58          $ 2.91      $(.20)       $   --        $(.20)     $16.67    21.10%
12/31/04      11.99       .23             2.01            2.24       (.27)           --         (.27)      13.96    19.07
12/31/03       8.76       .21             3.21            3.42       (.19)           --         (.19)      11.99    39.56
12/31/02       9.44       .20             (.70)           (.50)      (.18)           --         (.18)       8.76    (5.45)
12/31/01       9.85       .24             (.63)           (.39)      (.02)           --         (.02)       9.44    (3.99)
CLASS 2
12/31/05      13.89       .29             2.56            2.85       (.18)           --         (.18)      16.56    20.74
12/31/04      11.94       .19             2.01            2.20       (.25)           --         (.25)      13.89    18.80
12/31/03       8.73       .19             3.19            3.38       (.17)           --         (.17)      11.94    39.18
12/31/02       9.41       .18             (.70)           (.52)      (.16)           --         (.16)       8.73    (5.66)
12/31/01       9.84       .21             (.62)           (.41)      (.02)           --         (.02)       9.41    (4.19)

Blue Chip Income and Growth Fund/4/
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $10.26      $.18            $ .59           $ .77      $(.12)       $   --        $(.12)     $10.91     7.57%
12/31/04       9.41       .15              .78             .93       (.08)           --         (.08)      10.26     9.94
12/31/03       7.17       .13             2.11            2.24         --            --           --        9.41    31.24
12/31/02       9.43       .16            (2.32)          (2.16)      (.10)           --         (.10)       7.17   (22.93)
12/31/01      10.00       .09             (.61)           (.52)      (.05)           --         (.05)       9.43    (5.23)
CLASS 2
12/31/05      10.20       .15              .58             .73       (.10)           --         (.10)      10.83     7.24
12/31/04       9.36       .13              .78             .91       (.07)           --         (.07)      10.20     9.74
12/31/03       7.16       .11             2.09            2.20         --            --           --        9.36    30.73
12/31/02       9.41       .14            (2.30)          (2.16)      (.09)           --         (.09)       7.16   (23.07)
12/31/01      10.00       .08             (.63)           (.55)      (.04)           --         (.04)       9.41    (5.38)

Growth-Income Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $36.81      $.62           $ 1.61          $ 2.23      $(.58)      $  (.15)      $ (.73)     $38.31     6.08%
12/31/04      33.61       .48             3.09            3.57       (.37)           --         (.37)      36.81    10.66
12/31/03      25.63       .42             7.96            8.38       (.40)           --         (.40)      33.61    32.76
12/31/02      31.70       .41            (6.16)          (5.75)      (.32)           --         (.32)      25.63   (18.15)
12/31/01      35.23       .51              .49            1.00       (.73)        (3.80)       (4.53)      31.70     2.78
CLASS 2
12/31/05      36.64       .53             1.60            2.13       (.50)         (.15)        (.65)      38.12     5.83
12/31/04      33.48       .41             3.06            3.47       (.31)           --         (.31)      36.64    10.37
12/31/03      25.52       .34             7.92            8.26       (.30)           --         (.30)      33.48    32.43
12/31/02      31.58       .35            (6.14)          (5.79)      (.27)           --         (.27)      25.52   (18.34)
12/31/01      35.13       .41              .52             .93       (.68)        (3.80)       (4.48)      31.58     2.56
CLASS 3
12/31/05      36.80       .56             1.61            2.17       (.51)         (.15)        (.66)      38.31     5.88
12/31/04      34.64       .41             2.07            2.48       (.32)           --         (.32)      36.80     7.18





                         Ratio of   Ratio of   Ratio of
                         expenses   expenses     net
            Net assets, to average to average   income
              end of    net assets net assets (loss) to
Period      period (in    before     after     average
ended        millions)    waiver   waiver/3/  net assets


International Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/05       $1,599        .57%       .52%      1.92%
12/31/04        1,495        .60        .59       1.54
12/31/03        1,431        .63        .63       1.40
12/31/02        1,236        .63        .63       1.35
12/31/01        1,772        .61        .61       1.41
CLASS 2
12/31/05        4,790        .82        .77       1.64
12/31/04        2,752        .84        .83       1.27
12/31/03        1,385        .88        .88       1.08
12/31/02          636        .88        .88       1.05
12/31/01          628        .86        .86       1.04
CLASS 3
12/31/05          116        .75        .70       1.74
12/31/04/7/       115     .77/6/     .77/6/    1.45/6/

New World Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/05         $ 88        .92%       .85%      2.22%
12/31/04           63        .93        .92       1.81
12/31/03           47        .92        .92       2.15
12/31/02           35        .91        .91       2.14
12/31/01           37        .91        .91       2.54
CLASS 2
12/31/05          677       1.17       1.10       1.97
12/31/04          373       1.18       1.17       1.57
12/31/03          224       1.17       1.17       1.90
12/31/02          124       1.16       1.16       1.89
12/31/01          116       1.16       1.16       2.25

Blue Chip Income and Growth Fund/4/
---------------------------------------------------------------------------------------------------
CLASS 1
12/31/05       $  135        .45%       .41%      1.73%
12/31/04          129        .46        .46       1.60
12/31/03          107        .52        .50       1.67
12/31/02           54        .52        .52       1.89
12/31/01           49        .25        .25        .93
CLASS 2
12/31/05        3,029        .70        .66       1.48
12/31/04        2,349        .71        .70       1.37
12/31/03        1,490        .76        .74       1.41
12/31/02          426        .77        .77       1.76
12/31/01          111        .37        .37        .82

Growth-Income Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/05      $ 3,825        .29%       .27%      1.68%
12/31/04        4,213        .31        .30       1.39
12/31/03        4,402        .34        .34       1.45
12/31/02        3,741        .35        .35       1.43
12/31/01        5,428        .35        .35       1.53
CLASS 2
12/31/05       17,608        .54        .52       1.44
12/31/04       13,105        .56        .55       1.19
12/31/03        7,824        .59        .59       1.18
12/31/02        3,632        .60        .60       1.22
12/31/01        3,187        .60        .60       1.25
CLASS 3
12/31/05          471        .47        .45       1.50
12/31/04          537     .49/6/     .48/6/    1.24/6/



                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 29
                                                                             ---

<PAGE>



                      Income (loss) from investment operations/2/      Dividends and distributions
                      ------------------------------------------  -------------------------------------

                                      Net gains
            Net asset    Net         (losses) on                  Dividends                    Total     Net asset
             value,   investment   securities (both   Total from  (from net  Distributions   dividends    value,
Period      beginning   income       realized and     investment  investment (from capital      and       end of   Total
ended       of period   (loss)       unrealized)      operations   income)      gains)     distributions  period   return


Asset Allocation Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $15.49      $.41           $ 1.05          $ 1.46       $(.39)      $  --        $ (.39)     $16.56     9.45%
12/31/04      14.58       .39              .84            1.23        (.32)         --          (.32)      15.49     8.50
12/31/03      12.23       .41             2.29            2.70        (.35)         --          (.35)      14.58    22.14
12/31/02      14.30       .45            (2.19)          (1.74)       (.33)         --          (.33)      12.23   (12.19)
12/31/01      15.71       .49             (.37)            .12        (.59)       (.94)        (1.53)      14.30      .77
CLASS 2
12/31/05      15.42       .37             1.04            1.41        (.36)         --          (.36)      16.47     9.14
12/31/04      14.51       .36              .84            1.20        (.29)         --          (.29)      15.42     8.34
12/31/03      12.18       .37             2.27            2.64        (.31)         --          (.31)      14.51    21.74
12/31/02      14.25       .42            (2.18)          (1.76)       (.31)         --          (.31)      12.18   (12.38)
12/31/01      15.67       .45             (.36)            .09        (.57)       (.94)        (1.51)      14.25      .52
CLASS 3
12/31/05      15.49       .38             1.05            1.43        (.36)         --          (.36)      16.56     9.26
12/31/04/7/   14.85       .36              .58             .94        (.30)         --          (.30)      15.49     6.38

Bond Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $11.57      $.60            $(.40)          $ .20       $(.46)         --         $(.46)     $11.31     1.77%
12/31/04      11.34       .56              .10             .66        (.43)         --          (.43)      11.57     6.04
12/31/03      10.41       .57              .78            1.35        (.42)         --          (.42)      11.34    13.07
12/31/02      10.44       .67             (.24)            .43        (.46)         --          (.46)      10.41     4.26
12/31/01      10.18       .77              .08             .85        (.59)         --          (.59)      10.44     8.48
CLASS 2
12/31/05      11.48       .57             (.39)            .18        (.44)         --          (.44)      11.22     1.59
12/31/04      11.27       .53              .09             .62        (.41)         --          (.41)      11.48     5.72
12/31/03      10.36       .53              .78            1.31        (.40)         --          (.40)      11.27    12.80
12/31/02      10.40       .64             (.24)            .40        (.44)         --          (.44)      10.36     4.05
12/31/01      10.16       .73              .08             .81        (.57)         --          (.57)      10.40     8.15

High-Income Bond Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $12.89     $ .85           $ (.55)          $ .30      $ (.78)         --        $ (.78)     $12.41     2.46%
12/31/04      12.54       .84              .32            1.16        (.81)         --          (.81)      12.89     9.83
12/31/03      10.44       .90             2.12            3.02        (.92)         --          (.92)      12.54    29.79
12/31/02      11.78      1.01            (1.25)           (.24)      (1.10)         --         (1.10)      10.44    (1.51)
12/31/01      12.25      1.17             (.23)            .94       (1.41)         --         (1.41)      11.78     8.02
CLASS 2
12/31/05      12.81       .81             (.55)            .26        (.75)         --          (.75)      12.32     2.20
12/31/04      12.47       .81              .32            1.13        (.79)         --          (.79)      12.81     9.59
12/31/03      10.39       .86             2.12            2.98        (.90)         --          (.90)      12.47    29.51
12/31/02      11.74       .97            (1.25)           (.28)      (1.07)         --         (1.07)      10.39    (1.83)
12/31/01      12.22      1.13             (.23)            .90       (1.38)         --         (1.38)      11.74     7.73
CLASS 3
12/31/05      12.87       .82             (.55)            .27        (.75)         --          (.75)      12.39     2.25
12/31/04/7/   12.79       .78              .11             .89        (.81)         --          (.81)      12.87     7.52

U.S. Government/AAA-Rated Securities Fund
--------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $12.07      $.48            $(.16)          $ .32       $(.48)         --         $(.48)     $11.91     2.70%
12/31/04      12.24       .45             (.03)            .42        (.59)         --          (.59)      12.07     3.58
12/31/03      12.37       .46             (.15)            .31        (.44)         --          (.44)      12.24     2.51
12/31/02      11.87       .54              .55            1.09        (.59)         --          (.59)      12.37     9.45
12/31/01      11.73       .66              .17             .83        (.69)         --          (.69)      11.87     7.24
CLASS 2
12/31/05      12.00       .45             (.16)            .29        (.46)         --          (.46)      11.83     2.41
12/31/04      12.17       .41             (.03)            .38        (.55)         --          (.55)      12.00     3.30
12/31/03      12.31       .42             (.14)            .28        (.42)         --          (.42)      12.17     2.28
12/31/02      11.83       .50              .55            1.05        (.57)         --          (.57)      12.31     9.15
12/31/01      11.70       .62              .18             .80        (.67)         --          (.67)      11.83     7.02
CLASS 3
12/31/05      12.05       .46             (.16)            .30        (.46)         --          (.46)      11.89     2.50
12/31/04/7/   12.34       .41             (.11)            .30        (.59)         --          (.59)      12.05     2.58





                         Ratio of   Ratio of   Ratio of
                         expenses   expenses     net
            Net assets, to average to average   income
              end of    net assets net assets (loss) to
Period      period (in    before     after     average
ended        millions)    waiver   waiver/3/  net assets


Asset Allocation Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/05      $  879         .35%       .32%      2.57%
12/31/04         899         .38        .37       2.64
12/31/03         911         .42        .42       3.12
12/31/02         797         .45        .45       3.31
12/31/01       1,012         .45        .45       3.30
CLASS 2
12/31/05       5,120         .60        .57       2.31
12/31/04       3,797         .62        .62       2.42
12/31/03       2,314         .67        .67       2.81
12/31/02       1,056         .70        .70       3.11
12/31/01         730         .70        .70       3.03
CLASS 3
12/31/05          76         .53        .50       2.39
12/31/04/7/       81      .55/6/     .55/6/    2.50/6/

Bond Fund
-------------------------------------------------------------------
CLASS 1
12/31/05      $  182         .44%       .40%      5.30%
12/31/04         195         .45        .44       4.94
12/31/03         213         .47        .47       5.19
12/31/02         218         .49        .49       6.60
12/31/01         194         .49        .49       7.38
CLASS 2
12/31/05       2,312         .69        .65       5.06
12/31/04       1,759         .70        .69       4.68
12/31/03       1,280         .72        .72       4.88
12/31/02         697         .74        .74       6.34
12/31/01         349         .74        .74       7.06

High-Income Bond Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/05        $309         .50%       .46%      6.76%
12/31/04         364         .50        .50       6.74
12/31/03         411         .51        .51       7.74
12/31/02         335         .52        .52       9.55
12/31/01         403         .51        .51       9.60
CLASS 2
12/31/05         590         .75        .71       6.55
12/31/04         444         .75        .74       6.48
12/31/03         319         .76        .76       7.41
12/31/02         183         .77        .77       9.28
12/31/01         156         .76        .76       9.37
CLASS 3
12/31/05          37         .68        .64       6.58
12/31/04/7/       46      .68/6/     .68/6/    6.57/6/

U.S. Government/AAA-Rated Securities Fund
---------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05        $252         .47%       .43%      3.99%
12/31/04         286         .47        .46       3.68
12/31/03         373         .46        .46       3.71
12/31/02         517         .47        .47       4.45
12/31/01         386         .47        .47       5.58
CLASS 2
12/31/05         341         .72        .68       3.75
12/31/04         285         .72        .71       3.42
12/31/03         273         .71        .71       3.43
12/31/02         288         .72        .72       4.14
12/31/01         137         .72        .72       5.27
CLASS 3
12/31/05          39         .65        .61       3.81
12/31/04/7/       43      .65/6/     .65/6/    3.51/6/



----
30  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>



                      Income (loss) from investment operations/2/      Dividends and distributions
                      ------------------------------------------- -------------------------------------

                                      Net gains
            Net asset    Net         (losses) on                  Dividends                    Total     Net asset
             value,   investment   securities (both   Total from  (from net  Distributions   dividends    value,
Period      beginning   income       realized and     investment  investment (from capital      and       end of   Total
ended       of period   (loss)       unrealized)      operations   income)      gains)     distributions  period   return


Cash Management Fund
-------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/05     $11.09      $.33           $--/5/           $.33       $(.11)        --           $(.11)     $11.31    2.97%
12/31/04      11.07       .11            --/5/            .11        (.09)        --            (.09)      11.09     .96
12/31/03      11.17       .07            --/5/            .07        (.17)        --            (.17)      11.07     .67
12/31/02      11.41       .14            --/5/            .14        (.38)        --            (.38)      11.17    1.24
12/31/01      11.65       .41              .01            .42        (.66)        --            (.66)      11.41    3.66
CLASS 2
12/31/05      11.05       .30            --/5/            .30        (.09)        --            (.09)      11.26    2.68
12/31/04      11.03       .08            --/5/            .08        (.06)        --            (.06)      11.05     .70
12/31/03      11.12       .05            --/5/            .05        (.14)        --            (.14)      11.03     .47
12/31/02      11.37       .11            --/5/            .11        (.36)        --            (.36)      11.12    1.00
12/31/01      11.62       .34              .05            .39        (.64)        --            (.64)      11.37    3.43
CLASS 3
12/31/05      11.07       .30            --/5/            .30        (.08)        --            (.08)      11.29    2.74
12/31/04/7/   11.07       .09            --/5/            .09        (.09)        --            (.09)      11.07     .78





                         Ratio of   Ratio of   Ratio of
                         expenses   expenses     net
            Net assets, to average to average   income
              end of    net assets net assets (loss) to
Period      period (in    before     after     average
ended        millions)    waiver   waiver/3/  net assets


Cash Management Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/05       $ 75          .33%       .30%      2.91%
12/31/04         78          .37        .36        .96
12/31/03        103          .47        .47        .68
12/31/02        203          .46        .46       1.25
12/31/01        218          .46        .46       3.52
CLASS 2
12/31/05        153          .58        .55       2.71
12/31/04        110          .61        .61        .76
12/31/03         99          .72        .72        .42
12/31/02        133          .71        .71       1.00
12/31/01        127          .71        .71       2.99
CLASS 3
12/31/05         16          .51        .48       2.70
12/31/04/7/      20       .54/6/     .54/6/     .80/6/




                                                     Year ended December 31
                                                  ----------------------------
Portfolio turnover rate for all classes of shares 2005  2004  2003  2002  2001
------------------------------------------------- ----  ----  ----  ----  ----

    Global Discovery Fund/4/                        53%   28%   30%   25%    4%
    Global Growth Fund                              26    24    27    30    38
    Global Small Capitalization Fund                47    49    51    66    65
    Growth Fund                                     29    30    34    34    31
    International Fund                              40    37    40    30    40
    New World Fund                                  26    18    19    22    31
    Blue Chip Income and Growth Fund/4/             33    13    12     8    12
    Growth-Income Fund                              20    21    21    26    34
    Asset Allocation Fund                           23    20    20    25    32
    Bond Fund                                       46    34    20    29    59
    High-Income Bond Fund                           35    38    48    45    42
    U.S. Government/AAA-Rated Securities Fund       86    68    63    53    84
    Cash Management Fund                            --    --    --    --    --


/1/Based on operations for the period shown (unless otherwise noted) and,
   accordingly, may not be representative of a full year.

/2/Based on average shares outstanding.

/3/The ratios in this column reflect the impact, if any, of certain waivers by
   Capital Research and Management Company. During the periods shown, Capital
   Research and Management Company reduced fees for investment advisory
   services for all share classes.

/4/Commenced operations July 5, 2001.

/5/Amount less than one cent.

/6/Annualized.

/7/From January 16, 2004, when Class 3 shares were first issued.


                                                                             ---
                                AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 31
                                                                             ---

<PAGE>

[LOGO OF American Funds(R)]                The right choice for the long term(R)

OTHER FUND INFORMATION

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
The shareholder reports contain additional information about the Series,
including financial statements, investment results, portfolio holdings, a
discussion of market conditions and the Series' investment strategies, and the
independent registered public accounting firm's report (in the annual report).

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS
The current SAI, as amended from time to time, contains more detailed
information on all aspects of the Series, including the funds' financial
statements, and is incorporated by reference into this prospectus. This means
that the current SAI, for legal purposes, is part of this prospectus. The codes
of ethics describe the personal investing policies adopted by the Series, the
Series' investment adviser and its affiliated companies.

The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the Series are
available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's website at
www.sec.gov or, after payment of a duplicating fee, via email request to
publicinfo@sec.gov or by writing to the SEC's Public Reference
Section,Washington, D.C. 20549-0102.

If you would like to receive a free copy of the current SAI, codes of ethics or
annual/semi-annual report to shareholders, please call American Funds at
800/421-4120 or write to the Secretary of the Series at 333 South Hope Street,
Los Angeles, California 90071.

