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AMERICAN FUNDS INSURANCE SERIES

Part B
Statement of Additional Information

May 1, 2009

(as supplemented March 1, 2010)

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, 2009. 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 . . . . 9
Fund policies . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Management of the Series . . . . . . . . . . . . . . . . . . . . . 30
Execution of portfolio transactions . . . . . . . . . . . . . . . . 60
Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . . 65
Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Taxes and distributions . . . . . . . . . . . . . . . . . . . . . . 69
General information . . . . . . . . . . . . . . . . . . . . . . . . 72
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Investment portfolio
Financial statements

American Funds Insurance Series -- Page 1
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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.

Investing outside the U.S.

. 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") and 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 straight debt
securities (i.e., debt securities that do not have equity conversion
or purchase rights) rated Baa1 or below by Moody's and BBB+ or below
by S&P or in unrated securities that are determined to be of
equivalent quality.

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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 "small market capitalization"
companies to be companies with market capitalizations of $3.5 billion
or less. The investment adviser has periodically reevaluated and
adjusted this definition and may continue to do so in the future.

Debt securities

. The fund may invest up to 10% of its assets in straight debt
securities rated Baa1 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.

Investing outside the U.S.

. The fund may invest up to 15% of its assets in securities of issuers
domiciled outside the United States and Canada.

Debt securities

. The fund may invest up to 10% of its assets in straight debt
securities rated Ba1 or below by Moody's and BB+ or below by S&P or in
unrated securities that are determined to be of equivalent quality.
These are known as high yield securities ("high yield").

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 straight debt securities
rated Baa1 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
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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 straight 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 straight debt
securities rated high yield.

BLUE CHIP INCOME AND GROWTH FUND

General

. This fund will seek to produce income exceeding the average yield on
U.S. stocks generally (as represented by the average yield on the S&P
500) and to provide an opportunity for growth of principal consistent
with sound common stock investing.

Equity securities

. This fund will primarily invest in common stocks of larger U.S.-based
companies (those with market capitalizations of $4 billion and above).

. This fund ordinarily will invest at least 90% of equity assets in the
stock of companies in business for five or more years (including
predecessor companies).

. This fund ordinarily will invest at least 90% of equity assets in the
stock of companies that pay regular dividends.

. This fund ordinarily will invest at least 90% of its equity assets in
the stock of companies whose debt securities are rated at least
investment grade.

. This fund will not invest in private placements of stock of companies.

American Funds Insurance Series -- Page 4
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. This fund will invest, under normal market conditions, at least 90% of
its assets in equity securities.

Investing outside the U.S.

. This fund may invest up to 10% of assets in common stocks of larger
non-U.S. companies so long as they are listed or traded in the United
States.

GLOBAL 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.

Investing outside the U.S.

. The fund may 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 Baa1 or below by Moody's and BBB+ 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 high yield.

GROWTH-INCOME FUND

General

. The fund invests primarily in common stocks or other securities that
demonstrate the potential for appreciation and/or dividends.

Investing outside the U.S.

. 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 straight debt securities
rated high yield.

American Funds Insurance Series -- Page 5
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INTERNATIONAL GROWTH AND INCOME FUND

General

. The fund may invest up to 20% of its assets in securities of issuers
domiciled in the United States; however, the fund has no current
intention of investing more than 10% of its assets in securities of
issuers domiciled in the United States or whose securities are
primarily listed on U.S. securities exchanges. Accordingly, the fund
currently intends to invest at least 90% of its assets in securities
of issuers domiciled outside the United States and whose securities
are primarily listed on exchanges outside the United States. For
purposes of this 90% limit, the fund will include holdings of cash and
cash equivalents issued by both U.S. issuers and issuers domiciled
outside the U.S. The fund may invest a portion of its assets in
companies located in developing countries.

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).

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 high yield.

Investing outside the U.S.

. 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

General

. The fund will invest at least 80% of its assets in bonds. The fund may
not purchase equity securities directly, other than certain
convertible securities. The fund may retain up to 5% of its assets in
common stock, warrants and rights received in conjunction with, or in
exchange for, debt securities.

. The fund may invest up to 20% of its assets in preferred securities,
including convertible and nonconvertible preferred securities.

American Funds Insurance Series -- Page 6
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Debt securities

. For purposes of the above limits, bonds include any debt instrument
including corporate bank loans and cash equivalents, and include
nonvoting, nonconvertible preferred securities.

. The fund will invest at least 35% of its assets in debt securities
(including cash and cash equivalents) rated A3 or better by Moody's or
A- or better by 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 Baa3 or better by
Moody's or BBB- or better by S&P or in unrated securities that are
determined to be of equivalent quality. These securities are known as
investment grade securities ("investment grade").

. The fund may invest up to 35% of its assets in debt securities rated
high yield.

Investing outside the U.S.

. The fund may invest up to 20% of its assets in securities denominated
in currencies other than the U.S. dollar. The fund may also invest in
bonds of issuers domiciled outside the U.S. which are denominated in
U.S. dollars.

GLOBAL 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 including corporate
bank loans and cash equivalents and may include certain preferred
securities).

. Normally, the fund will invest substantially in debt securities rated
investment grade.

. The fund may invest up to 35% of its assets in debt securities rated
high yield.

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 including corporate
bank loans and cash equivalents, and may include certain preferred
securities.

. The fund will invest at least 65% of its assets in debt securities
rated Ba1 or below by Moody's or BB+ or below by S&P or in unrated
securities that are determined to be of equivalent quality.

American Funds Insurance Series -- Page 7
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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.

Investing outside the U.S.

. 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 short-term 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 8
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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 -- Certain funds are eligible to invest in 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. For example, prices of
these securities can be affected by financial contracts held by the issuer or
third parties (such as derivatives) relating to the security or other assets or
indices.

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 periodic interest and repay the amount borrowed
either periodically during the life of the security and/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 their values accrete over
time to face value at maturity. 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 Ba1 or below by Moody's and/or BB+ or below
by S&P or unrated but determined by the funds' investment adviser 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 could 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. For example, prices of these securities can be affected by
financial contracts held by the issuer or third parties (such as
derivatives) relating to the security or other assets or indices.

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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.

Credit ratings for debt securities provided by rating agencies reflect an
evaluation of the safety of principal and interest payments, not market value
risk. The rating of an issuer is a rating agency's view of past and future
potential developments related to the issuer and may not necessarily reflect
actual outcomes. There can be a lag between the time of developments relating to
an issuer and the time a rating is assigned and updated.

Bond rating agencies may assign modifiers (such as +/-) to ratings categories to
signify the relative position of a credit within the rating category. Investment
policies that are based on ratings categories should be read to include any
security within that category, without giving consideration to the modifier
except where otherwise provided. See the Appendix for more information about
credit ratings.

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 or vice versa. Some
types of convertible bonds, preferred stocks or other preferred securities
automatically convert into common stocks or other securities at a stated
conversion ratio and some may be subject to redemption at the option of the
issuer at a predetermined price. 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 values vary in response to many factors,
including the values of the securities into which they are convertible, 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.

These securities may include hybrid securities, which also have equity and debt
characteristics. Such securities are normally at the bottom of an issuer's debt
capital structure. As such, they may be more sensitive to economic changes than
more senior debt securities. These securities may also be viewed as more
equity-like by the market when the issuer or its parent company experience
financial problems.

The prices and yields of nonconvertible preferred securities or preferred stocks
generally move with changes in interest rates and the issuer's credit quality,
similar to the factors affecting debt

American Funds Insurance Series -- Page 10
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securities. Nonconvertible preferred securities will be treated as debt for fund
investment limit purposes.

INVESTING IN SMALLER CAPITALIZATION STOCKS -- Global Discovery Fund, Global
Growth Fund, Global Small Capitalization Fund, Growth Fund, International Fund,
New World Fund, Global Growth and Income Fund, Growth-Income Fund, International
Growth and Income Fund and Asset Allocation Fund may invest in the stocks of
smaller capitalization companies (typically companies with market
capitalizations of less than $3.5 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 operating histories,
limited markets, or financial resources, may be dependent on one or a few key
persons for management, 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
concentrate on larger capitalization stocks. The funds determine relative market
capitalizations using U.S. standards. Accordingly, the funds' investments in
certain countries outside the United States may have larger market
capitalizations relative to other companies within those countries.