[GRAPHIC APPEARS HERE]
Printed on recycled Paper    Litho in USA     Invested Company File No. 811-3857

THE CAPITAL GROUP COMPANIES
American Funds    Capital Research       Capital       Capital    Capital Bank
                   and Management     International   Guardian      and Trust



<PAGE>


                        AMERICAN FUNDS INSURANCE SERIES

                                     Part B
                      Statement of Additional Information

                                  May 1, 2006

This document is not a prospectus but should be read in conjunction with the
current prospectus of American Funds Insurance Series (the "Series") dated May
1, 2006. You may obtain a prospectus from your financial adviser or by writing
to the Series at the following address:

                        American Funds Insurance Series
                              Attention: Secretary
                             333 South Hope Street
                         Los Angeles, California 90071
                                  213/486-9200

                               TABLE OF CONTENTS




Item                                                                  Page No.
----                                                                  --------

Certain investment limitations and guidelines . . . . . . . . . . .        2
Description of certain securities and investment techniques . . . .        8
Fundamental policies and investment restrictions. . . . . . . . . .       20
Management of the Series  . . . . . . . . . . . . . . . . . . . . .       25
Execution of portfolio transactions . . . . . . . . . . . . . . . .       47
Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . .       50
Taxes and distributions . . . . . . . . . . . . . . . . . . . . . .       51
Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . .       54
General information . . . . . . . . . . . . . . . . . . . . . . . .       55
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       58
Financial statements





                   American Funds Insurance Series -- Page 1
<PAGE>


                 CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES

The following limitations and guidelines are considered at the time of purchase,
under normal circumstances, and are based on a percentage of each fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the funds' investment limitations.


GLOBAL DISCOVERY FUND

     General

     .    The fund invests primarily in stocks of companies in the services and
          information areas of the global economy.

     .    The fund may invest up to 25% of its assets in companies outside the
          services and information area of the global economy. Under normal
          market conditions, the fund will invest in equity securities,
          including common and preferred stocks or other securities convertible
          into stocks.

     .    The fund may hold cash and cash equivalents, government and other debt
          securities of companies outside the services and information area.

     Non-U.S. securities

     .
          Although the fund currently expects to invest a majority of its assets
          in the United States, it may invest its assets on a global basis. The
          fund may invest in securities of issuers domiciled outside the United
          States, including securities denominated in currencies other than the
          U.S. dollar.

     Debt securities

     .    The fund may not invest in debt securities rated below Ca by Moody's
          Investors Service ("Moody's") or below CC by Standard & Poor's
          Corporation ("S&P") or in unrated securities determined to be of
          equivalent quality.

GLOBAL GROWTH FUND

     General

     .    The fund invests primarily in common stocks of companies located
          around the world.

     Debt securities

     .    The fund may invest up to 10% of its assets in nonconvertible debt
          securities rated Baa or below by Moody's and BBB or below by S&P or in
          unrated securities that are determined to be of equivalent quality.


                   American Funds Insurance Series -- Page 2
<PAGE>


GLOBAL SMALL CAPITALIZATION FUND

     Equity securities

     .    Normally, the fund invests at least 80% of its assets in equity
          securities of companies with small market capitalizations. The
          investment adviser currently defines the market capitalization range
          of "small market capitalization" companies as $50 million to $2.0
          billion.

     Debt securities

     .    The fund may invest up to 10% of its assets in straight debt
          securities rated Baa or below by Moody's and BBB or below by S&P, or
          unrated but determined to be of equivalent quality.

GROWTH FUND

     General

     .    The fund invests primarily in common stocks of companies that appear
          to offer superior opportunities for growth of capital.

     Non-U.S. securities

     .    The fund may invest up to 15% of its assets in securities of issuers
          domiciled outside the United States and Canada and not included in the
          S&P 500 Composite Index.

     Debt securities

     .    The fund may invest up to 10% of its assets in nonconvertible debt
          securities rated Ba or below by Moody's and BB or below by S&P or in
          unrated securities that are determined to be of equivalent quality.

INTERNATIONAL FUND

     General

     .    The fund invests primarily in common stocks of companies located
          outside the United States.

     Debt securities

     .    The fund may invest up to 5% of its assets in nonconvertible debt
          securities rated Baa or below by Moody's and BBB or below by S&P or in
          unrated securities that are determined to be of equivalent quality.


                   American Funds Insurance Series -- Page 3
<PAGE>


NEW WORLD FUND

     General

     .    The fund invests primarily in stocks of companies with significant
          exposure to countries with developing economies and/or markets.

     .    The fund will invest at least 35% of its assets in equity and debt
          securities of issuers primarily based in qualified countries which
          have developing economies and/or markets.

     Equity securities

     .    The fund may invest the balance of its assets in equity securities of
          any company regardless of where it is based, provided the adviser has
          determined that a significant portion of its assets or revenues
          (generally 20% or more) is attributable to developing countries.

     Debt securities

     .    The fund may invest up to 25% of its assets in nonconvertible debt
          securities of issuers primarily based in qualified countries which
          have developing economies and/or markets, or issuers that the fund's
          investment adviser determines have a significant portion of their
          assets or revenues (generally 20% or more) attributable to developing
          countries.

     .    The fund may invest up to 25% of its assets in nonconvertible debt
          securities rated Ba or below by Moody's and BB or below by S&P or in
          unrated securities that are determined to be of equivalent quality.

BLUE CHIP INCOME AND GROWTH FUND

     General

     .    The fund invests primarily in common stocks of larger, more
          established companies based in the United States.

     Equity securities

     .    The fund ordinarily will invest at least 90% of its equity assets in
          the stock of companies in business for five or more years (including
          predecessor companies); that pay regular dividends; whose debt
          securities are rated Baa or above by Moody's or BBB or above by S&P or
          unrated but determined to be of equivalent quality; and reflect a
          market capitalization of $4 billion and above. The fund will not
          invest in private companies.

     Non-U.S. securities

     .    The fund may invest up to 10% of its assets in equity securities of
          larger non-U.S. companies that are listed or traded in the United
          States.


                   American Funds Insurance Series -- Page 4
<PAGE>


GROWTH-INCOME FUND

     General

     .    The fund invests primarily in common stocks or other securities that
          demonstrate the potential for appreciation and/or dividends.

     Non-U.S. securities

     .    The fund may invest up to 15% of its assets in securities of issuers
          domiciled outside the United States and not in the S&P 500.

     Debt securities

     .    The fund may invest up to 5% of its assets in nonconvertible debt
          securities rated Ba or below by Moody's and BB or below by S&P or in
          unrated securities that are determined to be of equivalent quality.
WORLD GROWTH AND INCOME FUND

     General

     .    The fund seeks to make your investment grow over time and provide you
          with current income by investing primarily in stocks of
          well-established companies located around the world.

     Non-U.S. securities

     .    The fund expects to invest a majority of its assets outside the United
          States.  For temporary defensive purposes, the fund may invest
          principally or entirely in securities that are denominated in U.S.
          dollars or whose issuers are domiciled in the United States.

     Debt securities

     .    The fund may invest up to 10% of its assets in straight debt
          securities rated Baa or below by Moody's and BB or below by S&P or
          unrated but determined to be of equivalent quality.

     .    The fund may invest up to 5% of its assets in straight debt securities
          rated Ba or below by Moody's and BB or below by S&P or unrated but
          determined to be of equivalent quality.

ASSET ALLOCATION FUND

     General

     .    The fund will generally invest 40% to 80% of its assets in equity
          securities; 20% to 50% in debt securities; and 0% to 40% in money
          market instruments (including cash).


                   American Funds Insurance Series -- Page 5
<PAGE>


     Debt securities

     .    Up to 25% of the fund's debt assets may be invested in straight debt
          securities (i.e., not convertible into equity) rated Ba and BB or
          below by Moody's or S&P or in unrated securities that are determined
          to be of equivalent quality.

     Non-U.S. securities

     .    The fund may invest up to 15% of its assets in equity securities of
          issuers domiciled outside the United States and not in the S&P 500.

     .    The fund may invest up to 5% of its assets in debt securities of
          issuers domiciled outside the United States.

BOND FUND

     Equity securities

     .    The fund may invest up to 20% of its assets in preferred stocks,
          including convertible and nonconvertible preferred stocks. The fund
          may not purchase other equity securities directly, but may retain up
          to 5% of its assets in common stock, warrants and rights after the
          sale of the corresponding debt securities or received in exchange for
          debt securities.

     Debt securities

     .    The fund will invest at least 80% of its assets in bonds. For purposes
          of this limit, bonds include any debt instrument and cash equivalents,
          and may include certain preferred securities.

     .    The fund will invest at least 35% of its assets in debt securities
          (including cash and cash equivalents) rated A or better by Moody's or
          S&P or in unrated securities that are determined to be of equivalent
          quality.

     .    The fund will invest at least 65% of its assets in debt securities
          (including cash and cash equivalents) that are rated Baa or better by
          Moody's or BBB or better by S&P or in unrated securities that are
          determined to be of equivalent quality.

     .    The fund may invest up to 35% of its assets in debt securities rated
          Ba or below by Moody's and BB or below by S&P or in unrated securities
          that are determined to be of equivalent quality.

     Non-U.S. securities

     .    The fund may invest up to 20% of its assets in non-U.S. dollar
          denominated securities.


                   American Funds Insurance Series -- Page 6
<PAGE>


HIGH-INCOME BOND FUND

     Debt securities

     .    The fund will invest at least 80% of its assets in bonds. For purposes
          of this limit, bonds include any debt instrument and cash equivalents,
          and may include certain preferred securities.

     .    The fund will invest at least 65% of its assets in debt securities
          rated Ba or below by Moody's or BB or below by S&P or in unrated
          securities that are determined to be of equivalent quality.

     Equity and other securities

     .    The fund may invest up to 20% of its assets in equity securities, such
          as common and preferred stocks and convertible securities.

     Maturity

     .    The fund generally will invest in securities with maturities in excess
          of three years.

     Non-U.S. securities

     .    The fund may invest up to 25% of its assets in securities of issuers
          domiciled outside the United States.

U.S. GOVERNMENT/AAA-RATED SECURITIES FUND

     General

     .    The fund will invest at least 80% of its assets in securities
          guaranteed by the "full faith and credit" pledge of the U.S.
          government or debt securities that are rated Aaa by Moody's or AAA by
          S&P or unrated but determined to be of equivalent quality.

CASH MANAGEMENT FUND

     General

     .    The fund will invest in high quality money market instruments rated in
          the two highest quality categories by at least two nationally
          recognized statistical rating organizations.

     Maturity

     .    The fund may purchase securities that mature or may be redeemed in 13
          months or less (25 months or less if U.S. government securities), even
          if their original maturity is greater than one year.


                   American Funds Insurance Series -- Page 7
<PAGE>


     Non-U.S. securities

     .
          The fund may invest up to 35% of its assets in U.S. dollar-denominated
          securities issued by non-U.S. or Canadian entities or in securities
          with credit and liquidity support features provided by non-U.S. or
          Canadian entities.



          DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES

With respect to all funds, portfolio changes will be made without regard to the
length of time a particular investment may have been held.


EQUITY SECURITIES -- Equity securities represent an ownership position in a
company. Equity securities held by the funds typically consist of common stocks.
The prices of equity securities fluctuate based on, among other things, events
specific to their issuers and market, economic and other conditions.


There may be little trading in the secondary market for particular equity
securities, which may adversely affect the funds' ability to value accurately or
dispose of such equity securities. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the value and/or
liquidity of equity securities.


The growth-oriented, equity-type securities generally purchased by certain of
the funds may involve large price swings and potential for loss.


DEBT SECURITIES -- Debt securities are used by issuers to borrow money.
Generally, issuers pay investors interest and may repay the amount borrowed
periodically during the life of the security or at maturity. Some debt
securities, such as zero coupon bonds, do not pay current interest, but are
purchased at a discount from their face values and accrue interest at the
applicable coupon rate over a specified time period. The market prices of debt
securities fluctuate depending on such factors as interest rates, credit quality
and maturity. In general, market prices of debt securities decline when interest
rates rise and increase when interest rates fall.


Lower rated debt securities, rated Ba or below by Moody's and/or BB or below by
S&P or unrated but determined to be of equivalent quality, are described by the
rating agencies as speculative and involve greater risk of default or price
changes due to changes in the issuer's creditworthiness than higher rated debt
securities, or they may already be in default. The market prices of these
securities may fluctuate more than higher quality securities and may decline
significantly in periods of general economic difficulty. It may be more
difficult to dispose of, and to determine the value of, lower rated debt
securities.


Certain additional risk factors relating to debt securities are discussed below:


     SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- Debt securities may be
     sensitive to economic changes, political and corporate developments, and
     interest rate changes. In addition, during an economic downturn or
     substantial period of rising interest rates, issuers that are highly
     leveraged may experience increased financial stress that would adversely
     affect their ability to meet projected business goals, to obtain additional
     financing and to service their principal and interest payment obligations.
     Periods of economic change and uncertainty also can be expected to result
     in increased volatility of market prices and yields of certain debt
     securities.


                   American Funds Insurance Series -- Page 8
<PAGE>


     PAYMENT EXPECTATIONS -- Debt securities may contain redemption or call
     provisions. If an issuer exercises these provisions in a lower interest
     rate market, the funds would have to replace the security with a lower
     yielding security, resulting in decreased income to investors. If the
     issuer of a debt security defaults on its obligations to pay interest or
     principal or is the subject of bankruptcy proceedings, the funds may incur
     losses or expenses in seeking recovery of amounts owed to them.

     LIQUIDITY AND VALUATION -- There may be little trading in the secondary
     market for particular debt securities, which may affect adversely the
     funds' ability to value accurately or dispose of such debt securities.
     Adverse publicity and investor perceptions, whether or not based on
     fundamental analysis, may decrease the value and/or liquidity of debt
     securities.

The investment adviser attempts to reduce the risks described above through
diversification of the funds' portfolios and by credit analysis of each issuer,
as well as by monitoring broad economic trends and corporate and legislative
developments, but there can be no assurance that it will be successful in doing
so.


SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS -- The funds may invest in
securities that have a combination of equity and debt characteristics. These
securities may at times behave more like equity than debt and vice versa. Some
types of convertible bonds or preferred stocks automatically convert into common
stocks. The prices and yields of nonconvertible preferred stocks generally move
with changes in interest rates and the issuer's credit quality, similar to the
factors affecting debt securities. Certain of these securities will be treated
as debt for fund investment limit purposes.


Convertible bonds, convertible preferred stocks and other securities may
sometimes be converted, or may automatically convert, into common stocks or
other securities at a stated conversion ratio. These securities, prior to
conversion, may pay a fixed rate of interest or a dividend. Because convertible
securities have both debt and equity characteristics, their value varies in
response to many factors, including the value of the underlying assets, general
market and economic conditions, and convertible market valuations, as well as
changes in interest rates, credit spreads and the credit quality of the issuer.


INVESTING IN SMALLER CAPITALIZATION STOCKS -- Global Discovery Fund, Global
Growth Fund, Global Small Capitalization Fund, Growth Fund, International Fund,
New World Fund, Growth-Income Fund and Asset Allocation Fund may invest in the
stocks of smaller capitalization companies (typically companies with market
capitalizations of less than $2.0 billion at the time of purchase). The
investment adviser believes that the issuers of smaller capitalization stocks
often provide attractive investment opportunities. However, investing in smaller
capitalization stocks can involve greater risk than is customarily associated
with investing in stocks of larger, more established companies. For example,
smaller companies often have limited product lines, limited markets, or
financial resources, may be dependent for management on one or a few key
persons, and can be more susceptible to losses. Also, their securities may be
thinly traded (and therefore have to be sold at a discount from current prices
or sold in small lots over an extended period of time), may be followed by fewer
investment research analysts and may be subject to wider price swings, thus
creating a greater chance of loss than securities of larger capitalization
companies. Because Global Small Capitalization Fund in particular emphasizes the
stocks of issuers with smaller market capitalizations (by U.S. standards), it
can be expected to have more difficulty obtaining information about the issuers
or valuing or disposing of its securities than if it were to


                   American Funds Insurance Series -- Page 9
<PAGE>


concentrate on larger capitalization stocks. The funds determine relative market
capitalizations using U.S. standards. Accordingly, the funds' non-U.S.
investments may have large capitalizations relative to market capitalizations of
companies based outside the United States.


INVESTING IN PRIVATE COMPANIES -- Global Discovery Fund, Global Growth Fund,
Global Small Capitalization Fund, Growth Fund, International Fund, New World
Fund, Growth-Income Fund, Asset Allocation Fund, Bond Fund and High-Income Bond
Fund may invest in companies that have not publicly offered their securities.
Investing in private companies can involve greater risks than those associated
with investing in publicly traded companies. For example, the securities of a
private company may be subject to the risk that market conditions, developments
within the company, investor perception, or regulatory decisions may delay or
prevent the company from ultimately offering its securities to the public.
Furthermore, these investments are generally considered to be illiquid until a
company's public offering and are often subject to additional contractual
restrictions on resale that would prevent the funds from selling their company
shares for a period of time following the public offering.


Investments in private companies can offer the funds significant growth
opportunities at attractive prices. However these investments can pose greater
risk, and, consequently, there is no guarantee that positive results can be
achieved in the future.


INVESTING IN VARIOUS COUNTRIES -- Global Discovery Fund, Global Growth Fund,
Global Small Capitalization Fund, Growth Fund, International Fund, New World
Fund, Blue Chip Income and Growth Fund, Growth-Income Fund, World Growth and
Income Fund, Asset Allocation Fund, Bond Fund and High-Income Bond Fund may
invest in securities of issuers domiciled outside the United States and which
may be denominated in currencies other than the U.S. dollar. Investing outside
the United States may involve additional risks caused by, among other things,
currency controls and fluctuating currency values; different accounting,
auditing, financial reporting and legal standards and practices in some
countries; changing local, regional and global economic, political and social
conditions; expropriation; changes in tax policy; greater market volatility;
differing securities market structures; higher transaction costs; and various
administrative difficulties, such as delays in clearing and settling portfolio
transactions or in receiving payment of dividends. However, in the opinion of
the investment adviser, investing outside the United States also can reduce
certain portfolio risks due to greater diversification opportunities.


The risks described above may be heightened in connection with investments in
developing countries. Although there is no universally accepted definition, the
investment adviser generally considers a developing country as a country that is
in the earlier stages of its industrialization cycle with a low per capita gross
domestic product ("GDP") and a low market capitalization to GDP ratio relative
to those in the United States and western Europe. Historically, the markets of
developing countries have been more volatile than the markets of developed
countries, reflecting the greater uncertainties of investing in less established
markets and economies. In particular, developing countries may have less stable
governments; may present the risks of nationalization of businesses,
restrictions on foreign ownership and prohibitions on the repatriation of
assets; and may have less protection of property rights than more developed
countries. The economies of developing countries may be reliant on only a few
industries, may be highly vulnerable to changes in local or global trade
conditions and may suffer from high and volatile debt burdens or inflation
rates. Local securities markets may trade a small number of securities and may
be unable to respond effectively to increases in trading volume, potentially
making prompt liquidation of holdings difficult or impossible at times.


                   American Funds Insurance Series -- Page 10
<PAGE>


Additional costs could be incurred in connection with the funds' investment
activities outside the United States. Brokerage commissions may be higher
outside the United States, and the funds will bear certain expenses in
connection with their currency transactions. Furthermore, increased custodian
costs may be associated with maintaining assets in certain jurisdictions.


U.S. Government/AAA-Rated Securities Fund and Cash Management Fund may purchase
obligations of non-U.S. corporations or governmental entities, provided they are
U.S. dollar-denominated and highly liquid. Accordingly, while the risks
mentioned above are still present, they are present to a lesser extent.


Certain risk factors related to developing countries are discussed below:


     CURRENCY FLUCTUATIONS -- Certain funds may invest in securities valued in
     currencies other than the U.S. dollar. Certain developing countries'
     currencies have experienced and may in the future experience significant
     declines against the U.S. dollar. For example, if the U.S. dollar
     appreciates against foreign currencies, the value of the funds' securities
     holdings would generally depreciate and vice versa. Consistent with their
     investment objectives, the funds can engage in certain currency
     transactions to hedge against currency fluctuations. See "Currency
     Transactions" below.

     GOVERNMENT REGULATION -- The political, economic and social structures of
     certain developing countries may be more volatile and less developed than
     those in the United States. Certain developing countries lack uniform
     accounting, auditing and financial reporting standards, have less
     governmental supervision of financial markets than in the United States,
     and do not honor legal rights enjoyed in the United States. Certain
     governments may be more unstable and present greater risks of
     nationalization or restrictions on foreign ownership of local companies.