INVESTING IN PRIVATE COMPANIES -- Global Discovery Fund, Global Growth Fund,
Global Small Capitalization Fund, Growth Fund, International Fund, New World
Fund, Global Growth and Income Fund, Growth-Income Fund, International Growth
and Income Fund, Asset Allocation Fund, Bond Fund, Global 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 OUTSIDE THE U.S. -- Global Discovery Fund, Global Growth Fund, Global
Small Capitalization Fund, Growth Fund, International Fund, New World Fund, Blue
Chip Income and Growth Fund, Global Growth and Income Fund, Growth-Income Fund,
International Growth and Income Fund, Asset Allocation Fund, Bond Fund, Global
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. In determining the domicile of an issuer, the funds'
investment adviser will consider the domicile determination of a leading
provider of global indexes, such as Morgan Stanley Capital International, and
may also take into account

American Funds Insurance Series -- Page 11
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such factors as where the company is legally organized and/or maintains
principal corporate offices and/or conducts its principal operations. 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, disclosure, and regulatory and legal standards
and practices; changing local, regional and global economic, political and
social conditions; expropriation; changes in tax policy; greater market
volatility; different 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 the European Union. 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, may have
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.

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 corporations or governmental entities outside the United States,
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

American Funds Insurance Series -- Page 12
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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 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.

American Funds Insurance Series -- Page 13
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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 resident
individuals and companies domiciled outside the United States.

FRAUDULENT SECURITIES -- Securities purchased by the funds may subsequently
be found to be fraudulent or counterfeit, resulting in a loss to the funds.

CURRENCY TRANSACTIONS -- Global Discovery Fund, Global Growth Fund, Global Small
Capitalization Fund, Growth Fund, International Fund, New World Fund, Global
Growth and Income Fund, International Growth and Income Fund, Asset Allocation
Fund, Bond Fund, Global 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. For all funds except Bond Fund, Global Bond Fund and High-Income Bond
Fund forward currency contracts entered into by the funds will involve the
purchase or sale of one currency against the U.S. dollar. Bond Fund, Global Bond
Fund and High-Income Bond Fund may also enter into foreign currency contracts
not involving 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, Global Bond Fund and High-Income Bond Fund may use forward currency
contracts to purchase or sell a currency against another currency at a future
date and price as agreed upon by the parties. These funds may also enter into
exchange-traded futures contracts relating to foreign currencies in connection
with investments in securities of foreign issuers in anticipation of, or to
protect against, fluctuations in exchange rates. An exchange-traded futures
contract

American Funds Insurance Series -- Page 14
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relating to foreign currency is similar to a forward foreign currency contract
but has a standardized size and exchange date.

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, Global 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.

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, Global 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 COMMITMENT, WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- 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. 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.

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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. After a transaction is entered into,
the funds may still dispose of or renegotiate the transaction. Additionally,
prior to receiving delivery of securities as part of a transaction, the funds
may sell such securities.

Asset Allocation Fund, Bond Fund, Global 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 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.

OBLIGATIONS 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 -- 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 Federal Financing Bank
(FFB), 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 Cor-

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poration (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.

On September 7, 2008, Freddie Mac and Fannie Mae were placed into
conservatorship by their new regulator, the Federal Housing Finance Agency.
Simultaneously, the U.S. Treasury made a commitment of indefinite duration to
maintain the positive net worth of both firms.

GOVERNMENT SUPPORT FOR SHORT-TERM DEBT INSTRUMENTS -- Various agencies and
instrumentalities of the U.S. government and governments of other countries have
recently implemented or announced programs that support short-term debt
instruments, including commercial paper, in an attempt to sustain liquidity in
the markets for these securities. Following is a brief summary of some of these
programs (please refer to the applicable entity's website for further
information on the specific program). Entities issuing obligations supported by
these programs in which the funds invest must be on an approved list that is
monitored on a regular basis. The U.S. government or other entities implementing
these programs may discontinue these programs, change the terms of the programs
or adopt new programs at their discretion.

TEMPORARY LIQUIDITY GUARANTEE PROGRAM -- The FDIC will guarantee payment of
new senior unsecured debt issued by FDIC-insured depository institutions,
U.S. bank holding companies and financial holding companies and certain
U.S. savings and loan holding companies. The guarantee will cover all new
senior unsecured debt issued under this program, including commercial
paper, issued by these entities on or before December 31, 2009. Entities
eligible to participate in this program may also issue debt that is not
guaranteed by the FDIC. The guarantee will extend only until December 31,
2012, even if the debt has not then matured.