     Repatriation of investment income, capital and the proceeds of sales by
     foreign investors may require governmental registration and/or approval in
     some developing market countries. While the funds will only invest in
     markets where these restrictions are considered acceptable, a country could
     impose new or additional repatriation restrictions after the funds'
     investment. If this happened, the funds' response might include, among
     other things, applying to the appropriate authorities for a waiver of the
     restrictions or engaging in transactions in other markets designed to
     offset the risks of decline in that country. Such restrictions will be
     considered in relation to the funds' liquidity needs and all other positive
     and negative factors. Further, some attractive equity securities may not be
     available to the funds because foreign shareholders hold the maximum amount
     legally permissible.

     While government involvement in the private sector varies in degree among
     developing countries, such involvement may in some cases include government
     ownership of companies in certain sectors, wage and price controls or
     imposition of trade barriers and other protectionist measures. With respect
     to any developing country, there is no guarantee that some future economic
     or political crisis will not lead to price controls, forced mergers of
     companies, expropriation or creation of government monopolies to the
     possible detriment of the funds' investments.

     LESS DEVELOPED SECURITIES MARKETS -- Developing countries may have less
     well-developed securities markets and exchanges. The securities markets
     have lower trading


                   American Funds Insurance Series -- Page 11
<PAGE>


     volumes than the securities markets of more developed countries. These
     markets may be unable to respond effectively to increases in trading
     volume. Consequently, these markets may be substantially less liquid than
     those of more developed countries and the securities of issuers located in
     these markets may have limited marketability. These factors may make prompt
     liquidation of substantial portfolio holdings difficult or impossible at
     times.

     SETTLEMENT RISKS -- Settlement systems in developing countries are
     generally less well organized than in developed markets. Supervisory
     authorities may also be unable to apply standards comparable with those in
     developed markets. Thus, there may be risks that settlement may be delayed
     and that cash or securities belonging to the funds may be in jeopardy
     because of failures of or defects in the systems. In particular, market
     practice may require that payment be made before receipt of the security
     being purchased or that delivery of a security be made before payment is
     received. In such cases, default by a broker or bank (the "counterparty")
     through whom the transaction is effected might cause the funds to suffer a
     loss. The funds will seek, where possible, to use counterparties whose
     financial status is such that this risk is reduced. However, there can be
     no certainty that the funds will be successful in eliminating this risk,
     particularly as counterparties operating in developing countries frequently
     lack the substance or financial resources of those in developed countries.
     There may also be a danger that, because of uncertainties in the operation
     of settlement systems in individual markets, competing claims may arise
     with respect to securities held by or to be transferred to the funds.

     INVESTOR INFORMATION -- The funds may encounter problems assessing
     investment opportunities in certain developing securities markets in light
     of limitations on available information and different accounting, auditing
     and financial reporting standards. In such circumstances, the investment
     adviser will seek alternative sources of information, and to the extent the
     investment adviser is not satisfied with the sufficiency of the information
     obtained with respect to a particular market or security, the funds will
     not invest in such market or security.

     TAXATION -- Taxation of dividends and capital gains received by
     non-residents varies among developing countries and, in some cases, is
     comparatively high. In addition, developing countries typically have less
     well-defined tax laws and procedures and such laws may permit retroactive
     taxation so that the funds could in the future become subject to local tax
     liability that they had not reasonably anticipated in conducting their
     investment activities or valuing their assets.

     LITIGATION -- The funds and their shareholders may encounter substantial
     difficulties in obtaining and enforcing judgments against non-U.S. resident
     individuals and companies.

     FRAUDULENT SECURITIES -- Securities purchased by the funds may subsequently
     be found to be fraudulent or counterfeit, resulting in a loss to the funds.

     LOAN PARTICIPATIONS -- New World Fund may invest, subject to its overall
     limitation on debt securities, in loan participations, typically made by a
     syndicate of banks to governmental or corporate borrowers for a variety of
     purposes. The underlying loans to developing market governmental borrowers
     may be in default and may be subject to restructuring under the Brady Plan.
     The underlying loans may be secured or unsecured, and will vary in term and
     legal structure.


                   American Funds Insurance Series -- Page 12
<PAGE>


CURRENCY TRANSACTIONS -- Global Discovery Fund, Global Growth Fund, Global Small
Capitalization Fund, Growth Fund, International Fund, New World Fund, World
Growth and Income Fund, Asset Allocation Fund, Bond Fund and High-Income Bond
Fund can purchase and sell currencies to facilitate securities transactions and
enter into forward currency contracts to protect against changes in currency
exchange rates. Blue Chip Income and Growth Fund and Growth-Income Fund do not
currently intend to engage in any such transactions other than purchasing and
selling currencies and foreign exchange contracts which will be used to
facilitate settlement of trades. A forward currency contract is an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. Forward currency contracts entered into
by the funds will involve the purchase or sale of one currency against the U.S.
dollar. While entering into forward currency transactions could minimize the
risk of loss due to a decline in the value of the hedged currency, it could also
limit any potential gain which might result from an increase in the value of the
currency. The funds will not generally attempt to protect against all potential
changes in exchange rates. The funds will segregate liquid assets which will be
marked to market daily to meet their forward contract commitments to the extent
required by the Securities and Exchange Commission.


Bond Fund and High-Income Bond Fund may enter into the transactions described
above and may also enter into exchange-traded futures contracts relating to
foreign currencies ("currency contracts") in connection with investments in
securities of foreign issuers in anticipation of, or to protect against,
fluctuations in exchange rates. In addition, forward currency contracts may be
used by these funds to purchase or sell a currency against another currency at a
future date and price as agreed upon by the parties. An exchange-traded futures
contract relating to foreign currency is similar to a forward foreign currency
contract but has a standardized size and exchange date. Although currency
contracts typically will involve the purchase and sale of a currency against the
U.S. dollar, these funds also may enter into currency contracts not involving
the U.S. dollar. In connection with these futures transactions, the Series has
filed a notice of eligibility with the Commodity Futures Trading Commission
("CFTC") that exempts the Series from CFTC registration as a "commodity pool
operator" as defined under the Commodity Exchange Act. Pursuant to this notice,
these funds will observe certain CFTC guidelines with respect to its futures
transactions that, among other things, limit initial margin deposits in
connection with the use of futures contracts and related options for purposes
other than "hedging" (as defined by CFTC rules) up to 5% of a fund's net assets.


Bond Fund and High-Income Bond Fund may attempt to accomplish objectives similar
to those involved in their use of currency contracts by purchasing put or call
options on currencies. A put option gives a fund, as purchaser, the right (but
not the obligation) to sell a specified amount of currency at the exercise price
until the expiration of the option. A call option gives a fund, as purchaser,
the right (but not the obligation) to purchase a specified amount of currency at
the exercise price until its expiration. A fund might purchase a currency put
option, for example, to protect itself during the contract period against a
decline in the U.S. dollar value of a currency in which they hold or anticipate
holding securities. If the currency's value should decline against the U.S.
dollar, the loss in currency value should be offset, in whole or in part, by an
increase in the value of the put. If the value of the currency instead should
rise against the U.S. dollar, any gain to the fund would be reduced by the
premium it had paid for the put option. A currency call option might be
purchased, for example, in anticipation of, or to protect against, a rise in the
value against the U.S. dollar of a currency in which the fund anticipates
purchasing securities.


                   American Funds Insurance Series -- Page 13
<PAGE>


Currency options may be either listed on an exchange or traded over-the-counter
("OTC options"). Listed options are third-party contracts (i.e., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike (exercise) prices and
expiration dates. OTC options are two-party contracts with negotiated strike
prices and expiration dates. Bond Fund and High-Income Bond Fund will not
purchase an OTC option unless the investment adviser believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation which guarantees performance.
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of a quote provided by
the dealer. In the case of OTC options, there can be no assurance that a liquid
secondary market will exist for any particular option at any specific time.


Certain provisions of the Internal Revenue Code may limit the extent to which
the funds may enter into forward contracts. Such transactions may also affect,
for U.S. federal tax purposes, the character and timing of income, gain or loss
recognized by the funds.


FORWARD COMMITMENTS -- The funds may enter into commitments to purchase or sell
securities at a future date. When a fund agrees to purchase such securities, it
assumes the risk of any decline in value of the security from the date of the
agreement. When a fund agrees to sell such securities, it does not participate
in further gains or losses with respect to the securities beginning on the date
of the agreement. If the other party to such a transaction fails to deliver or
pay for the securities, the fund could miss a favorable price or yield
opportunity, or could experience a loss.


The funds will not use these transactions for the purpose of leveraging and will
segregate liquid assets that will be marked to market daily in an amount
sufficient to meet their payment obligations in these transactions. Although
these transactions will not be entered into for leveraging purposes, to the
extent a fund's aggregate commitments in connection with these transactions
exceed its segregated assets, the fund temporarily could be in a leveraged
position (because it may have an amount greater than its net assets subject to
market risk). Should market values of the fund's portfolio securities decline
while the fund is in a leveraged position, greater depreciation of its net
assets would likely occur than if it were not in such a position. The funds will
not borrow money to settle these transactions and, therefore, will liquidate
other portfolio securities in advance of settlement if necessary to generate
additional cash to meet their obligations.


Asset Allocation Fund, Bond Fund, High-Income Bond Fund and U.S.
Government/AAA-Rated Securities Fund may also enter into "roll" transactions
which involve the sale of mortgage-backed or other securities together with a
commitment to purchase similar, but not identical, securities at a later date.
The funds assume the risk of price and yield fluctuations during the time of the
commitment. The funds will segregate liquid assets which will be marked to
market daily in an amount sufficient to meet their payment obligations in these
transactions.


REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements under
which the funds buy a security and obtain a simultaneous commitment from the
seller to repurchase the security at a specified time and price. Repurchase
agreements permit the funds to maintain liquidity and earn income over periods
of time as short as overnight. The seller must maintain with the Series'
custodian collateral equal to at least 100% of the repurchase price, including
accrued interest, as monitored daily by the investment adviser. The funds will
only enter into


                   American Funds Insurance Series -- Page 14
<PAGE>


repurchase agreements involving securities in which they could otherwise invest
and with selected banks and securities dealers whose financial condition is
monitored by the investment adviser. If the seller under the repurchase
agreement defaults, the funds may incur a loss if the value of the collateral
securing the repurchase agreement has declined and may incur disposition costs
in connection with liquidating the collateral. If bankruptcy proceedings are
commenced with respect to the seller, realization of the collateral by the funds
may be delayed or limited.


U.S. GOVERNMENT OBLIGATIONS -- U.S. government obligations are securities backed
by the full faith and credit of the U.S. government. U.S. government obligations
include the following types of securities:


     U.S. TREASURY SECURITIES -- U.S. Treasury securities include direct
     obligations of the U.S. Treasury, such as Treasury bills, notes and bonds.
     For these securities, the payment of principal and interest is
     unconditionally guaranteed by the U.S. government, and thus they are of the
     highest possible credit quality. Such securities are subject to variations
     in market value due to fluctuations in interest rates, but, if held to
     maturity, will be paid in full.

     FEDERAL AGENCY SECURITIES BACKED BY "FULL FAITH AND CREDIT" -- The
     securities of certain U.S. government agencies and government-sponsored
     entities are guaranteed as to the timely payment of principal and interest
     by the full faith and credit of the U.S. government. Such agencies and
     entities include the Government National Mortgage Association (Ginnie Mae),
     the Veterans Administration (VA), the Federal Housing Administration (FHA),
     the Export-Import Bank (Exim Bank), the Overseas Private Investment
     Corporation (OPIC), the Commodity Credit Corporation (CCC) and the Small
     Business Administration (SBA).

OTHER FEDERAL AGENCY OBLIGATIONS -- Additional federal agency securities are
neither direct obligations of, nor guaranteed by, the U.S. government. These
obligations include securities issued by certain U.S. government agencies and
government-sponsored entities. However, they generally involve some form of
federal sponsorship: some operate under a government charter, some are backed by
specific types of collateral; some are supported by the issuer's right to borrow
from the Treasury; and others are supported only by the credit of the issuing
government agency or entity. These agencies and entities include, but are not
limited to: Federal Home Loan Bank, Federal Home Loan Mortgage Corporation
(Freddie Mac), Federal National Mortgage Association (Fannie Mae), Tennessee
Valley Authority and Federal Farm Credit Bank System.


PASS-THROUGH SECURITIES -- The funds may invest in various debt obligations
backed by pools of mortgages or other assets including, but not limited to,
loans on single family residences, home equity loans, mortgages on commercial
buildings, credit card receivables and leases on airplanes or other equipment.
Principal and interest payments made on the underlying asset pools backing these
obligations are typically passed through to investors. Pass-through securities
may have either fixed or adjustable coupons. These securities include:


     "MORTGAGE-BACKED SECURITIES" -- These securities may be issued by U.S.
     government agencies and government-sponsored entities, such as Ginnie Mae,
     Fannie Mae and Freddie Mac, and by private entities. The payment of
     interest and principal on mortgage-backed obligations issued by U.S.
     government agencies may be guaranteed by the full faith and credit of the
     U.S. government (in the case of Ginnie Mae), or may be guaranteed by the
     issuer (in the case of Fannie Mae and Freddie Mac). However, these
     guarantees


                   American Funds Insurance Series -- Page 15
<PAGE>


     do not apply to the market prices and yields of these securities, which
     vary with changes in interest rates.

     Mortgage-backed securities issued by private entities are structured
     similarly to those issued by U.S. government agencies. However, these
     securities and the underlying mortgages are not guaranteed by any
     government agencies. These securities generally are structured with one or
     more types of credit enhancement. Mortgage-backed securities generally
     permit borrowers to prepay their underlying mortgages. Prepayments can
     alter the effective maturity of these instruments.

     COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS) -- CMOs are also backed by a
     pool of mortgages or mortgage loans, which are divided into two or more
     separate bond issues. CMOs issued by U.S. government agencies are backed by
     agency mortgages. Payments of principal and interest are passed through to
     each bond issue at varying schedules resulting in bonds with different
     coupons, effective maturities and sensitivities to interest rates. Some
     CMOs may be structured in a way that when interest rates change, the impact
     of changing prepayment rates on the effective maturities of certain issues
     of these securities is magnified.

     COMMERCIAL MORTGAGE-BACKED SECURITIES -- These securities are backed by
     mortgages on commercial property, such as hotels, office buildings, retail
     stores, hospitals and other commercial buildings. These securities may have
     a lower prepayment uncertainty than other mortgage-related securities
     because commercial mortgage loans generally prohibit or impose penalties on
     prepayments of principal. In addition, commercial mortgage-related
     securities often are structured with some form of credit enhancement to
     protect against potential losses on the underlying mortgage loans. Many of
     the risks of investing in commercial mortgage-backed securities reflect the
     risks of investing in the real estate securing the underlying mortgage
     loans, including the effects of local and other economic conditions on real
     estate markets, the ability of tenants to make loan payments and the
     ability of a property to attract and retain tenants.

     ASSET-BACKED SECURITIES -- These securities are backed by other assets such
     as credit card, automobile or consumer loan receivables, retail installment
     loans, or participations in pools of leases. Credit support for these
     securities may be based on the underlying assets and/or provided through
     credit enhancements by a third party. The values of these securities are
     sensitive to changes in the credit quality of the underlying collateral,
     the credit strength of the credit enhancement, changes in interest rates
     and at times the financial condition of the issuer. Some asset-backed
     securities also may receive prepayments that can change their effective
     maturities.

"IOs" and "POs" are issued in portions or tranches with varying maturities and
characteristics. Some tranches may only receive the interest paid on the
underlying mortgages (IOs) and others may only receive the principal payments
(POs). The values of IOs and POs are extremely sensitive to interest rate
fluctuations and prepayment rates, and IOs are also subject to the risk of early
repayment of the underlying mortgages that will substantially reduce or
eliminate interest payments.


WARRANTS AND RIGHTS -- The funds may purchase warrants, which may be issued
together with bonds or preferred stocks. Warrants generally entitle the holder
to buy a proportionate amount of common stock at a specified price, usually
higher than the current market price. Warrants may be


                   American Funds Insurance Series -- Page 16
<PAGE>


issued with an expiration date or in perpetuity. Rights are similar to warrants
except that they normally entitle the holder to purchase common stock at a lower
price than the current market price.


INFLATION-INDEXED BONDS -- Asset Allocation Fund, Bond Fund, High-Income Bond
Fund and U.S. Government/AAA-Rated Securities Fund may invest in
inflation-indexed bonds issued by governments, their agencies or
instrumentalities and corporations. The principal value of this type of bond is
adjusted in response to changes in the level of the consumer price index. The
interest rate is fixed at issuance as a percentage of this adjustable principal.
The actual interest income may therefore both rise and fall as the level of the
consumer price index rises and falls. In particular, in a period of deflation
the interest income would fall. While the interest income may adjust upward or
downward without limit in response to changes in the consumer price index, the
principal has a floor at par, meaning that the investor receives at least the
par value at redemption.


Repayment of the original bond principal upon maturity (as adjusted for
inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds,
even during a period of deflation. However, the current market value of the
bonds is not guaranteed and will fluctuate.


REAL ESTATE INVESTMENT TRUSTS -- The funds may invest in securities issued by
real estate investment trusts (REITs), which primarily invest in real estate or
real estate-related loans. Equity REITs own real estate properties, while
mortgage REITs hold construction, development and/or long-term mortgage loans.
The values of REITs may be affected by changes in the value of the underlying
property of the trusts, the creditworthiness of the issuer, property taxes,
interest rates and tax and regulatory requirements, such as those relating to
the environment. Both types of REITs are dependent upon management skill and are
subject to cash flow dependency, the real estate market in general and the
possibility of failing to qualify for any applicable pass-through tax treatment
or failing to maintain any applicable exemptive status afforded under relevant
laws.


CASH AND CASH EQUIVALENTS -- These include (a) commercial paper (for example,
short-term notes with maturities typically up to 12 months in length issued by
corporations, governmental bodies or bank/corporation sponsored conduits
(asset-backed commercial paper)) (b) short-term bank obligations (for example,
certificates of deposit, bankers' acceptances (time drafts on a commercial bank
where the bank accepts an irrevocable obligation to pay at maturity)) or bank
notes, (c) savings association and savings bank obligations (for example, bank
notes and certificates of deposit issued by savings banks or savings
associations), (d) securities of the U.S. government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less, and (e)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.


Cash Management Fund may only purchase commercial paper judged by the investment
adviser to be of suitable investment quality. This includes (a) commercial paper
that is rated in the two highest categories by at least two nationally
recognized statistical rating organizations (each, a "NRSRO"), or (b) other
commercial paper deemed on the basis of the issuer's creditworthiness to be of a
quality appropriate for Cash Management Fund. No more than 5% of Cash Management
Fund's assets may be invested in commercial paper rated in the second tier
(e.g., P-2/A-2) by any NRSRO; no more than the greater of 1% of Cash Management
Fund's assets or $1 million may be invested in such securities of any one
issuer. See the "Description of Commercial Paper Ratings" for a description of
the ratings.


                   American Funds Insurance Series -- Page 17
<PAGE>


"Short-term bank obligations" can include certificates of deposit
(interest-bearing time deposits), bankers acceptances (time drafts drawn on a
commercial bank where the bank accepts an irrevocable obligation to pay at
maturity) representing direct or contingent obligations of commercial banks.


Cash Management Fund may purchase corporate obligations that mature or that will
be redeemed in one year or less. These obligations originally may have been
issued with maturities in excess of one year. Cash Management Fund may invest
only in corporate bonds or notes of issuers having outstanding short-term
securities rated as described above in "Commercial Paper."


"Savings association obligations" include certificates of deposit
(interest-bearing time deposits) issued by savings banks or savings and loan
associations.


"Floating rate obligations" have a coupon rate that changes at least annually
and generally more frequently. The coupon rate is set in relation to money
market rates. The obligations, issued primarily by banks, other corporations,
governments and semi-governmental bodies, may have a maturity in excess of one
year. In some cases, the coupon rate may vary with changes in the yield on
Treasury bills or notes or with changes in LIBOR (London Interbank Offering
Rate). The investment adviser considers floating rate obligations to be liquid
investments because a number of U.S. and non-U.S. securities dealers make active
markets in these securities.