COMMERCIAL PAPER FUNDING FACILITY (CPFF) -- The Federal Reserve Bank of New
York will lend money to a special purpose vehicle that will purchase
eligible commercial paper from eligible issuers from October 27, 2008 until
February 1, 2010. Under the CPFF, eligible issuers are U.S. domiciled
issuers of commercial paper (including those with parent companies outside
the U.S.) and eligible commercial paper must have a three month maturity,
be U.S. dollar denominated and be rated at least A-1/P-1/F1 by two or more
nationally recognized rating agencies.

ASSET BACKED COMMERCIAL PAPER MONEY MARKET FUND LIQUIDITY FACILITY (AMLF) -
The Federal Reserve Bank of Boston will lend money to eligible borrowers,
including U.S. depository institutions, bank holding companies and U.S.
branches and agencies of banks domiciled outside the U.S, in order to fund
purchases of eligible asset backed commercial paper from money market funds
until February 1, 2010. Under the AMLF, eligible asset backed commercial
paper must be issued by a U.S. issuer that was in existence on

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September 18, 2008, be U.S. dollar denominated, be rated at least A-1, P-1
or F1 by at least two major rating agencies (or in the top rating category
if rated by only one agency) and have a maturity that does not exceed 120
days if the borrower is a bank or 270 days for non-bank borrowers.

GOVERNMENT GUARANTEES OUTSIDE THE U.S. -- Various governments outside the
U.S. have implemented or announced programs under which the government or a
government agency will guarantee debt, including commercial paper, of
financial institutions in that country.

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, net of any fees paid to
any insurer or any guarantor of the securities. 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 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 enhancements such as insurance or letters of credit
issued by private companies. 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. CMOs may be less liquid or may exhibit
greater price volatility than other types of mortgage or asset-backed
securities.

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, com-

American Funds Insurance Series -- Page 18
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mercial 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 rental payments and the ability of a property to attract
and retain tenants. Commercial mortgage-backed securities may be less
liquid or exhibit greater price volatility than other types of mortgage or
asset-backed securities.

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 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, Global 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 amount of an inflation-indexed bond is adjusted in response to
changes in the level of the consumer price index. Repayment of the original bond
principal upon maturity (as adjusted for inflation) is guaranteed in the case of
U.S. Treasury inflation-indexed bonds, and therefore the principal amount of
such bonds cannot be reduced below par even during a period of deflation.
However, the current market value of these bonds is not guaranteed and will
fluctuate, reflecting the rise and fall of yields. In certain jurisdictions
outside the United States the repayment of the original bond principal upon the
maturity of an inflation-indexed bond is not guaranteed, allowing for the amount
of the bond repaid at maturity to be less than par.

The interest rate for inflation-indexed bonds is fixed at issuance as a
percentage of this adjustable principal. Accordingly, the actual interest income
may both rise and fall as the principal amount of the bonds adjusts in response
to movements of the consumer price index. For example, typically interest income
would rise during a period of inflation and fall during a period of deflation.

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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, tax laws and regulatory requirements, such as those relating to
the environment. Both types of REITs are dependent upon management skill and the
cash flows generated by their holdings, 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 -- The funds may hold cash or invest in cash
equivalents. Cash equivalents 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.

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 securities dealers make active markets in these
securities.

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RESTRICTED OR ILLIQUID SECURITIES -- The funds may purchase securities subject
to restrictions on resale. Restricted securities may only be sold 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. Difficulty in selling such securities may
result in a loss to the funds or cause them to incur additional administrative
costs.

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 ASSIGNMENTS AND PARTICIPATIONS -- The funds may invest in loans or other
forms of indebtedness that represent interests in amounts owed by corporations
or other borrowers (collectively "borrowers"). Loans may be originated by the
borrower in order to address its working capital needs, as a result of a
reorganization of the borrower's assets and liabilities (recapitalizations), to
merge with or acquire another company (mergers and acquisitions), to take
control of another company (leveraged buy-outs), to provide temporary financing
(bridge loans), or for other corporate purposes.