RESTRICTED SECURITIES AND LIQUIDITY -- The funds may purchase securities subject
to restrictions on resale. Difficulty in selling such securities may result in a
loss or be costly to the funds. Restricted securities generally can be sold in
privately negotiated transactions, pursuant to an exemption from registration
under the Securities Act of 1933 (the "1933 Act"), or in a registered public
offering. Where registration is required, the holder of a registered security
may be obligated to pay all or part of the registration expense and a
considerable period may elapse between the time it decides to seek registration
and the time it may be permitted to sell a security under an effective
registration statement.


Securities (including restricted securities) not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures adopted by the Series' Board of Trustees, taking into account
factors such as the frequency and volume of trading, the commitment of dealers
to make markets and the availability of qualified investors, all of which can
change from time to time. The funds may incur certain additional costs in
disposing of illiquid securities.


LOAN PARTICIPATIONS AND ASSIGNMENTS -- New World Fund (as previously described),
Bond Fund and High-Income Bond Fund may invest in loan participations or
assignments. Loan participations are loans or other direct debt instruments that
are interests in amounts owed by a corporate, governmental or other borrower to
another party. They may represent amounts owed to lenders or lending syndicates
to suppliers of goods or services, or to other parties. A fund will have the
right to receive payments of principal, interest and any fees to which it is
entitled only from the lender selling the participation and only upon receipt by
the lender of the payments from the borrower. In connection with purchasing
participations, a fund generally will have no right to enforce compliance by the
borrower with the terms of the loan agreement relating to the loan, nor any
rights of set-off against the borrower, and a fund may not directly benefit from
any collateral supporting the loan in which it has purchased the participation.
As a result, a fund will be subject to the credit risk of both the borrower and
the lender that is selling the participation. In the event


                   American Funds Insurance Series -- Page 18
<PAGE>


of the insolvency of the lender selling a participation, a fund may be treated
as a general creditor of the lender and may not benefit from any set-off between
the lender and the borrower.


When a fund purchases assignments from lenders, it acquires direct rights
against the borrower on the loan. However, because assignments are arranged
through private negotiations between potential assignees and potential
assignors, the rights and obligations acquired by a fund as the purchaser of an
assignment may differ from, and be more limited than, those held by the
assigning lender. Investments in loan participations and assignments present the
possibility that a fund could be held liable as a co-lender under emerging legal
theories of lender liability. In addition, if the loan is foreclosed, a fund
could be part owner of any collateral and could bear the costs and liabilities
of owning and disposing of the collateral. The funds anticipate that loan
participations could be sold only to a limited number of institutional
investors. In addition, some loan participations and assignments may not be
rated by major rating agencies and may not be protected by the securities laws.


REINSURANCE RELATED NOTES AND BONDS -- High-Income Bond Fund may invest in
reinsurance related notes and bonds. These instruments, which are typically
issued by special purpose reinsurance companies, transfer an element of
insurance risk to the note or bond holders. For example, such a note or bond
could provide that the reinsurance company would not be required to repay all or
a portion of the principal value of the note or bond if losses due to a
catastrophic event under the policy (such as a major hurricane) exceed certain
dollar thresholds. Consequently, the fund may lose the entire amount of its
investment in such bonds or notes if such an event occurs and losses exceed
certain dollar thresholds. In this instance, investors would have no recourse
against the insurance company. These instruments may be issued with fixed or
variable interest rates and rated in a variety of credit quality categories by
the rating agencies.


REVERSE REPURCHASE AGREEMENTS -- Bond Fund and U.S. Government/AAA-Rated
Securities Fund are authorized to enter into reverse repurchase agreements. A
reverse repurchase agreement is the sale of a security by a fund and its
agreement to repurchase the security at a specified time and price. Each fund
will segregate liquid assets which will be marked to market daily in an amount
sufficient to cover its obligations under reverse repurchase agreements with
broker-dealers (no collateral is required on reverse repurchase agreements with
banks). Under the 1940 Act, reverse repurchase agreements may be considered
borrowing by a fund. The use of reverse repurchase agreements by a fund creates
leverage which increases the fund's investment risk. As a fund's aggregate
commitments under these reverse repurchase agreements increase, the opportunity
for leverage similarly increases. If the income and gains on securities
purchased with the proceeds of reverse repurchase agreements exceed the costs of
the agreements, a fund's earnings or net asset value will increase faster than
otherwise would be the case; conversely, if the income and gains fail to exceed
the costs, a fund's earnings or net asset value would decline faster than
otherwise would be the case. The funds do not currently intend to engage in this
investment practice over the next 12 months.


LOANS OF PORTFOLIO SECURITIES -- Asset Allocation Fund, Bond Fund, High-Income
Bond Fund and U.S. Government/AAA-Rated Securities Fund are authorized to lend
portfolio securities to selected securities dealers or other institutional
investors whose financial condition is monitored by the investment adviser. The
borrower must maintain with the Series' custodian collateral consisting of cash,
cash equivalents or U.S. government securities equal to at least 100% of the
value of the borrowed securities, plus any accrued interest. The investment
adviser will monitor the adequacy of the collateral on a daily basis. A fund may
at any time call a loan of its portfolio


                   American Funds Insurance Series -- Page 19
<PAGE>


securities and obtain the return of the loaned securities. The fund will receive
any interest paid on the loaned securities and a fee or a portion of the
interest earned on the collateral. Each fund will limit its loans of portfolio
securities to an aggregate of 10% of the value of its total assets, measured at
the time any such loan is made. The funds do not currently intend to engage in
this investment practice over the next 12 months.

                        *     *     *     *     *     *

PORTFOLIO TURNOVER -- Portfolio changes will be made without regard to the
length of time particular investments may have been held. Short-term trading
profits are not the funds' objective, and changes in their investments are
generally accomplished gradually, though short-term transactions may
occasionally be made. High portfolio turnover involves correspondingly greater
transaction costs in the form of dealer spreads or brokerage commissions, and
may result in the realization of net capital gains, which are taxable when
distributed to shareholders.


Under certain market conditions, the investment policies of Asset Allocation
Fund, Bond Fund, High-Income Bond Fund, and U.S. Government/AAA-Rated Securities
Fund may result in higher portfolio turnover than those of the other funds,
although, other than Cash Management Fund, no fund's annual portfolio turnover
rate is expected to exceed 100%. A fund's portfolio turnover rate would equal
100% if each security in the fund's portfolio were replaced once per year. See
"Financial Highlights" in the prospectus for the funds' annual portfolio
turnover rates for each of the last five fiscal years.


                FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS

FUNDAMENTAL POLICIES -- The Series has adopted the following fundamental
policies and investment restrictions, which may not be changed without approval
by holders of a majority of its outstanding shares. Such majority is defined in
the Investment Company Act of 1940, as amended (the "1940 Act"), as the vote of
the lesser of (a) 67% or more of the outstanding voting securities present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present in person or by proxy, or (b) more than 50% of the outstanding
voting securities. All percentage limitations are considered at the time
securities are purchased and are based on a fund's net assets unless otherwise
indicated. None of the following investment restrictions involving a maximum
percentage of assets will be considered violated unless the excess occurs
immediately after, and is caused by, an acquisition by the applicable fund.


INVESTMENT RESTRICTIONS OF GLOBAL DISCOVERY FUND, GLOBAL GROWTH FUND, GLOBAL
SMALL CAPITALIZATION FUND, GROWTH FUND, INTERNATIONAL FUND, NEW WORLD FUND, BLUE
CHIP INCOME AND GROWTH FUND, GROWTH-INCOME FUND, WORLD GROWTH AND INCOME FUND,
ASSET ALLOCATION FUND, BOND FUND AND HIGH-INCOME BOND FUND

Global Discovery Fund, Global Growth Fund, Global Small Capitalization Fund,
Growth Fund, International Fund, New World Fund, Blue Chip Income and Growth
Fund, World Growth and Income Fund, Growth-Income Fund, Asset Allocation Fund,
Bond Fund and High-Income Bond Fund may not:


1.   Invest more than 5% of the value of the total assets of the fund in the
securities of any one issuer, provided that this limitation shall apply only to
75% of the value of the fund's total assets and, provided further, that the
limitation shall not apply to obligations of the government of the


                   American Funds Insurance Series -- Page 20
<PAGE>


U.S. under a general Act of Congress. The short-term obligations of commercial
banks are excluded from this 5% limitation with respect to 25% of the fund's
total assets.

2.   As to 75% of its total assets, purchase more than 10% of the outstanding
voting securities of an issuer.

3.   Invest more than 25% of the fund's total assets in the securities of
issuers in the same industry. Obligations of the U.S. government, its agencies
and instrumentalities, are not subject to this 25% limitation on industry
concentration. In addition, the fund may, if deemed advisable, invest more than
25% of its assets in the obligations of domestic commercial banks.

4.   Invest in real estate (including limited partnership interests, but
excluding securities of companies, such as real estate investment trusts, which
deal in real estate or interests therein).

5.   Purchase commodities or commodity contracts; except that Global Discovery
Fund, Global Small Capitalization Fund, International Fund, New World Fund,
Asset Allocation Fund, Bond Fund and High-Income Bond Fund may engage in
transactions involving currencies (including forward or futures contracts and
put and call options).

6.   Invest in companies for the purpose of exercising control or management.

7.   Make loans to others except for (a) the purchase of debt securities; (b)
entering into repurchase agreements; (c) the loaning of its portfolio
securities; and (d) entering into loan participations.

8.   Borrow money, except from banks for temporary purposes, and then in an
amount not in excess of 5% of the value of the fund's total assets. Moreover, in
the event that the asset coverage for such borrowings falls below 300%, the fund
will reduce, within three days, the amount of its borrowings in order to provide
for 300% asset coverage.

9.   Purchase securities on margin.

10.  Sell securities short, except to the extent that the fund contemporaneously
owns, or has the right to acquire at no additional cost, securities identical to
those sold short.

11.  Invest in puts, calls, straddles, spreads or any combination thereof;
except as described above in Investment Restriction number 5.

12.  Invest in securities of other investment companies, except as permitted by
the 1940 Act.

13.  Engage in underwriting of securities issued by others, except to the extent
it may be deemed to be acting as an underwriter in the purchase or resale of
portfolio securities.

Notwithstanding investment restriction number 12, if deemed advisable by its
officers, compensation paid by the Series to its Trustees may be invested in
securities of these or other investment companies under a deferred compensation
plan adopted by Trustees pursuant to an exemptive order granted by the
Securities and Exchange Commission.


Notwithstanding investment restriction number 13, the funds may not engage in
the business of underwriting securities of other issuers, except to the extent
that the disposal of an investment


                   American Funds Insurance Series -- Page 21
<PAGE>


position may technically constitute the fund an underwriter as that term is
defined under the Securities Act of 1933.


NONFUNDAMENTAL POLICIES -- The following nonfundamental policies of Global
Discovery Fund, Global Growth Fund, Global Small Capitalization Fund, Growth
Fund, International Fund, New World Fund, Blue Chip Income and Growth Fund,
Growth-Income Fund, World Growth and Income Fund, Asset Allocation Fund, Bond
Fund and High-Income Bond Fund may be changed without shareholder approval:


1.   The fund may not invest more than 15% of its net assets in illiquid
securities.

2.   The fund may not issue senior securities, except as permitted by the 1940
Act.

INVESTMENT RESTRICTIONS OF U.S. GOVERNMENT/AAA-RATED SECURITIES FUND

U.S. Government/AAA-Rated Securities Fund may not:


1.   Purchase any security (other than securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities ("U.S. government
securities")) if, immediately after and as a result of such investment, more
than 5% of the value of the fund's total assets would be invested in securities
of the issuer.

2.   Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry,
except that this limitation shall not apply to U.S. government securities or
other securities to the extent they are backed by or represent interests in U.S.
government securities or U.S. government-guaranteed mortgages.

3.   Invest in companies for the purpose of exercising control or management.

4.   Invest in securities of other investment companies, except as permitted by
the 1940 Act.

5.   Buy or sell real estate or commodities or commodity contracts in the
ordinary course of its business; however, the fund may purchase or sell readily
marketable debt securities secured by real estate or interests therein or issued
by companies which invest in real estate or interests therein, including real
estate investment trusts.

6.   Engage in the business of underwriting securities of other issuers, except
to the extent that the disposal of an investment position may technically cause
it to be considered an underwriter as that term is defined under the Securities
Act of 1933.

7.   Make loans, except that the fund may: (a) purchase readily marketable debt
securities; (b) invest in repurchase agreements; (c) make loans of portfolio
securities; and (d) enter into loan participations. The fund will not invest in
repurchase agreements maturing in more than seven days if any such investment,
together with any illiquid securities (including securities which are subject to
legal or contractual restrictions on resale) held by the fund, exceeds 10% of
the value of its total assets.

8.   Sell securities short, except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost, securities identical to
those sold short.


                   American Funds Insurance Series -- Page 22
<PAGE>


9.   Purchase securities on margin, except that the fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities.

10.  Borrow money, except from banks for temporary or emergency purposes not in
excess of 5% of the value of the fund's total assets, except that the fund may
enter into reverse repurchase agreements.

11.  Write, purchase or sell puts, calls or combinations thereof.

Notwithstanding investment restriction number 4, if deemed advisable by its
officers, compensation paid by the Series to its Trustees may be invested in
securities of these or other investment companies under a deferred compensation
plan adopted by Trustees pursuant to an exemptive order granted by the
Securities and Exchange Commission.


NONFUNDAMENTAL POLICIES -- The following nonfundamental policies of U.S.
Government/AAA-Rated Securities Fund may be changed without shareholder
approval:


1.   The fund may not invest more than 15% of its net assets in illiquid
securities.

2.   The fund may not issue senior securities, except as permitted by the 1940
Act.

INVESTMENT RESTRICTIONS OF CASH MANAGEMENT FUND

Cash Management Fund may not:


1.   Invest more than 5% of the value of the total assets of the fund in the
securities of any one issuer, provided that this limitation shall apply only to
75% of the value of the fund's total assets and, provided further, that the
limitation shall not apply to obligations of the government of the U.S. under a
general Act of Congress. The short-term obligations of commercial banks are
excluded from this 5% limitation with respect to 25% of the fund's total assets.

2.   As to 75% of its total assets, purchase more than 10% of the outstanding
voting class of securities of an issuer.

3.   Invest more than 25% of the fund's total assets in the securities of
issuers in the same industry. Obligations of the U.S. government, its agencies
and instrumentalities, are not subject to this 25% limitation on industry
concentration. In addition, the fund may, if deemed advisable, invest more than
25% of its assets in the obligations of domestic commercial banks.

4.   Enter into any repurchase agreement maturing in more than seven days or
invest in any other illiquid security if, as a result, more than 10% of the
fund's total assets would be so invested.

5.   Make loans to others except for the purchase of the debt securities listed
above. The fund may enter into repurchase agreements as described above.

6.   Borrow money, except from banks for temporary purposes, and then in an
amount not in excess of 5% of the value of the fund's total assets. Moreover, in
the event that the asset coverage for such borrowings falls below 300%, the fund
will reduce, within three days, the amount of its borrowings in order to provide
for 300% asset coverage.


                   American Funds Insurance Series -- Page 23
<PAGE>


7.   Sell securities short except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost, securities identical to
those sold short.

8.   Invest in puts, calls, straddles, spreads or any combination thereof.

9.   Purchase or sell securities of other investment companies (except in
connection with a merger, consolidation, acquisition or reorganization), real
estate or commodities.

10.  Act as underwriter of securities issued by others, engage in distribution
of securities for others, or make investments in other companies for the purpose
of exercising control or management.

NONFUNDAMENTAL POLICIES -- The following nonfundamental policies of Cash
Management Fund may be changed without shareholder approval:


Notwithstanding investment restriction number 1 above, in order to comply with
Rule 2a-7 under the 1940 Act, Cash Management Fund has adopted a policy of
investing no more than 5% of its assets (measured at the time of purchase) in
the securities of any one issuer (other than the U.S. government); provided
however, that Cash Management Fund may invest, as to 25% of its assets, more
than 5% of its assets in certain high-quality securities (as defined in the
Rule) of a single issuer for a period of up to three business days. Investment
restriction number 9 above does not prevent the purchase by Cash Management Fund
of securities that have "put" or "stand-by" commitment features.


Notwithstanding investment restriction number 9 above, if deemed advisable by
its officers, compensation paid by the Series to its Trustees may be invested in
securities of these or other investment companies under a deferred compensation
plan adopted by Trustees pursuant to an exemptive order granted by the
Securities and Exchange Commission.


                   American Funds Insurance Series -- Page 24
<PAGE>


                            MANAGEMENT OF THE SERIES

BOARD OF TRUSTEES AND OFFICERS



                                     YEAR FIRST                                       NUMBER OF BOARDS
                        POSITION      ELECTED                                          WITHIN THE FUND     OTHER DIRECTORSHIPS/3/
                        WITH THE     A TRUSTEE      PRINCIPAL OCCUPATION(S) DURING   COMPLEX/2/ ON WHICH            HELD
     NAME AND AGE        SERIES   OF THE SERIES/1/          PAST FIVE YEARS            TRUSTEE SERVES            BY TRUSTEE
-----------------------------------------------------------------------------------------------------------------------------------
 "NON-INTERESTED" TRUSTEES
-----------------------------------------------------------------------------------------------------------------------------------

 Lee A. Ault III         Trustee        1999         Chairman of the Board,                   1            Anworth Mortgage Asset
 Age: 68                                             In-Q-Tel, Inc. (information                           Corp.; Office Depot,
                                                     technology); former Chairman                          Inc.
                                                     of the Board, President and
                                                     CEO, Telecredit, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 H. Frederick            Trustee        1994         Private investor; former                19            Ducommun Incorporated;
 Christie                                            President and CEO, The                                IHOP Corporation;
 Age: 71                                             Mission Group (non-utility                            Southwest Water Company;
                                                     holding company, subsidiary                           Valero L.P.
                                                     of Southern California Edison
                                                     Company)
-----------------------------------------------------------------------------------------------------------------------------------
 Joe E. Davis            Trustee        1991         Private investor; former                 1            Anworth Mortgage Asset
 Age: 70                                             Chairman of the Board, Linear                         Corp.; Natural
                                                     Corporation (linear motor                             Alternatives
                                                     design and production);                               International, Inc.
                                                     former President and CEO,
                                                     National Health Enterprises,
                                                     Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 Martin Fenton           Trustee        1995         Chairman of the Board and               16            None
 Age: 69                                             CEO, Senior Resource Group
                                                     LLC (development and
                                                     management of senior living
                                                     communities)
-----------------------------------------------------------------------------------------------------------------------------------
 Leonard R. Fuller       Trustee        1999         President and CEO, Fuller               14            None
 Age: 58                                             Consulting (financial
                                                     management consulting firm)
-----------------------------------------------------------------------------------------------------------------------------------
 Mary Myers Kauppila     Trustee        1994         Private investor; Chairman of            5            None
 Age: 51                                             the Board and CEO, Ladera
                                                     Management Company (venture
                                                     capital and agriculture);
                                                     former owner and President,
                                                     Energy Investment, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 Kirk P. Pendleton       Trustee        1996         Chairman of the Board and                6            None
 Age: 65                                             CEO, Cairnwood, Inc. (venture
                                                     capital investment)
-----------------------------------------------------------------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 25

<PAGE>




                                                     PRINCIPAL OCCUPATION(S) DURING
                                      YEAR FIRST           PAST FIVE YEARS AND         NUMBER OF BOARDS
                                       ELECTED               POSITIONS HELD             WITHIN THE FUND
                      POSITION        A TRUSTEE         WITH AFFILIATED ENTITIES      COMPLEX/2/ ON WHICH   OTHER DIRECTORSHIPS/3/
                      WITH THE      AND/OR OFFICER    OR THE PRINCIPAL UNDERWRITER          TRUSTEE                  HELD
   NAME AND AGE        SERIES      OF THE SERIES/1/           OF THE SERIES            OR OFFICER SERVES    BY TRUSTEE OR OFFICER
-----------------------------------------------------------------------------------------------------------------------------------
 "INTERESTED" TRUSTEES/4,5/
-----------------------------------------------------------------------------------------------------------------------------------

 James K. Dunton     Chairman of         1993         Senior Vice President and                2            None
 Age: 67             the Board                        Director, Capital Research
                                                      and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
 Donald D. O'Neal    President           1998         Senior Vice President,                   3            None
 Age: 44             and Trustee                      Capital Research and
                                                      Management Company
-----------------------------------------------------------------------------------------------------------------------------------
 Michael J.          Senior Vice         1991         Vice President and Secretary,            1            None
 Downer              President                        Capital Research and
 Age: 50             and Trustee                      Management Company; Secretary
                                                      and Director, American Funds
                                                      Distributors, Inc.*;
                                                      Director, Capital Bank and
                                                      Trust Company*
-----------------------------------------------------------------------------------------------------------------------------------





                   American Funds Insurance Series -- Page 26

<PAGE>




                                                                                    PRINCIPAL OCCUPATION(S) DURING
                                                                                  PAST FIVE YEARS AND POSITIONS HELD
                                                YEAR FIRST ELECTED                     WITH AFFILIATED ENTITIES
                               POSITION             AN OFFICER                       OR THE PRINCIPAL UNDERWRITER
     NAME AND AGE          WITH REGISTRANT       OF THE SERIES/1/                            OF THE SERIES
-----------------------------------------------------------------------------------------------------------------------------------
 OTHER OFFICERS/5/
-----------------------------------------------------------------------------------------------------------------------------------

 Alan N. Berro               Senior Vice               1998         Vice President, Capital Research and Management Company; Senior
 Age: 44                      President                             Vice President, Capital Research Company*
-----------------------------------------------------------------------------------------------------------------------------------
 Abner D. Goldstine          Senior Vice               1993         Senior Vice President and Director, Capital Research and
 Age: 75                      President                             Management Company
-----------------------------------------------------------------------------------------------------------------------------------
 John H. Smet                Senior Vice               1994         Senior Vice President, Capital Research and Management Company;
 Age: 48                      President                             Director, American Funds Distributors, Inc.*
-----------------------------------------------------------------------------------------------------------------------------------
 Claudia P.                 Vice President             1994         Senior Vice President, Capital Research and Management Company;
 Huntington                                                         Director, The Capital Group Companies, Inc.*
 Age: 53
-----------------------------------------------------------------------------------------------------------------------------------
 Robert W. Lovelace         Vice President             1997         Senior Vice President, Capital Research and Management Company;
 Age: 42                                                            Chairman of the Board, Capital Research Company*; Director, The
                                                                    Capital Group Companies, Inc.*
-----------------------------------------------------------------------------------------------------------------------------------
 Susan M. Tolson            Vice President             1999         Senior Vice President, Capital Research Company*
 Age: 43
-----------------------------------------------------------------------------------------------------------------------------------
 Chad L. Norton               Secretary                1994         Vice President - Fund Business Management Group, Capital
 Age: 44                                                            Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
 David A. Pritchett           Treasurer                1999         Vice President - Fund Business Management Group, Capital
 Age: 38                                                            Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
 Steven I. Koszalka           Assistant                2003         Fund Boards Specialist, Capital Research and Management Company
 Age: 41                      Secretary
-----------------------------------------------------------------------------------------------------------------------------------
 Sheryl F. Johnson            Assistant                1997         Vice President - Fund Business Management Group, Capital
 Age: 36                      Treasurer                             Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
 Jeffrey P. Regal             Assistant                2004         Vice President - Fund Business Management Group, Capital
 Age: 33                      Treasurer                             Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------





                   American Funds Insurance Series -- Page 27

<PAGE>

* Company affiliated with Capital Research and Management Company.
1 Trustees and officers of the Series serve until their resignation, removal or
 retirement.
2 Capital Research and Management Company manages the American Funds, consisting
 of 29 funds, and Endowments, whose shareholders are limited to certain
 nonprofit organizations.
3 This includes all directorships (other than those of the American Funds) that
 are held by each Trustee as a director of a public company or a registered
 investment company.
4 "Interested persons," within the meaning of the 1940 Act, on the basis of
 their affiliation with the Series' investment adviser, Capital Research and
 Management Company, or affiliated entities.
5 All of the Trustees and officers listed are officers and/or Directors/Trustees
 of one or more of the other funds for which Capital Research and Management
 Company serves as investment adviser.

THE ADDRESS FOR ALL TRUSTEES AND OFFICERS OF THE SERIES IS 333 SOUTH HOPE
STREET, 55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: FUND SECRETARY.


                   American Funds Insurance Series -- Page 28

<PAGE>


FUND SHARES OWNED BY TRUSTEES AS OF DECEMBER 31, 2005



                                                     AGGREGATE DOLLAR RANGE/1/
                                                             OF SHARES
                                                        OWNED IN ALL FUNDS
                                                       IN THE AMERICAN FUNDS
                             DOLLAR RANGE/1/ OF           FAMILY OVERSEEN
          NAME              FUND SHARES OWNED/2/            BY TRUSTEE
-------------------------------------------------------------------------------

 "NON-INTERESTED" TRUSTEES
-------------------------------------------------------------------------------
 Lee A. Ault III                    None                       None
-------------------------------------------------------------------------------
 H. Frederick Christie              None                   Over $100,000
-------------------------------------------------------------------------------
 Joe E. Davis                       None                       None
-------------------------------------------------------------------------------
 Martin Fenton                      None                   Over $100,000
-------------------------------------------------------------------------------
 Leonard R. Fuller                  None                $50,001 - $100,000
-------------------------------------------------------------------------------
 Mary Myers Kauppila                None                   Over $100,000
-------------------------------------------------------------------------------
 Kirk P. Pendleton                  None                   Over $100,000
-------------------------------------------------------------------------------
 "INTERESTED" TRUSTEES/3/
-------------------------------------------------------------------------------
 Michael J. Downer                  None                       None
-------------------------------------------------------------------------------
 James K. Dunton                    None                   Over $100,000
-------------------------------------------------------------------------------
 Donald D. O'Neal                   None                   Over $100,000
-------------------------------------------------------------------------------



1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
 $10,001 - $50,000; $50,001 - $100,000; and Over $100,000. The amounts listed
 for "interested" Trustees include shares owned through The Capital Group
 Companies, Inc. retirement plan and 401(k) plan.
2 All of the Series' outstanding shares are owned of record by the separate
 accounts of insurance companies that use the Series as the underlying
 investments for variable annuity and variable life insurance contracts.
3 "Interested persons," within the meaning of the 1940 Act, on the basis of
 their affiliation with the Series' investment adviser, Capital Research and
 Management Company, or affiliated entities.

TRUSTEE COMPENSATION -- No compensation is paid by the Series to any officer or
Trustee who is a director, officer or employee of the investment adviser or its
affiliates. The Series pays to Trustees who are not affiliated with the
investment adviser: (a) fees of $4,000 for each Board of Trustees meeting
attended, (b) $2,000 for each meeting attended as a member of a committee of the
Board of Trustees and (c) annual fees of either $31,000 (if the Trustee also
receives compensation as a member of the Board of another fund advised by the
investment adviser and the other Board typically meets separately from the
Series' Board of Trustees), or $50,000 (for all other unaffiliated Trustees).


The payment by the Series to certain unaffiliated Trustees of a larger per fund
annual fee reflects the significant time and labor commitment required of any
mutual fund Board member overseeing even one fund.


The Nominating Committee of the Board of Trustees, a Committee comprised
exclusively of Trustees not affiliated with the investment adviser, reviews
Trustee compensation periodically, and typically recommends adjustments every
other year. In making its recommendations, the


                   American Funds Insurance Series -- Page 29
<PAGE>


Nominating Committee considers a number of factors, including operational,
regulatory and other developments affecting the complexity of the Board's
oversight obligations, as well as comparative industry data.


No pension or retirement benefits are accrued as part of Series expenses. The
Trustees may elect, on a voluntary basis, to defer all or a portion of their
fees through a deferred compensation plan in effect for the Series. The Series
also reimburses certain expenses of the Trustees who are not affiliated with the
investment adviser.


Trustee compensation paid during the fiscal year ended December 31, 2005


                                                     TOTAL COMPENSATION (INCLUDING
                                                         VOLUNTARILY DEFERRED
                                                           COMPENSATION/1/)
                         AGGREGATE COMPENSATION        FROM ALL FUNDS MANAGED BY
                         (INCLUDING VOLUNTARILY     CAPITAL RESEARCH AND MANAGEMENT
                        DEFERRED COMPENSATION/1/)    COMPANY OR ITS AFFILIATES/2/
         NAME                 FROM THE FUND
-----------------------------------------------------------------------------------

 Lee A. Ault III                 $70,500                       $ 70,500
-----------------------------------------------------------------------------------
 H. Frederick                     54,474                        293,340
 Christie/3/
-----------------------------------------------------------------------------------
 Joe E. Davis                     71,500                         71,500
-----------------------------------------------------------------------------------
 Martin Fenton/3/                 57,375                        245,620
-----------------------------------------------------------------------------------
 Leonard R. Fuller                47,356                        183,115
-----------------------------------------------------------------------------------
 Mary Myers                       51,000                        161,000
 Kauppila/3/
-----------------------------------------------------------------------------------
 Kirk P. Pendleton/3/             48,000                        204,249
-----------------------------------------------------------------------------------




1 Amounts may be deferred by eligible Trustees under a nonqualified deferred
 compensation plan adopted by the Series in 1993. Deferred amounts accumulate at
 an earnings rate determined by the total return of one or more American Funds
 as designated by the Trustees. Compensation for the fiscal year ended December
 31, 2004, includes earnings on amounts deferred in previous fiscal years.
2 Capital Research and Management Company manages the American Funds, consisting
 of 29 funds, and Endowments, whose shareholders are limited to certain
 nonprofit organizations.
3 Since the deferred compensation plan's adoption, the total amount of deferred
 compensation accrued by the Series (plus earnings thereon) through the 2004
 fiscal year for participating Trustees is as follows: H. Frederick Christie
 ($287,531), Martin Fenton ($90,098), Mary Myers Kauppila ($655,012) and Kirk P.
 Pendleton ($420,494). Amounts deferred and accumulated earnings thereon are not
 funded and are general unsecured liabilities of the Series until paid to the
 Trustees.

SERIES ORGANIZATION AND THE BOARD OF TRUSTEES -- The Series, an open-end
investment company, was organized as a Massachusetts business trust on September
13, 1983. All Series operations are supervised by its Board of Trustees, which
meets periodically and performs duties required by applicable state and federal
laws. Members of the board who are not employed by Capital Research and
Management Company or its affiliates are paid certain fees for services rendered
to the Series as described above. They may elect to defer all or a portion of
these fees through a deferred compensation plan in effect for the Series.


Massachusetts common law provides that a trustee of a Massachusetts business
trust owes a fiduciary duty to the trust and must carry out his or her
responsibilities as a trustee in accordance


                   American Funds Insurance Series -- Page 30
<PAGE>

with that fiduciary duty. Generally, a trustee will satisfy his or her duties if
he or she acts in good faith and uses ordinary prudence.


The Series currently consists of separate funds which have separate assets and
liabilities, and invest in separate investment portfolios. The Board of Trustees
may create additional funds in the future. Income, direct liabilities and direct
operating expenses of a fund will be allocated directly to that fund and general
liabilities and expenses of the Series will be allocated among the funds in
proportion to the total net assets of each fund.


Each fund has three classes of shares - Class 1, Class 2 and Class 3. The shares
of each class represent an interest in the same investment portfolio. Each class
has equal rights as to voting, redemption, dividends and liquidation, except
that each class bears different distribution expenses and other expenses
properly attributable to the particular class as approved by the Board of
Trustees and set forth in the Series' amended and restated rule 18f-3 Plan.
Class 2 and Class 3 shareholders have exclusive voting rights with respect to
their respective rule 12b-1 Plans adopted in connection with the distribution of
Class 2 and Class 3 shares. Shares of each Class of the Series vote together on
matters that affect all classes in substantially the same manner. Each class
votes as a class on matters that affect that class alone.


The Series does not hold annual meetings of shareholders. However, significant
matters that require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the Series will hold a meeting at which any member of the Board could be removed
by a majority vote.


COMMITTEES OF THE BOARD OF TRUSTEES -- The Series has an Audit Committee
comprised of Lee A. Ault III; H. Frederick Christie; Joe E. Davis; and Martin
Fenton, none of whom is an "interested person" of the Series within the meaning
of the 1940 Act. The Committee provides oversight regarding the Series'
accounting and financial reporting policies and practices, their internal
controls and the internal controls of the Series' principal service providers.
The Committee acts as a liaison between the Series' independent registered
public accounting firm and the full Board of Trustees. Five Audit Committee
meetings were held during the 2005 fiscal year.


The Series has a Contracts Committee comprised of Lee A. Ault III; H. Frederick
Christie; Joe E. Davis; Martin Fenton; Leonard R. Fuller; Mary Myers Kauppila;
and Kirk P. Pendleton, none of whom is an "interested person" of the Series
within the meaning of the 1940 Act. The Committee's function is to request,
review and consider the information deemed necessary to evaluate the terms of
certain agreements between the Series and its investment adviser or the
investment adviser's affiliates, such as the Investment Advisory and Service
Agreement and plan of distribution adopted pursuant to rule 12b-1 under the 1940
Act, that the Series may enter into, renew or continue, and to make its
recommendations to the full Board of Trustees on these matters. Two Contracts
Committee meetings were held during the 2005 fiscal year.


The Series has a Nominating Committee comprised of Lee A. Ault III; Joe E.
Davis; Martin Fenton; and Mary Myers Kauppila, none of whom is an "interested
person" of the Series within the meaning of the 1940 Act. The Committee
periodically reviews such issues as the Board's composition, responsibilities,
committees, compensation and other relevant issues, and recommends any
appropriate changes to the full Board of Trustees. The Committee also


                   American Funds Insurance Series -- Page 31
<PAGE>


evaluates, selects and nominates independent Trustee candidates to the full
Board of Trustees. While the Committee normally is able to identify from its own
and other resources an ample number of qualified candidates, it will consider
shareholder suggestions of persons to be considered as nominees to fill future
vacancies on the Board. Such suggestions must be sent in writing to the
Nominating Committee of the Series, addressed to the Series' Secretary, and must
be accompanied by complete biographical and occupational data on the prospective
nominee, along with a written consent of the prospective nominee for
consideration of his or her name by the Committee. Two Nominating Committee
meetings were held during the 2005 fiscal year.


PROXY VOTING PROCEDURES AND GUIDELINES -- The Series and its investment adviser
have adopted Proxy Voting Guidelines (the "Guidelines") with respect to voting
proxies of securities held by the funds, other American Funds and Endowments.
Certain American Funds have established separate proxy committees that vote
proxies or delegate to a voting officer the authority to vote on behalf of those
funds. Proxies for all other funds are voted by a committee of the investment
adviser under authority delegated by those funds' Boards. Therefore, if more
than one fund invests in the same company, they may vote differently on the same
proposal.


All U.S. proxies are voted. Non-U.S. proxies also are voted, provided there is
sufficient time and information available. After a proxy is received, the
investment adviser prepares a summary of the proposals in the proxy. A
discussion of any potential conflicts of interest is also included in the
summary. After reviewing the summary, one or more research analysts familiar
with the company and industry make a voting recommendation on the proxy
proposals. A second recommendation is made by a proxy coordinator (a senior
investment professional) based on the individual's knowledge of the Guidelines
and familiarity with proxy-related issues. The proxy summary and voting
recommendations are then sent to the appropriate proxy voting committee for the
final voting decision.


The analyst and proxy coordinator making voting recommendations are responsible
for noting any potential material conflicts of interest. One example might be
where a director of one or more American Funds is also a director of a company
whose proxy is being voted. In such instances, proxy committee members are
alerted to the potential conflict. The proxy committee may then elect to vote
the proxy or seek a third-party recommendation or vote of an ad hoc group of
committee members.


The Guidelines, which have been in effect in substantially their current form
for many years, provide an important framework for analysis and decision-making
by all funds. However, they are not exhaustive and do not address all potential
issues. The Guidelines provide a certain amount of flexibility so that all
relevant facts and circumstances can be considered in connection with every
vote. As a result, each proxy received is voted on a case-by-case basis
considering the specific circumstances of each proposal. The voting process
reflects the funds' understanding of the company's business, its management and
its relationship with shareholders over time.


On August 31 of each year, each fund is required to file Form N-PX containing
its complete voting record for the 12 months ended the preceding June 30. Each
fund's voting record for the 12 months ended June 30, 2005 is available on the
American Funds website at americanfunds.com and on the SEC's website at
www.sec.gov.


The following summary sets forth the general positions of the American Funds,
Endowments, the Series and the investment adviser on various proposals. A copy
of the full Guidelines is available


                   American Funds Insurance Series -- Page 32
<PAGE>

upon request, free of charge, by calling American Funds Service Company at
800/421-0180 or visiting the American Funds website.


     DIRECTOR MATTERS -- The election of a company's slate of nominees for
     director is generally supported. Votes may be withheld for some or all of
     the nominees if this is determined to be in the best interest of
     shareholders. Separation of the chairman and CEO positions may also be
     supported. Typically, proposals to declassify the board (elect all
     directors annually) are supported based on the belief that this increases
     the directors' sense of accountability to shareholders.

     SHAREHOLDER RIGHTS -- Proposals to repeal an existing poison pill, to
     provide for confidential voting and to provide for cumulative voting are
     usually supported. Proposals to eliminate the right of shareholders to act
     by written consent or to take away a shareholder's right to call a special
     meeting are not typically supported.

     COMPENSATION AND BENEFIT PLANS -- Option plans are complicated, and many
     factors are considered in evaluating a plan. Each plan is evaluated based
     on protecting shareholder interests and a knowledge of the company and its
     management. Considerations include the pricing (or repricing) of options
     awarded under the plan and the impact of dilution on existing shareholders
     from past and future equity awards. Compensation packages should be
     structured to attract, motivate and retain existing employees and qualified
     directors; however, they should not be excessive.

     ROUTINE MATTERS -- The ratification of auditors, procedural matters
     relating to the annual meeting and changes to company name are examples of
     items considered routine. Such items are generally voted in favor of
     management's recommendations unless circumstances indicate otherwise.

PRINCIPAL FUND SHAREHOLDERS -- The following tables identify those investors who
own of record or are known by the funds to own beneficially 5% or more of any
class of a fund's shares as of the opening of business on April 25, 2006. Unless
otherwise indicated, the ownership percentages below represent ownership of
record rather than beneficial ownership.