Some loans may be secured in whole or in part by assets or other collateral. The
greater the value of the assets securing the loan the more the lender is
protected against loss in the case of nonpayment of principal or interest. Loans
made to highly leveraged borrowers may be especially vulnerable to adverse
changes in economic or market conditions and may involve a greater risk of
default.

Some loans may represent revolving credit facilities or delayed funding loans,
in which a lender agrees to make loans up to a maximum amount upon demand by the
borrower during a specified term. These commitments may have the effect of
requiring the fund to increase its investment in a company at a time when it
might not otherwise decide to do so (including at a time when the company's
financial condition makes it unlikely that such amounts will be repaid). To the
extent that the fund is committed to advance additional funds, the fund will
segregate assets determined to be liquid in an amount sufficient to meet such
commitments.

Some loans may represent debtor-in-possession financings (commonly known as "DIP
financings"). DIP financings are arranged when an entity seeks the protections
of the bankruptcy court under Chapter 11 of the U.S. Bankruptcy Code. These
financings allow the entity to continue its business operations while
reorganizing under Chapter 11. Such financings constitute senior liens on
unencumbered collateral (i.e., collateral not subject to other creditors'
claims). There is a risk that the entity will not emerge from Chapter 11 and be
forced to liquidate its assets under Chapter 7 of the U.S. Bankruptcy Code. In
the event of liquidation, the fund's only recourse will be against the
collateral securing the DIP financing.

The investment adviser generally makes investment decisions based on publicly
available information, but may rely on non-public information if necessary.
Borrowers may offer to provide lenders with material, non-public information
regarding a specific loan or the borrower in general.

American Funds Insurance Series -- Page 21
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The investment adviser generally chooses not to receive this information. As a
result, the investment adviser may be at a disadvantage compared to other
investors that may receive such information. The investment adviser's decision
not to receive material, non-public information may impact the investment
adviser's ability to assess a borrower's requests for amendments or waivers of
provisions in the loan agreement. However, the investment adviser may on a
case-by-case basis decide to receive such information when it deems prudent. In
these situations the investment adviser may be restricted from trading the loan
or buying or selling other debt and equity securities of the borrower while it
is in possession of such material, non-public information, even if such loan or
other security is declining in value.

The funds normally acquire loan obligations through an assignment from another
lender, but also may acquire loan obligations by purchasing participation
interests from lenders or other holders of the interests. When the funds
purchase assignments they acquire direct contractual rights against the borrower
on the loan. The funds acquire the right to receive principal and interest
payments directly from the borrower and to enforce their rights as a lender
directly against the borrower. 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. Loan
assignments are often administered by a financial institution that acts as agent
for the holders of the loan, and the fund may be required to receive approval
from the agent and/or borrower prior to the purchase of a loan. Risks may also
arise due to the ability of the agent to meet its obligations under the loan
agreement.

Loan participations are loans or other direct debt instruments that are
interests in amounts owed by the borrower to another party. They may represent
amounts owed to lenders or lending syndicates, to suppliers of goods or
services, or to other parties. The funds will have the right to receive payments
of principal, interest and any fees to which they are 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, the
funds 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. In addition, the funds may not directly benefit from any
collateral supporting the loan in which they have purchased the participation
and the funds will have to rely on the agent bank or other financial
intermediary to apply appropriate credit remedies. As a result, the funds will
be subject to the credit risk of both the borrower and the lender that is
selling the participation. In the event of the insolvency of the lender selling
a participation, a fund may be treated as a general creditor of the lender and
may not benefit from any set-off between the lender and the borrower.

Investments in loan participations and assignments present the possibility that
the funds could be held liable as a co-lender under emerging legal theories of
lender liability. In addition, if the loan is foreclosed, the funds 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

American Funds Insurance Series -- Page 22
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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, Global 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.

LOANS OF PORTFOLIO SECURITIES -- Asset Allocation Fund, Bond Fund, Global 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 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.