GLOBAL DISCOVERY



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                      Class 1
 P.O. Box 2340                                       Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------



GLOBAL GROWTH



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                      Class 1
 P. O. Box 2340                                      Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 Hartford Life/Annuity Insurance Co.                 Class 2
 P. O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.                   Class 2
 P.O. Box 54299
 Los Angeles, CA 90054-0299
----------------------------------------------------------------------------
 Travelers Life & Annuity Co.                        Class 2
 P.O. Box 990027
 Hartford, CT 06199-0027
----------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 33
<PAGE>


GLOBAL SMALL CAPITALIZATION FUND



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                      Class 1
 P. O. Box 2340                                      Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 Hartford Life/Annuity Insurance Co.                 Class 2
 P. O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------
 Metropolitan Life Insurance Co.                     Class 2
 1 Madison Avenue
 New York, NY 10010-3603
----------------------------------------------------------------------------
 Hartford Life Insurance Co.                         Class 2
 P. O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------



GROWTH FUND



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                     Class 1
 P.O. Box 2340                                      Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 Hartford Life/Annuity Insurance Co.                Class 2
 P. O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------
 ING                                                Class 2
 7337 E. Doubletree Ranch Road
 Scottsdale, AZ 85258-2160
----------------------------------------------------------------------------
 MIT                                                Class 2
 73 Tremont Street, Suite 1300
 Boston, MA 02108-3902
----------------------------------------------------------------------------
 Hartford Life Insurance Co.                        Class 2
 P. O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.                  Class 3
 P.O. Box 54299
 Los Angeles, CA 90054-0299
----------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 34
<PAGE>

INTERNATIONAL FUND



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                      Class 1
 P. O. Box 2340                                      Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 Hartford Life/Annuity Insurance Co.                 Class 2
 P. O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------
 ING                                                 Class 2
 7337 E. Doubletree Ranch Road
 Scottsdale, AZ 85258-2160
----------------------------------------------------------------------------
 MIT                                                 Class 2
 73 Tremont Street, Suite 1300
 Boston, MA 02108-3902
----------------------------------------------------------------------------



NEW WORLD FUND



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                      Class 1
 P. O. Box 2340                                      Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 Hartford Life/Annuity Insurance Co.                 Class 2
 P. O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------
 Hartford Life Insurance Co.                         Class 2
 P. O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------



BLUE CHIP INCOME AND GROWTH FUND



                  NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
-----------------------------------------------------------------------------

 Lincoln Life Insurance Company                       Class 1
 P.O. Box 2340                                        Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
-----------------------------------------------------------------------------
 Hartford Life/Annuity Insurance Co.                  Class 2
 P.O. Box 2999
 Hartford, CT 06104-2999
-----------------------------------------------------------------------------
 Hartford Life Insurance Co.                          Class 2
 P.O. Box 2999
 Hartford, CT 06104-2999
-----------------------------------------------------------------------------
 MIT                                                  Class 2
 73 Tremont Street, Suite 1300
 Boston, MA 02108-3902
-----------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 35
<PAGE>


GROWTH-INCOME FUND



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                     Class 1
 P.O. Box 2340                                      Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 Hartford Life/Annuity Insurance Co.                Class 2
 P.O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------
 ING                                                Class 2
 7337 E. Doubletree Ranch Road
 Scottsdale, AZ 85258-2160
----------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.                  Class 2
 P.O. Box 54299                                     Class 3
 Los Angeles, CA 90054-0299
----------------------------------------------------------------------------
 Hartford Life Insurance Co.                        Class 2
 P.O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------



ASSET ALLOCATION FUND



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                     Class 1
 P.O. Box 2340                                      Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 Hartford Life/Annuity Insurance Co.                Class 2
 P.O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------
 Hartford Life Insurance Co.                        Class 2
 P.O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.                  Class 2
 P.O. Box 54299                                     Class 3
 Los Angeles, CA 90054-0299
----------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 36
<PAGE>

BOND FUND



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                      Class 1
 P. O. Box 2340                                      Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 Hartford Life/Annuity Insurance Co.                 Class 2
 P. O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------
 Hartford Life Insurance Co.                         Class 2
 P. O. Box 2999
 Hartford, CT 06104-2999
----------------------------------------------------------------------------



HIGH-INCOME BOND FUND



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                     Class 1
 P.O. Box 2340                                      Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.                  Class 3
 P.O. Box 54299
 Los Angeles, CA 90054-0299
----------------------------------------------------------------------------



U.S. GOVERNMENT/AAA-RATED SECURITIES FUND



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                     Class 1
 P. O. Box 2340                                     Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.                  Class 3
 P.O. Box 54299
 Los Angeles, CA 90054-0299
----------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 37
<PAGE>


CASH MANAGEMENT FUND



                 NAME AND ADDRESS                    OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

 Lincoln Life Insurance Company                     Class 1
 P.O. Box 2340                                      Class 2
 1300 S. Clinton Street
 Fort Wayne, IN 46802-3518
----------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.                  Class 3
 P.O. Box 54299
 Los Angeles, CA 90054-0299
----------------------------------------------------------------------------



INVESTMENT ADVISER -- The investment adviser, Capital Research and Management
Company, founded in 1931, maintains research facilities in the United States and
abroad (Los Angeles; San Francisco; New York; Washington, DC; London; Geneva;
Hong Kong; Singapore; and Tokyo) with a staff of professionals, many of whom
have significant investment experience. The investment adviser is located at 333
South Hope Street, Los Angeles, CA 90071 and at 135 South State College
Boulevard, Brea, CA 92821. The investment adviser's research professionals
travel several million miles a year, making more than 5,000 research visits in
more than 50 countries around the world. The investment adviser believes that it
is able to attract and retain quality personnel. The investment adviser is a
wholly owned subsidiary of The Capital Group Companies, Inc.


The investment adviser is responsible for managing more than $500 billion of
stocks, bonds and money market instruments and serves over 20 million
shareholder accounts of all types throughout the world. These investors include
individuals, privately owned businesses and large corporations, as well as
schools, colleges, foundations and other nonprofit and tax-exempt organizations.


POTENTIAL CONFLICTS OF INTEREST -- The investment adviser has adopted policies
and procedures that address potential conflicts of interest that may arise
between a portfolio counselor's management of one or more funds in the Series
and his or her management of other funds and accounts, such as conflicts
relating to the allocation of investment opportunities, personal investing
activities, portfolio counselor compensation and proxy voting of portfolio
securities. While there is no guarantee that such policies and procedures will
be effective in all cases, the investment adviser believes that all issues
relating to potential material conflicts of interest involving the Series and
its other managed funds and accounts have been addressed.


COMPENSATION OF INVESTMENT PROFESSIONALS -- As described in the prospectus, the
investment adviser uses a system of multiple portfolio counselors in managing
fund assets. In addition, Capital Research and Management Company's investment
analysts may make investment decisions with respect to a portion of a fund's
portfolio within their research coverage. Portfolio counselors and investment
analysts may manage assets in other mutual funds advised by Capital Research and
Management Company. Portfolio counselors and investment analysts are paid
competitive salaries by Capital Research and Management Company. In addition,
they may receive bonuses based on their individual portfolio results. Investment
professionals also may participate in profit-sharing plans. The relative mix of
compensation represented by bonuses, salary and profit-sharing will vary
depending on the individual's portfolio results, contributions to the
organization and other factors. In order to encourage a long-term focus, bonuses
based on investment results are calculated by comparing pretax total returns to
relevant benchmarks over


                   American Funds Insurance Series -- Page 38
<PAGE>

both the most recent year and a four-year rolling average, with the greatest
weight placed on the four-year rolling average. For portfolio counselors,
benchmarks may include measures of the marketplaces in which the relevant fund
invests and measures of the results of comparable mutual funds. For investment
analysts, benchmarks may include relevant market measures and appropriate
industry or sector indexes reflecting their areas of expertise. Capital Research
and Management Company also separately compensates analysts for the quality of
their research efforts. The benchmarks against which American Funds Insurance
Series portfolio counselors are measured include:


     Global Discovery Fund -- Lipper Multi-Cap Growth Funds Index, Global
     Service and Information Index, is a subset of MSCI World Index Fund;

     Global Growth Fund -- MSCI World Index, Lipper Global Funds Index;

     Global Small Capitalization Fund -- S&P/Citigroup Global/World ex US
     Indexes, S&P/Citigroup US Indexes, S&P/Citigroup Global/World Indexes,
     Lipper Small Cap Growth Funds Index, Lipper International Small Cap Funds
     Index;

     Growth Fund -- S&P 500, Lipper Growth Funds Index;

     International Fund -- MSCI All Country World Index, Lipper International
     Funds Index;

     New World Fund -- MSCI All Country World Index, Lipper Global Funds Index,
     Lipper Emerging Markets Funds Index, JP Morgan Emerging Markets Bond Index
     Global, MSCI Emerging Markets Index;

     Blue Chip Income and Growth Fund -- S&P 500, Lipper Growth and Income Funds
     Index;

     Growth-Income Fund -- S&P 500, Lipper Growth and Income Funds Index;

     Asset Allocation Fund -- S&P 500, Lipper Growth and Income Funds Index,
     Citigroup Broad Investment-Grade (BIG) Bond Index, Credit Suisse First
     Boston High Yield Bond Index, Lipper High Current Yield Bond Funds Average;

     Bond Fund -- Citigroup Broad Investment-Grade (BIG) Bond Index, Credit
     Suisse First Boston High Yield Bond Index, Lipper High Current Yield Bond
     Funds Average;

     High-Income Bond Fund -- Credit Suisse First Boston High Yield Bond Index,
     Lipper High Current Yield Bond Funds Average; and

     U.S. Government/AAA Rated Securities Fund -- Citigroup Treasury/Government
     Sponsored/Mortgage Index.

PORTFOLIO COUNSELOR FUND HOLDINGS AND MANAGEMENT OF OTHER ACCOUNTS -- Shares of
the funds may only be owned by purchasing variable annuity and variable life
insurance contracts. Each portfolio counselor's needs for variable annuity or
variable life products and the role those products would play in their
comprehensive investment portfolio will vary and depend on a number of factors
including tax, estate planning, life insurance, alternative retirement plans or
other considerations. The following portfolio counselor(s) own fund shares
(through an insurance


                   American Funds Insurance Series -- Page 39
<PAGE>


contract) in the dollar range noted: Robert W. Lovelace, Global Growth Fund,
$10,001 - $50,000. At this time, the remaining portfolio counselors have
determined that variable annuity products are not needed for their individual
retirement planning, and, as a result, as of the end of the Series' most recent
fiscal year period, they did not hold shares of the funds.


Portfolio counselors may also manage assets in other funds advised by Capital
Research and Management Company or its affiliates. Other managed accounts as of
the end of American Funds Insurance Series' most recently completed fiscal year
are listed below:





                             NUMBER             NUMBER
                            OF OTHER           OF OTHER          NUMBER
                           REGISTERED           POOLED          OF OTHER
                           INVESTMENT         INVESTMENT        ACCOUNTS
                        COMPANIES (RICS)   VEHICLES (PIVS)        THAT
                              THAT               THAT           PORTFOLIO
                            PORTFOLIO         PORTFOLIO         COUNSELOR
                            COUNSELOR         COUNSELOR          MANAGES
                             MANAGES           MANAGES         (ASSETS OF
      PORTFOLIO          (ASSETS OF RICS   (ASSETS OF PIVS   OTHER ACCOUNTS
      COUNSELOR          IN BILLIONS)/1/   IN BILLIONS)/2/   IN BILLIONS)/3/
------------------------------------------------------------------------------

 James K. Dunton

------------------------------------------------------------------------------
 Donald D. O'Neal

------------------------------------------------------------------------------
 Alan N. Berro

------------------------------------------------------------------------------
 Abner D. Goldstine

------------------------------------------------------------------------------
 John H. Smet

------------------------------------------------------------------------------
 Claudia P.
 Huntington
------------------------------------------------------------------------------
 Robert W. Lovelace

------------------------------------------------------------------------------
 Susan M. Tolson

------------------------------------------------------------------------------
 David C. Barclay

------------------------------------------------------------------------------
 Donnalisa Barnum

------------------------------------------------------------------------------
 Gordon Crawford

------------------------------------------------------------------------------
 Mark E. Denning

------------------------------------------------------------------------------
 J. Blair Frank

------------------------------------------------------------------------------
 Nick J. Grace
------------------------------------------------------------------------------
 Alwyn W. Heong

------------------------------------------------------------------------------
 Thomas H. Hogh

------------------------------------------------------------------------------
 Carl M. Kawaja

------------------------------------------------------------------------------
 Michael T. Kerr

------------------------------------------------------------------------------
 Michael D. Locke

------------------------------------------------------------------------------
 Ronald B. Morrow

------------------------------------------------------------------------------
 Robert G. O'Donnell

------------------------------------------------------------------------------
 C. Ross Sappenfield

------------------------------------------------------------------------------
 Steven T. Watson

------------------------------------------------------------------------------
 J. Dale Harvey

------------------------------------------------------------------------------
 Sung Lee
------------------------------------------------------------------------------
 Mark H. Dalzell

------------------------------------------------------------------------------
 James R. Mulally

------------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 40
<PAGE>

1 Indicates fund(s) where the Portfolio Counselor also has significant
 responsibilities for the day to day management of the fund(s). Assets noted are
 the total net assets of the registered investment companies and are not
 indicative of the total assets managed by the individual, which is a
 substantially lower amount.
2 Represents funds advised or sub-advised by Capital Research and Management
 Company and sold outside the United States and/ or fixed-income assets in
 institutional accounts managed by investment adviser subsidiaries of Capital
 Group International, Inc., an affiliate of Capital Research and Management
 Company. Assets noted are the total net assets of the fund or account and are
 not indicative of the total assets managed by the individual, which is a
 substantially lower amount.
3 Reflects other professionally managed accounts held at the companies
 affiliated with Capital Research and Management Company. Personal brokerage
 accounts of portfolio counselors and their families are not reflected.

INVESTMENT ADVISORY AND SERVICE AGREEMENTS -- The Investment Advisory and
Service Agreements (the "Agreements") between the Series and the investment
adviser will continue in effect until June 30, 2006 (for the Growth Fund, Blue
Chip Income and Growth Fund, Growth-Income Fund, Asset Allocation Fund, Bond
Fund and High-Income Bond Fund) and December 31, 2006 (for the Global Discovery
Fund, Global Growth Fund, Global Small Capitalization Fund, International Fund,
New World Fund, U.S. Government/AAA-Rated Securities Fund and Cash Management
Fund), unless sooner terminated, and may be renewed from year to year
thereafter, provided that any such renewal has been specifically approved at
least annually by (a) the Board of Trustees, or by the vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of the applicable
Series, and (b) the vote of a majority of Trustees who are not parties to the
Agreements or interested persons (as defined in the 1940 Act) of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
The Agreements provide that the investment adviser has no liability to the
Series for its acts or omissions in the performance of its obligations to the
Series not involving willful misconduct, bad faith, gross negligence or reckless
disregard of its obligations under the Agreements. The Agreements also provide
that either party has the right to terminate them, without penalty, upon 60
days' written


                   American Funds Insurance Series -- Page 41
<PAGE>


notice to the other party, and that the Agreements automatically terminate in
the event of their assignment (as defined in the 1940 Act).


As compensation for its services, the investment adviser receives a monthly fee
that is accrued daily, calculated at the annual rates of:


Global Discovery Fund: 0.58% of the first $500 million of net assets, plus 0.48%
on net assets greater than $500 million but not exceeding $1.0 billion, plus
0.44% on net assets in excess of $1.0 billion;


Global Growth Fund: 0.69% of the first $600 million of net assets, plus 0.59% on
net assets greater than $600 million but not exceeding $1.2 billion, plus 0.53%
on net assets greater than $1.2 billion but not exceeding $2.0 billion, plus
0.50% on net assets greater than $2.0 billion but not exceeding $3.0 billion,
plus 0.48% on net assets in excess of $3.0 billion;


Global Small Capitalization Fund: 0.80% of the first $600 million of net assets,
plus 0.74% on net assets greater than $600 million but not exceeding $1.0
billion, plus 0.70% on net assets greater than $1.0 billion but not exceeding
$2.0 billion, plus 0.67% on net assets in excess of $2.0 billion;


Growth Fund: 0.50% of the first $600 million of net assets, plus 0.45% on net
assets greater than $600 million but not exceeding $1.0 billion, plus 0.42% on
net assets greater than $1.0 billion but not exceeding $2.0 billion, plus 0.37%
on net assets greater than $2.0 billion but not exceeding $3.0 billion, plus
0.35% on net assets greater than $3.0 billion but not exceeding $5.0 billion,
plus 0.33% on net assets greater than $5.0 billion but not exceeding $8.0
billion, plus 0.315% on net assets greater than $8.0 billion but not exceeding
$13.0 billion, plus 0.30% on net assets greater than $13.0 billion but not
exceeding $21.0 billion, plus 0.29% on net assets greater than $21.0 billion but
not exceeding $27.0 billion, plus 0.285% on net assets in excess of $27.0
billion;


International Fund: 0.69% of the first $500 million of net assets, plus 0.59% on
net assets greater than $500 million but not exceeding $1.0 billion, plus 0.53%
on net assets greater than $1.0 billion but not exceeding $1.5 billion, plus
0.50% on net assets greater than $1.5 billion but not exceeding $2.5 billion,
plus 0.48% on net assets greater than $2.5 billion but not exceeding $4.0
billion, plus 0.47% on net assets greater than $4.0 billion but not exceeding
$6.5 billion, plus 0.46% on net assets greater than $6.5 billion but not
exceeding $10.5 billion, plus 0.45% on net assets greater than $10.5 billion but
not exceeding $17.0 billion, plus 0.44% on net assets greater than $17.0 billion
but not exceeding $21.0 billion, plus 0.43% on net assets in excess of $21.0
billion;


New World Fund: 0.85% on the first $500 million of net assets, plus 0.77% on net
assets greater than $500 million but not exceeding $1.0 billion, plus 0.71% on
net assets in excess of $1.0 billion;


Blue Chip Income and Growth Fund: 0.50% on the first $600 million of net assets,
plus 0.45% on net assets greater than $600 million but not exceeding $1.5
billion, plus 0.40% on net assets greater than $1.5 billion but not exceeding
$2.5 billion, plus 0.38% on net assets greater than $2.5 billion but not
exceeding $4.0 billion, plus 0.37% on net assets in excess of $4.0 billion;


Growth-Income Fund: 0.50% of the first $600 million of net assets, plus 0.45% on
net assets greater than $600 million but not exceeding $1.5 billion, plus 0.40%
on net assets greater than $1.5 billion but not exceeding $2.5 billion, plus
0.32% on net assets greater than $2.5 billion but


                   American Funds Insurance Series -- Page 42
<PAGE>

not exceeding $4.0 billion, plus 0.285% on net assets greater than $4.0 billion
but not exceeding $6.5 billion, plus 0.256% on net assets greater than $6.5
billion but not exceeding $10.5 billion, plus 0.242% on net assets greater than
$10.5 billion but not exceeding $13.0 billion, plus 0.235% on net assets greater
than $13.0 billion but not exceeding $17.0 billion, plus 0.23% on net assets
greater than $17.0 billion but not exceeding $21.0 billion, plus 0.225% on net
assets in excess of $21.0 billion;


World Growth and Income Fund: 0.69% on all assets;


Asset Allocation Fund: 0.50% of the first $600 million of net assets, plus 0.42%
on net assets greater than $600 million but not exceeding $1.2 billion, plus
0.36% on net assets greater than $1.2 billion but not exceeding $2.0 billion,
plus 0.32% on net assets greater than $2.0 billion but not exceeding $3.0
billion, plus 0.28% on net assets greater than $3.0 billion but not exceeding
$5.0 billion, plus 0.26% on net assets greater than $5.0 billion but not
exceeding $8.0 billion, plus 0.250% on net assets in excess of $8.0 billion;


Bond Fund: 0.48% of the first $600 million of net assets, plus 0.44% on net
assets greater than $600 million but not exceeding $1.0 billion, plus 0.40% on
net assets greater than $1.0 billion but not exceeding $2.0 billion, plus 0.38%
on net assets greater than $2.0 billion but not exceeding $3.0 billion, plus
0.36% on net assets in excess of $3.0 billion;


High-Income Bond Fund: 0.50% of the first $600 million of net assets, plus 0.46%
on net assets greater than $600 million but not exceeding $1.0 billion, plus
0.44% on net assets greater than $1.0 billion but not exceeding $2.0 billion,
plus 0.42% on net assets in excess of $2.0 billion;


U.S. Government/AAA-Rated Securities Fund: 0.46% of the first $600 million of
net assets, plus 0.40% on net assets greater than $600 million but not exceeding
$1.0 billion, plus 0.36% on net assets greater than $1.0 billion but not
exceeding $2.0 billion, plus 0.34% on net assets in excess of $2.0 billion; and


Cash Management Fund: 0.32% on all assets.


In addition to providing investment advisory services, the investment adviser
furnishes the services and pays the compensation and travel expenses of
qualified persons to perform the executive and related administrative functions
of the Series, and provides necessary office space, office equipment and
utilities, and general purpose accounting forms, supplies and postage used at
the office of the Series relating to the services furnished by the investment
adviser. Subject to the expense agreement described below, the Series will pay
all expenses not expressly assumed by the investment adviser, including, but not
limited to: registration and filing fees of federal and state agencies; blue sky
expenses (if any); expenses of shareholders' meetings; the expense of reports to
existing shareholders; expenses of printing proxies and prospectuses; insurance
premiums; legal and auditing fees; dividend disbursement expenses; the expense
of the issuance, transfer and redemption of its shares; custodian fees; printing
and preparation of registration statements; taxes; compensation, fees and
expenses paid to Trustees unaffiliated with the investment adviser; association
dues; and costs of stationary and forms prepared exclusively for the Series.


The Agreements provide for an advisory fee reduction to the extent that the
annual ordinary net operating expenses of each fund, except International Fund,
exceed 1 1/2% of the first $30 million of the average month-end total net assets
of the fund and 1% of the average month-end


                   American Funds Insurance Series -- Page 43
<PAGE>


total net assets in excess thereof. For International Fund, the advisory fee
will be reduced to the extent that its annual ordinary net operating expenses
exceed 1 1/2% of its average month-end total net assets. Expenses which are not
subject to this limitation are interest, taxes and extraordinary items, such as
litigation. Expenditures, including costs incurred in connection with the
purchase or sale of portfolio securities, which are capitalized in accordance
with generally accepted accounting principles applicable to investment
companies, are accounted for as capital items and not as expenses.


The investment adviser's total fees for the fiscal years ended December 31,
2005, 2004 and 2003 were:



                                                FISCAL YEAR ENDED
                                     ------------------------------------------
                                         2005          2004           2003
-------------------------------------------------------------------------------

GLOBAL DISCOVERY FUND

-------------------------------------------------------------------------------
GLOBAL GROWTH FUND

-------------------------------------------------------------------------------
GLOBAL SMALL CAPITALIZATION FUND

-------------------------------------------------------------------------------
GROWTH FUND

-------------------------------------------------------------------------------
INTERNATIONAL FUND

-------------------------------------------------------------------------------
NEW WORLD FUND

-------------------------------------------------------------------------------
BLUE CHIP INCOME AND GROWTH FUND

-------------------------------------------------------------------------------
GROWTH-INCOME FUND

-------------------------------------------------------------------------------
ASSET ALLOCATION FUND

-------------------------------------------------------------------------------
BOND FUND

-------------------------------------------------------------------------------
HIGH-INCOME BOND FUND

-------------------------------------------------------------------------------
U.S. GOVERNMENT/AAA-RATED
SECURITIES FUND
-------------------------------------------------------------------------------
CASH MANAGEMENT FUND

-------------------------------------------------------------------------------



For the period from September 1, 2004 through March 31, 2005, the investment
adviser agreed to waive 5% of the management fees that it was otherwise entitled
to receive under the Agreements. Beginning April 1, 2005, this waiver increased
to 10% of the management fees that it is otherwise entitled to receive and will
continue at this level until further review. As a result of this waiver,
management fees will be reduced similarly for all funds.


For the period ended December 31, 2005, management fees were reduced by the
following as a result of this waiver:


                   American Funds Insurance Series -- Page 44
<PAGE>




                                                        WAIVER REDUCTION
-----------------------------------------------------------------------------

 GLOBAL DISCOVERY FUND

-----------------------------------------------------------------------------
 GLOBAL GROWTH FUND

-----------------------------------------------------------------------------
 GLOBAL SMALL CAPITALIZATION FUND

-----------------------------------------------------------------------------
 GROWTH FUND

-----------------------------------------------------------------------------
 INTERNATIONAL FUND

-----------------------------------------------------------------------------
 NEW WORLD FUND

-----------------------------------------------------------------------------
 BLUE CHIP INCOME AND GROWTH FUND

-----------------------------------------------------------------------------
 GROWTH-INCOME FUND

-----------------------------------------------------------------------------
 ASSET ALLOCATION FUND

-----------------------------------------------------------------------------
 BOND FUND

-----------------------------------------------------------------------------
 HIGH-INCOME BOND FUND

-----------------------------------------------------------------------------
 U.S. GOVERNMENT/AAA-RATED SECURITIES FUND

-----------------------------------------------------------------------------
 CASH MANAGEMENT FUND

-----------------------------------------------------------------------------




PLANS OF DISTRIBUTION - The Series has adopted Plans of Distribution (the
"Plans") for its Class 2 and Class 3 shares, pursuant to rule 12b-1 under the
1940 Act. As required by rule 12b-1, the Plans have been approved by a majority
of the entire Board of Trustees, and separately by a majority of the Trustees
who are not "interested persons" of the Series and who have no direct or
indirect financial interest in the operation of the Plans. Potential benefits of
the Plans to the Series include improved shareholder services, benefits to the
investment process from growth or stability of assets and maintenance of a
financially healthy management organization. The selection and nomination of
Trustees who are not "interested persons" of the Series is committed to the
discretion of the Trustees who are not "interested persons" during the existence
of the Plans. The Plans are reviewed quarterly and must be renewed annually by
the Board of Trustees.


Under the Plans, the Series will pay to insurance company contract issuers 0.25%
of each fund's average net assets annually (Class 2 shares) or 0.18% of each
fund's average net assets annually (Class 3 shares) to finance any distribution
activity which is primarily intended to benefit the Class 2 and Class 3 shares
of the Series, respectively, provided that the Board of Trustees of the Series
has approved the categories of expenses for which payment is being made.
Payments made pursuant to the Plans will be used by insurance company contract
issuers to pay a continuing annual service fee to dealers on the value of all
variable annuity and variable life contract payments for account-related
services provided to existing shareholders. During the fiscal year ended
December 31, 2005, the Series incurred distribution expenses for Class 2 shares
of $ and Class 3 shares of $, payable to certain life insurance companies under
the Plan. Class 3 distribution fees were reduced for Growth Fund, as necessary,
to maintain the expense


                   American Funds Insurance Series -- Page 45
<PAGE>


level in the class, stipulated by the terms of the exemptive order granted by
the U.S. Securities and Exchange Commission relating to the substitution of
Class 3 shares of Growth Fund for shares of Anchor Pathway Fund Growth Series.
As a result, for the year ended December 31, 2005, the distribution fee was
reduced by $ to $. Accrued and unpaid distribution expenses were $ for Class 2
shares and $ for Class 3 shares.


COMPENSATION TO INSURANCE COMPANIES -- American Funds Distributors, Inc., at its
expense, currently makes payments to certain of the insurance companies listed
below that use the Series as the underlying investment in insurance contracts.
These payments generally cover expenses associated with education and training
meetings sponsored by American Funds Distributors, Inc. for insurance company
sales forces. The total payments made to all insurance companies during the 2005
calendar year will not exceed .0006% of the assets of the Series.


     AEGON, N.V.
     AIG SunAmerica Life Assurance Company
     Hartford Life Insurance Company
     ING Life Insurance and Annuity Company
     Jefferson Pilot Financial Insurance Company/Jefferson Pilot LifeAmerica
     Insurance Company
     John Hancock Life Insurance Company (U.S.A.)
     The Lincoln National Life Insurance Company
     The Manufacturers Life Insurance Company (U.S.A.)
     Massachusetts Mutual Life Insurance Company
     Merrill Lynch Life Insurance Company
     Metropolitan Life Insurance Company
     Nationwide Mutual Insurance Company
     New England Life Insurance Company
     Pacific Life Insurance Company
     Travelers Insurance Company

                      EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the Series'
portfolio transactions. The investment adviser strives to obtain best execution
on each fund's portfolio transactions, taking into account a variety of factors
to produce the most favorable total price reasonably attainable under the
circumstances. These factors include the size and type of transaction, the cost
and quality of executions, and the broker-dealer's ability to offer liquidity
and anonymity. The Series does not consider the investment adviser as having an
obligation to obtain the lowest available commission rate to the exclusion of
price, service and qualitative considerations. Subject to the considerations
outlined above, the investment adviser may place orders for the Series'
portfolio transactions with broker-dealers who have sold shares of the funds
managed by the investment adviser, or who have provided investment research,
statistical or other related services to the investment adviser. In placing
orders for the Series' portfolio transactions, the investment adviser does not
commit to any specific amount of business with any particular broker-dealer.
Further, when the investment adviser places orders for the Series' portfolio
transactions, it does not give any consideration to whether a broker-dealer has
sold shares of the funds managed by the investment adviser. The investment
adviser may, however, give consideration to investment research, statistical or
other related services provided to the adviser in placing orders for the Series'
portfolio transactions.


                   American Funds Insurance Series -- Page 46
<PAGE>

Portfolio transactions for the Series may be executed as part of concurrent
authorizations to purchase or sell the same security for other funds served by
the investment adviser, or for trusts or other accounts served by affiliated
companies of the investment adviser. When such concurrent authorizations occur,
the objective is to allocate the executions in an equitable manner.


Brokerage commissions and concessions (commissions built into the price of
bonds) paid on portfolio transactions for the fiscal years ended December 31,
2005, 2004, and 2003 were:



                                                FISCAL YEAR ENDED
                                     ------------------------------------------
                                         2005          2004           2003
-------------------------------------------------------------------------------

GLOBAL DISCOVERY FUND

-------------------------------------------------------------------------------
GLOBAL GROWTH FUND

-------------------------------------------------------------------------------

GLOBAL SMALL CAPITALIZATION FUND
GROWTH FUND

-------------------------------------------------------------------------------
INTERNATIONAL FUND

-------------------------------------------------------------------------------
NEW WORLD FUND

-------------------------------------------------------------------------------
BLUE CHIP INCOME AND GROWTH FUND

-------------------------------------------------------------------------------
GROWTH-INCOME FUND

-------------------------------------------------------------------------------
ASSET ALLOCATION FUND

-------------------------------------------------------------------------------
BOND FUND

-------------------------------------------------------------------------------
HIGH-INCOME BOND FUND

-------------------------------------------------------------------------------
U.S. GOVERNMENT/AAA-RATED
SECURITIES FUND
-------------------------------------------------------------------------------



With respect to fixed-income securities, brokerage commissions include explicit
investment dealer concessions and may exclude other transaction costs which may
be reflected in the spread between the bid and asked price. The volume of
trading activity by Global Discovery Fund, Global Growth Fund, Global Small
Capitalization Fund, Growth Fund, International Fund, New World Fund, Blue Chip
Income and Growth Fund, Growth-Income Fund and Asset Allocation Fund increased
during the year, resulting in an increase in brokerage commissions and
concessions paid on portfolio transactions. The volume of trading activity by
Bond Fund, High-Income Bond Fund and U.S. Government/AAA-Rated Securities Fund
decreased during the year, resulting in a decrease in brokerage concessions paid
on portfolio transactions.


The Series is required to disclose information regarding investments in the
securities of its "regular" broker-dealers (or parent companies of its regular
broker-dealers) that derive more than


                   American Funds Insurance Series -- Page 47
<PAGE>


15% of their revenue from broker-dealer, underwriter or investment adviser
activities. A regular broker-dealer is (a) one of the 10 broker-dealers that
received from the Series the largest amount of brokerage commissions by
participating, directly or indirectly, in the Series' portfolio transactions
during the Series' most recent fiscal year; (b) one of the 10 broker-dealers
that engaged as principal in the largest dollar amount of portfolio transactions
of the Series during the Series' most recent fiscal year; or (c) one of the 10
broker-dealers that sold the largest amount of securities of the Series during
the Series' most recent fiscal year.


At the end of the Series' most recent fiscal year, the Series' regular
broker-dealers included Banc of America Securities, LLC, Deutsche Bank AG, J.P.
Morgan Securities Inc., State Street Bank & Trust Company and Citigroup Global
Markets Inc. As of the Series' fiscal year-end, the following funds held equity
and/or debt securities of an affiliated company of such regular broker-dealers:





                            AFFILIATED COMPANY OF     TYPE OF
                            REGULAR BROKER-DEALER    SECURITY        AMOUNT
-------------------------------------------------------------------------------

Global Discovery Fund        Citigroup Inc.           equity

-------------------------------------------------------------------------------
Global Growth Fund          J.P. Morgan Chase &       equity
                            Co.
-------------------------------------------------------------------------------
                            Citigroup Inc.            equity

-------------------------------------------------------------------------------
                            Deutsche Bank AG           debt

-------------------------------------------------------------------------------
Growth Fund                 Citigroup Inc.            equity

-------------------------------------------------------------------------------
                            State Street Bank &        debt
                            Trust Company
-------------------------------------------------------------------------------
                            Bank of America Corp.      debt

-------------------------------------------------------------------------------
Blue Chip Income and        J.P. Morgan Chase &       equity
Growth Fund                 Co.
-------------------------------------------------------------------------------
                            Bank of America Corp.     equity

-------------------------------------------------------------------------------
                            Citigroup Inc.            equity

-------------------------------------------------------------------------------
Growth-Income Fund          Bank of America Corp.     equity

-------------------------------------------------------------------------------
                                                       debt

-------------------------------------------------------------------------------
                            J.P. Morgan Chase &       equity
                            Co.
-------------------------------------------------------------------------------
                                                       debt

-------------------------------------------------------------------------------
                            Citigroup Inc.            equity

-------------------------------------------------------------------------------
Asset Allocation Fund       J.P. Morgan Chase &       equity
                            Co.
-------------------------------------------------------------------------------
                            Bank of America Corp.     equity

-------------------------------------------------------------------------------
                            Citigroup Inc.            equity

-------------------------------------------------------------------------------
Bond Fund                   Citigroup Inc.             debt

-------------------------------------------------------------------------------
                            Bank of America Corp.      debt

-------------------------------------------------------------------------------
                            J.P. Morgan Chase &        debt
                            Co.
-------------------------------------------------------------------------------





                   American Funds Insurance Series -- Page 48
<PAGE>

                        DISCLOSURE OF PORTFOLIO HOLDINGS

The Series' investment adviser, on behalf of the funds, has adopted policies and
procedures with respect to the disclosure of information about the funds'
portfolio securities. These policies and procedures have been reviewed by the
Series' Board of Trustees and compliance will be periodically assessed by the
Board in connection with reporting from the Series' Chief Compliance Officer.


Under these policies and procedures, the funds' complete list of portfolio
holdings available for public disclosure, dated as of the end of each calendar
quarter, is permitted to be posted on the American Funds website no earlier than
the tenth day after such calendar quarter. In addition, the funds' list of top
10 equity portfolio holdings measured by percentage of net assets invested,
dated as of the end of each calendar month, is permitted to be posted on the
American Funds website no earlier than the tenth day after such month. Such
portfolio holdings information may then be disclosed to any person pursuant to
an ongoing arrangement to disclose portfolio holdings information to such person
no earlier than one day after the day on which the information is posted on the
American Funds website. Affiliates of the Series (including the Series' Board
members and officers, and certain personnel of the Series' investment adviser
and its affiliates) and certain service providers (such as the Series'
custodian, insurance companies and outside counsel) who require such information
for legitimate business and fund oversight purposes may receive such information
earlier.


Affiliated persons of the Series as described above who receive portfolio
holdings information are subject to restrictions and limitations on the use and
handling of such information pursuant to a Code of Ethics, including
requirements to maintain the confidentiality of such information, preclear
securities trades and report securities transactions activity, as applicable.
Third party service providers of the Series receiving such information are
subject to confidentiality obligations. When portfolio holdings information is
disclosed other than through the American Funds website to persons not
affiliated with the Series (which, as described above, would typically occur no
earlier than one day after the day on which the information is posted on the
American Funds website), such persons may be bound by agreements (including
confidentiality agreements) that restrict and limit their use of the information
to legitimate business uses only. Neither the Series nor its investment adviser
or any affiliate thereof receives compensation or other consideration in
connection with the disclosure of information about portfolio securities.


The authority to disclose a fund's portfolio holdings, and to establish policies
with respect to such disclosure, resides with the Investment Committee of the
Series' investment adviser. In


                   American Funds Insurance Series -- Page 49
<PAGE>


exercising its authority, the Investment Committee determines whether disclosure
of information about the fund's portfolio securities is appropriate and in the
best interest of fund shareholders. The investment adviser has implemented
policies and procedures to address conflicts of interest that may arise from the
disclosure of fund holdings. For example, the Code of Ethics specifically
requires, among other things, the safeguarding of information about fund
holdings and contains prohibitions designed to prevent the personal use of
confidential, proprietary investment information in a way that would conflict
with fund transactions. In addition, the investment adviser believes that its
current policy of not selling portfolio holdings information and not disclosing
such information to unaffiliated third parties (other than to Series service
providers for legitimate business and Series oversight purposes) until such
holdings have been made public on the American Funds website, helps reduce
potential conflicts of interest between Series shareholders and the investment
adviser and its affiliates.


                            TAXES AND DISTRIBUTIONS

FUND TAXATION -- Each fund has elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code"). A
regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90% of its investment
company taxable income (including the excess of net short-term capital gain over
net long-term capital losses) and generally is not subject to federal income tax
to the extent that it distributes annually 100% of its investment company
taxable income and net realized capital gains in the manner required under the
Code. Each fund intends to distribute annually all of its investment company
taxable income and net realized capital gains and therefore does not expect to
pay federal income tax, although in certain circumstances, a fund may determine
that it is in the interest of shareholders to distribute less than that amount.


To be treated as a regulated investment company under Subchapter M of the Code,
each fund must also (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities or foreign currencies, or other income
(including, but not limited to, gains from options, futures or forward
contracts) derived with respect to the business of investing in such securities
or currencies, and (b) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of its assets is represented by
cash, U.S. government securities and securities of other regulated investment
companies, and other securities (for purposes of this calculation, generally
limited in respect of any one issuer, to an amount not greater than 5% of the
market value of the fund's assets and 10% of the outstanding voting securities
of such issuer) and (ii) not more than 25% of the value of its assets is
invested in the securities of (other than U.S. government securities or the
securities of other regulated investment companies) any one issuer or two or
more issuers which the fund controls and which are determined to be engaged in
the same or similar trades or businesses.


Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (a) 98% of ordinary income (generally net investment income)
for the calendar year, (b) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year) and
(c) the sum of any untaxed, undistributed net investment income and net capital
gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (a) amounts actually


                   American Funds Insurance Series -- Page 50
<PAGE>

distributed by a fund from its current year's ordinary income and capital gain
net income and (b) any amount on which the fund pays income tax during the
periods described above. Although each fund intends to distribute its net
investment income and net capital gains so as to avoid excise tax liability, any
fund may determine that it is in the interest of shareholders to distribute a
lesser amount.


In addition to the asset diversification and other requirements for
qualification as a regulated investment company, the funds are subject to
another set of asset diversification requirements applicable to insurance
company separate accounts and their underlying funding vehicles. To satisfy
these diversification requirements, as of the end of each calendar quarter or
within 30 days thereafter, a fund must (a) be qualified as a "regulated
investment company"; and (b) have either (i) no more than 55% of the total value
of its assets in cash and cash equivalents, government securities and securities
of other regulated investment companies; or (ii) no more than 55% of its total
assets represented by any one investment, no more than 70% by any two
investments, no more than 80% by any three investments, and no more than 90% by
any four investments. For this purpose all securities of the same issuer are
considered a single investment, and each agency or instrumentality of the U.S.
government is treated as a separate issuer of securities. The Series intends to
comply with these regulations. If a fund should fail to comply with these
regulations, Contracts invested in that fund will not be treated as annuity,
endowment or life insurance contracts under the Code.


     DIVIDENDS -- Each fund intends to follow the practice of distributing
     substantially all of its investment company taxable income, which includes
     any excess of net realized short-term gains over net realized long-term
     capital losses. Investment company taxable income generally includes
     dividends, interest, net short-term capital gains in excess of net
     long-term capital losses, and certain foreign currency gains, if any, less
     expenses and certain foreign currency losses.

     Under the Code, gains or losses attributable to fluctuations in exchange
     rates that occur between the time the funds accrue receivables or
     liabilities denominated in a foreign currency and the time the funds
     actually collect such receivables, or pay such liabilities, generally are
     treated as ordinary income or ordinary loss. Similarly, on disposition of
     debt securities denominated in a foreign currency and on disposition of
     certain futures contracts, forward contracts and options, gains or losses
     attributable to fluctuations in the value of foreign currency between the
     date of acquisition of the security or contract and the date of disposition
     are also treated as ordinary gain or loss. These gains or losses, referred
     to under the Code as Section 988 gains or losses, may increase or decrease
     the amount of a fund's investment company taxable income to be distributed
     to its shareholders as ordinary income.


     If a fund invests in stock of certain passive foreign investment companies,
     the fund may be subject to U.S. federal income taxation on a portion of any
     "excess distribution" with respect to, or gain from the disposition of,
     such stock. The tax would be determined by allocating such distribution or
     gain ratably to each day of the fund's holding period for the stock. The
     distribution or gain so allocated to any taxable year of the fund, other
     than the taxable year of the excess distribution or disposition, would be
     taxed to the fund at the highest ordinary income rate in effect for such
     year, and the tax would be further increased by an interest charge to
     reflect the value of the tax deferral deemed to have resulted from the
     ownership of the foreign company's stock. Any amount of distribution or
     gain allocated to the taxable year of the distribution or disposition would
     be included in the


                   American Funds Insurance Series -- Page 51
<PAGE>


     fund's investment company taxable income and, accordingly, would not be
     taxable to the fund to the extent distributed by the fund as a dividend to
     its shareholders.


     To avoid such tax and interest, each fund intends to elect to treat these
     securities as sold on the last day of its fiscal year and recognize any
     gains for tax purposes at that time. Under this election, deductions for
     losses are allowable only to the extent of any prior recognized gains, and
     both gains and losses will be treated as ordinary income or loss. The funds
     will be required to distribute any resulting income, even though they have
     not sold the security and received cash to pay such distributions. Upon
     disposition of these securities, any gain recognized is treated as ordinary
     income and loss is treated as ordinary loss to the extent of any prior
     recognized gain.


     A portion of the difference between the issue price of zero coupon
     securities and their face value (original issue discount) is considered to
     be income to the funds each year, even though the funds will not receive
     cash interest payments from these securities. This original issue discount
     (imputed income) will comprise a part of the investment company taxable
     income of the funds that must be distributed to shareholders in order to
     maintain the qualification of the funds as regulated investment companies
     and to avoid federal income taxation at the level of the funds.


     In addition, some of the bonds may be purchased by the funds at a discount
     that exceeds the original issue discount on such bonds, if any. This
     additional discount represents market discount for federal income tax
     purposes. The gain realized on the disposition of any bond having a market
     discount may be treated as taxable ordinary income to the extent it does
     not exceed the accrued market discount on such bond or a fund may elect to
     include the market discount in income in tax years to which it is
     attributable. Generally, accrued market discount may be figured under
     either the ratable accrual method or constant interest method. If a fund
     has paid a premium over the face amount of a bond, the fund has the option
     of either amortizing the premium until bond maturity and reducing the
     fund's basis in the bond by the amortized amount, or not amortizing and
     treating the premium as part of the bond's basis. In the case of any debt
     security having a fixed maturity date of not more than one year from its
     date of issue, the gain realized on disposition generally will be treated
     as a short-term capital gain. In general, any gain realized on disposition
     of a security held less than one year is treated as a short-term capital
     gain.


     Dividend and interest income received by the funds from sources outside the
     United States may be subject to withholding and other taxes imposed by such
     foreign jurisdictions. Tax conventions between certain countries and the
     United States, however, may reduce or eliminate these foreign taxes. Most
     foreign countries do not impose taxes on capital gains with respect to
     investments by foreign investors.


     CAPITAL GAIN DISTRIBUTIONS -- The funds also intend to follow the practice
     of distributing the entire excess of net realized long-term capital gains
     over net realized short-term capital losses. Net capital gains for a fiscal
     year are computed by taking into account any capital loss carry forward of
     the funds.

See the applicable Contract prospectus for information regarding the federal
income tax treatment of the Contracts and distributions to the separate
accounts.


                   American Funds Insurance Series -- Page 52
<PAGE>

                                PRICE OF SHARES

Shares are purchased at the offering price or sold at the net asset value price
next determined after the purchase or sell order is received and accepted by the
Series or its designee. Orders received by the Series or authorized designee
after the time of the determination of the net asset value will be entered at
the next calculated offering price.


The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily as of approximately 4:00 p.m. New
York time, which is the normal close of trading on the New York Stock Exchange,
each day the Exchange is open. If, for example, the Exchange closes at 1:00
p.m., the fund's share price would still be determined as of 4:00 p.m. New York
time. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas Day. Each share class of a fund has a separately calculated net asset
value (and share price).


All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset values per
share for each share class are determined, as follows:


1.    Equity securities, including depositary receipts, are valued at the
official closing price of, or the last reported sale price on, the exchange or
market on which such securities are traded, as of the close of business on the
day the securities are being valued or, lacking any sales, at the last available
bid price. Prices for each security are taken from the principal exchange or
market in which the security trades. Fixed-income securities are valued at
prices obtained from an independent pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the mean quoted bid and
asked prices or at prices for securities of comparable maturity, quality and
type. Securities with both fixed-income and equity characteristics, or equity
securities traded principally among fixed-income dealers, are valued in the
manner described above for either equity or fixed-income securities, depending
on which method is deemed most appropriate by the investment adviser.

Securities with original maturities of one year or less having 60 days or less
to maturity are amortized to maturity based on their cost if acquired within 60
days of maturity, or if already held on the 60th day, based on the value
determined on the 61st day. Forward currency contracts are valued at the mean of
representative quoted bid and asked prices.


Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of each fund's
shares into U.S. dollars at the prevailing market rates.


Securities and assets for which representative market quotations are not readily
available or are considered unreliable are valued at fair value as determined in
good faith under policies approved by the Series' Board. Subject to Board
oversight, the Series' Board has delegated the obligation to make fair valuation
determinations to a Valuation Committee established by the Series' investment
adviser. The Board receives regular reports describing fair-valued securities
and the valuation methods used.


                   American Funds Insurance Series -- Page 53
<PAGE>


The Valuation Committee has adopted guidelines and procedures (consistent with
SEC rules and guidance) to ensure that certain basic principles and factors are
considered when making all fair value determinations. As a general principle,
securities lacking readily available market quotations are valued in good faith
by the Valuation Committee based upon what a fund might reasonably expect to
receive upon their current sale. The Valuation Committee considers all
indications of value available to it in determining the "fair value" to be
assigned to a particular security, including, without limitation, the type and
cost of the security, contractual or legal restrictions on resale of the
security, relevant financial or business developments of the issuer, actively
traded similar or related securities, conversion or exchange rights on the
security, related corporate actions, significant events occurring after the
close of trading in the security and changes in overall market conditions. The
Valuation Committee employs additional fair value procedures to address issues
related to investing substantial portions of applicable fund portfolios outside
the United States. Securities owned by these funds trade in markets that open
and close at different times, reflecting time zone differences. If significant
events occur after the close of a market (and before these fund's net asset
values are next determined) which affect the value of portfolio securities,
appropriate adjustments from closing market prices may be made to reflect these
events. Events of this type could include, for example, earthquakes and other
natural disasters or significant price changes in other markets (e.g., U.S.
stock markets);


2.   Each class of shares represents interests in the same portfolio of
investments and is identical in all respects to each other class, except for
differences relating to distribution, service and other charges and expenses,
certain voting rights, differences relating to eligible investors, the
designation of each class of shares, conversion features and exchange
privileges. Expenses attributable to a fund, but not to a particular class of
shares, are borne by each class pro rata based on relative aggregate net assets
of the classes. Expenses directly attributable to a class of shares are borne by
that class of shares. Liabilities, including accruals of taxes and other expense
items attributable to particular share classes, are deducted from total assets
attributable to such share classes.

3.   Net assets so obtained for each share class are then divided by the total
number of shares outstanding of that share class, and the result, rounded to the
nearer cent, is the net asset value per share for that share class.

                              GENERAL INFORMATION

CUSTODIAN OF ASSETS -- Securities and cash owned by all funds, including
proceeds from the sale of shares of the funds and of securities in the funds'
portfolios, are held by State Street Bank and Trust Company, 225 Franklin
Street, Boston, MA 02105, as Custodian. Non-U.S. securities may be held by the
Custodian in non-U.S. banks or securities depositories or foreign branches of
U.S. banks.


TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the investment adviser, maintains the records of each insurance company's
separate account, processes purchases and redemptions of the funds' shares, acts
as dividend and capital gain distribution disbursing agent, and performs other
related shareholder service functions. The principal office of American Funds
Service Company is located at 135 South State College Boulevard, Brea, CA
92821-5823. American Funds Service Company was paid a fee of $ for Class 1
shares, $ for Class 2 shares and $ for Class 3 shares for the 2005 fiscal year.


                   American Funds Insurance Series -- Page 54
<PAGE>

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -- PricewaterhouseCoopers LLP, 350
South Grand Avenue, Los Angeles, CA 90071, serves as the Series' independent
registered public accounting firm providing audit services, preparation of tax
returns and review of certain documents to be filed with the Securities and
Exchange Commission. The financial statements included in this statement of
additional information from the Annual Report have been so included in reliance
on the report of PricewaterhouseCoopers LLP, independent registered public
accounting firm, given on the authority of said firm as experts in accounting
and auditing. The selection of the Series' independent registered public
accounting firm is reviewed and determined annually by the Board of Trustees.


INDEPENDENT LEGAL COUNSEL -- Paul, Hastings, Janofsky & Walker LLP, 55 Second
Street, 24th Floor, San Francisco, CA 94105, serves as counsel for the Series
and for Trustees who are not interested persons (as defined by the 1940 Act) of
the Series. Certain legal matters in connection with the shares of beneficial
interest offered by the prospectus have been passed upon for the Series by Paul,
Hastings, Janofsky & Walker LLP. Counsel does not provide legal services to the
funds' investment adviser or any of its affiliated companies. A determination
with respect to the independence of the Series' "independent legal counsel" will
be made at least annually by the independent Trustees of the Series, as
prescribed by the 1940 Act and the rules thereunder.


PROSPECTUSES AND REPORTS TO SHAREHOLDERS -- The Series' fiscal year ends on
December 31. Contract owners are provided updated prospectuses annually and at
least semiannually with reports showing the investment portfolio, financial
statements and other information. The Series' annual financial statements are
audited by the independent registered public accounting firm of
PricewaterhouseCoopers LLP.


PERSONAL INVESTING POLICY -- The Series, Capital Research and Management Company
and its affiliated companies have adopted codes of ethics which allow for
personal investments, including securities in which the Series may invest from
time to time. This policy includes: a ban on acquisitions of securities pursuant
to an initial public offering; restrictions on acquisitions of private placement
securities; pre-clearance and reporting requirements; review of duplicate
confirmation statements; annual recertification of compliance with codes of
ethics; blackout periods on personal investing for certain investment personnel;
a ban on short-term trading profits for investment personnel; limitations on
service as a director of publicly traded companies; and disclosure of personal
securities transactions.


SHAREHOLDER AND TRUSTEE RESPONSIBILITY -- Under the laws of certain states,
including Massachusetts, where the Series was organized, and California, where
the Series' principal office is located, shareholders of a Massachusetts
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the Series. However, the risk of a shareholder
incurring any financial loss on account of shareholder liability is limited to
circumstances in which the Series itself would be unable to meet its
obligations. The Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Series and provides that
notice of the disclaimer may be given in each agreement, obligation, or
instrument which is entered into or executed by the Series or Trustees. The
Declaration of Trust provides for indemnification out of Series property of any
shareholder personally liable for the obligations of the Series and also
provides for the Series to reimburse such shareholder for all legal and other
expenses reasonably incurred in connection with any such claim or liability.


                   American Funds Insurance Series -- Page 55
<PAGE>


Under the Declaration of Trust, the Trustees or officers are not liable for
actions or failure to act; however, they are not protected from liability by
reason of their willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office. The Series will
provide indemnification to its Trustees and officers as authorized by its
By-Laws and by the 1940 Act and the rules and regulations thereunder.


LEGAL PROCEEDINGS -- On February 16, 2005, the NASD filed an administrative
complaint against the American Funds Distributors, Inc. The complaint alleges
violations of certain NASD rules by the American Funds Distributors, Inc. with
respect to the selection of broker-dealer firms that buy and sell securities for
mutual fund investment portfolios. The complaint seeks sanctions, restitution
and disgorgement.


On March 24, 2005, the investment adviser and American Funds Distributors, Inc.
filed a complaint against the Attorney General of the State of California in Los
Angeles County Superior Court. The complaint alleges that the Attorney General
threatened to take enforcement actions against the investment adviser and
American Funds Distributors, Inc. that are without merit and preempted by
federal law. The complaint seeks injunctive and declaratory relief. On the same
day, following the filing of the investment adviser's and American Funds
Distributors, Inc.'s complaint, the Attorney General of the State of California
filed a complaint against the American Funds Distributors, Inc. and investment
adviser. Filed in Los Angeles County Superior Court, the Attorney General's
complaint alleges violations of certain sections of the California Corporations
Code with respect to so-called "revenue sharing" disclosures in mutual fund
prospectuses and statements of additional information. The complaint seeks
injunctive relief, penalties, restitution and disgorgement.


The investment adviser and American Funds Distributors, Inc. believe that these
matters are not likely to have a material adverse effect on the funds or on the
ability of the investment adviser or American Funds Distributors, Inc. to
perform its contract with the funds. The SEC is conducting a related
investigation as of the date of this statement of additional information. The
investment adviser and American Funds Distributors, Inc. are cooperating fully.
In addition, a series of class action lawsuits have been filed in the U.S.
District Court, Central District of California, raising issues related to
so-called "directed brokerage" and "revenue sharing" practices. Further updates
on these issues will be available on the American Funds website
(americanfunds.com) under "American Funds regulatory matters."


REGISTRATION STATEMENT -- A registration statement has been filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the 1940
Act with respect to the Series. The prospectus and this statement of additional
information do not contain all information set forth in the registration
statement, its amendments and exhibits, to which reference is made for further
information concerning the Series. Statements contained in the prospectus and
this statement of additional information as to the content of the Contracts
issued through the separate accounts and other legal instruments are summaries.
For a complete statement of the terms thereof, reference is made to the
registration statements of the separate accounts and Contracts as filed with the
Securities and Exchange Commission.


AUTHORIZED SHARES -- The Series was organized as a Massachusetts business trust
which permits each fund of the Series to issue an unlimited number of shares of
beneficial interest of one or more classes.


                   American Funds Insurance Series -- Page 56
<PAGE>

                                    APPENDIX

The following descriptions of debt security ratings are based on information
provided by Moody's Investors Service and Standard & Poor's Corporation.


                          DESCRIPTION OF BOND RATINGS

MOODY'S
LONG-TERM RATING DEFINITIONS

Aaa
Obligations rated Aaa are judged to be of the highest quality, with minimal
credit risk.


Aa
Obligations rated Aa are judged to be of high quality and are subject to very
low credit risk.


A
Obligations rated A are considered upper-medium grade and are subject to low
credit risk.


Baa
Obligations rated Baa are subject to moderate credit risk. They are considered
medium-grade and as such may possess certain speculative characteristics.


Ba
Obligations rated Ba are judged to have speculative elements and are subject to
substantial credit risk.


B
Obligations rated B are considered speculative and are subject to high credit
risk.


Caa
Obligations rated Caa are judged to be of poor standing and are subject to very
high credit risk.


Ca
Obligations rated Ca are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.


C
Obligations rated C are the lowest rated class of bonds and are typically in
default, with little prospect for recovery of principal or interest.


NOTE: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.


                   American Funds Insurance Series -- Page 57
<PAGE>


STANDARD & POOR'S
LONG-TERM ISSUE CREDIT RATINGS

AAA
An obligation rated AAA has the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.


AA
An obligation rated AA differs from the highest-rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.


A
An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.


BBB
An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.


BB, B, CCC, CC, AND C
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.


BB
An obligation rated BB is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.


B
An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.


CCC
An obligation rated CCC is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.


CC
An obligation rated CC is currently highly vulnerable to nonpayment.


                   American Funds Insurance Series -- Page 58
<PAGE>

C
The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.


D
An obligation rated D is in payment default. The D rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.


PLUS (+) OR MINUS (-)
The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.


                    DESCRIPTION OF COMMERCIAL PAPER RATINGS

MOODY'S
COMMERCIAL PAPER RATINGS (HIGHEST THREE RATINGS)

P-1
Issuers (or supporting institutions) rated Prime-1 have a superior ability to
repay short-term debt obligations.


P-2
Issuers (or supporting institutions) rated Prime-2 have a strong ability to
repay short-term debt obligations.


P-3
Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to
repay short-term obligations.


STANDARD & POOR'S
COMMERCIAL PAPER RATINGS (HIGHEST THREE RATINGS)

A-1
A short-term obligation rated A-1 is rated in the highest category by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is strong. Within this category, certain obligations are designated
with a plus sign (+). This indicates that the obligor's capacity to meet its
financial commitment on these obligations is extremely strong.


A-2
A short-term obligation rated A-2 is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.


A-3
A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.


                   American Funds Insurance Series -- Page 59
	Signature	Title
(1)	Principal Executive Officer:
	/s/ James K. Dunton	Chairman
	James K. Dunton
(2)	Principal Financial Officer and
	Principal Accounting Officer:
	/s/ David A. Pritchett	Treasurer
	David A. Pritchett
(3)	Trustees:
	Lee A. Ault III*	Trustee
	H. Frederick Christie*	Trustee
	Joe E. Davis*	Trustee
	/s/ Michael J. Downer	Senior Vice President andTrustee
	Michael J. Downer
	/s/ James K. Dunton	Chairman
	James K. Dunton
	Martin Fenton*	Trustee
	Leonard R. Fuller*	Trustee
	Mary Myers Kauppila*	Trustee
	/s/ Don D. O'Neal	President
	Don D. O'Neal
	Kirk P. Pendleton*	Trustee
-	AMCAP Fund, Inc.
-	The American Funds Income Series - U.S. Government Securities Fund
-	American Funds Insurance Series
-	The American Funds Tax-Exempt Series II - The Tax-Exempt Fund of California
-	American High-Income Municipal Bond Fund, Inc.
-	American High-Income Trust
-	American Mutual Fund, Inc.
-	The Bond Fund of America, Inc.
-	Capital Income Builder, Inc.
-	Capital World Bond Fund, Inc.
-	Capital World Growth and Income Fund, Inc.
-	The Cash Management Trust of America
-	Intermediate Bond Fund of America
-	Limited Term Tax- Exempt Bond Fund of America
-	The New Economy Fund
-	SMALLCAP World Fund, Inc.
-	The Tax-Exempt Bond Fund of America, Inc.
-	The Tax-Exempt Money Fund of America
-	The U.S. Treasury Money Fund of America
-	AMCAP Fund, Inc.
-	The American Funds Income Series - U.S. Government Securities Fund
-	American Funds Insurance Series
-	The American Funds Tax-Exempt Series II - The Tax-Exempt Fund of California
-	American High-Income Municipal Bond Fund, Inc.
-	American High-Income Trust
-	American Mutual Fund, Inc.
-	The Bond Fund of America, Inc.
-	Capital World Bond Fund, Inc.
-	The Cash Management Trust of America
-	Intermediate Bond Fund of America
-	The Investment Company of America
-	Limited Term Tax-Exempt Bond Fund of America
-	The Tax-Exempt Bond Fund of America, Inc.
-	The Tax-Exempt Money Fund of America
-	The U.S. Treasury Money Fund of America
-	The American Funds Income Series - U.S. Government Securities Fund
-	American Funds Insurance Series
-	The American Funds Tax-Exempt Series II - The Tax-Exempt Fund of California
-	American High-Income Municipal Bond Fund, Inc.
-	American High-Income Trust
-	The Bond Fund of America, Inc.
-	Capital World Bond Fund, Inc.
-	The Cash Management Trust of America
-	Intermediate Bond Fund of America
-	The Investment Company of America
-	Limited Term Tax-Exempt Bond Fund of America
-	The Tax-Exempt Bond Fund of America, Inc.
-	The Tax-Exempt Money Fund of America
-	The U.S. Treasury Money Fund of America
-	AMCAP Fund, Inc.
-	American Funds Insurance Series
-	American Mutual Fund, Inc.
-	Capital Income Builder, Inc.
-	Capital World Growth and Income Fund, Inc.