DIVERSIFICATION -- Global Bond Fund is a non-diversified investment company
which allows the fund to invest a greater percentage of its assets in any one
issuer. For the fund to be considered a "diversified" investment company under
the Investment Company Act of 1940, as amended, the fund with respect to 75% of
its total assets, would be required to limit its investment in any one issuer
(other than the U.S. government) to 5% of the market value of the total assets
of the fund or to 10% of the outstanding voting securities of such issuer.
However, such a limitation would reduce the extent to which the fund could
concentrate its investments in securities of governmental issuers outside the
United States, which are generally considered to be of higher credit quality
than are private issuers domiciled outside the United States. Accordingly, such
a limitation might increase the fund's investment risk. Although the fund is
non-diversified, it has no current intention of investing more than 5% of its
assets in securities of any one corporate issuer. In addition, the fund intends
to comply with the diversification and other requirements of the U.S. Internal
Revenue Code of 1986, as amended, applicable to regulated investment companies
so

American Funds Insurance Series -- Page 23
<PAGE>

that the fund will not be subject to U.S. taxes on the net investment income and
net capital gains that it distributes to its shareholders. (See "Taxes and
Distributions".)

* * * * * *

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 may be taxable when
distributed to shareholders.

A fund's portfolio turnover rate would equal 100% if each security in the fund's
portfolio was replaced once per year. Over the past fiscal year, funds whose
portfolio turnover rates exceeded 100% were Global Bond Fund, U.S.
Government/AAA-Rated Securities Fund and Cash Management Fund. Global Bond
Fund's portfolio turnover rates for the fiscal years ended December 31, 2008 and
2007 were 118% and 85%, respectively. U.S. Government/AAA-Rated Securities
Fund's portfolio turnover rates for the fiscal years ended December 31, 2008 and
2007 were 108% and 91%, respectively. For both funds, the change in portfolio
turnover rate reflects unusually volatile market conditions and significant net
inflows during the period.

See "Financial Highlights" in the prospectus for the funds' annual portfolio
turnover rates for each of the last five fiscal years.

American Funds Insurance Series -- Page 24
<PAGE>

FUND POLICIES

All percentage limitations in the following fund policies are considered at the
time securities are purchased and are based on a fund's net assets unless
otherwise indicated. None of the following policies 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.

FUNDAMENTAL POLICIES -- The Series has adopted the following fundamental
policies, 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 voting securities present at a shareholder 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.

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, GLOBAL GROWTH AND INCOME FUND, GROWTH-INCOME FUND,
INTERNATIONAL GROWTH AND INCOME FUND, ASSET ALLOCATION FUND, BOND FUND, GLOBAL
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, Global Growth and Income Fund, Growth-Income Fund, International Growth
and Income Fund, Asset Allocation Fund, Bond Fund, Global 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 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,
International Growth and Income Fund, Asset Allocation Fund, Bond Fund, Global
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.

American Funds Insurance Series -- Page 25
<PAGE>

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.

Investment restriction numbers 1 and 2 do not apply to Global Bond Fund.

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 position may technically constitute the fund
an underwriter as that term is defined under the Securities Act of 1933.

For purposes of investment restriction number 7, the investment adviser
considers investments in corporate loans to be purchases of debt securities.

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, Global Growth and Income Fund, International Growth and
Income Fund, Asset Allocation Fund, Bond Fund, Global 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.

CHANGES TO FUNDAMENTAL POLICIES - At a meeting of the funds' shareholders on
November 24, 2009, shareholders approved changes to the fundamental policies
listed above for each of the funds. The Series plans to implement the new
fundamental policies for all funds in 2010 or early 2011; however, the Series
reserves the right to delay the implementation. The new policies are set forth
in a proxy statement available on the SEC's website at sec.gov.

American Funds Insurance Series -- Page 26
<PAGE>

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.

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.

American Funds Insurance Series -- Page 27
<PAGE>

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:

2. As to 75% of its total assets, purchase more than 10% of the outstanding
voting class of securities of an issuer.

4. Enter into any repurchase agreement maturing in more than seven days or
invest in any other illiquid security if, as a result, more than 10% of the
fund's total assets would be so invested.

5. Make loans to others except for the purchase of the debt securities listed
above. The fund may enter into repurchase agreements as described above.

6. Borrow money, except from banks for temporary purposes, and then in an
amount not in excess of 5% of the value of the fund's total assets. Moreover, in
the event that the asset coverage for such borrowings falls below 300%, the fund
will reduce, within three days, the amount of its borrowings in order to provide
for 300% asset coverage.

7. 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.

American Funds Insurance Series -- Page 28
<PAGE>

NONFUNDAMENTAL POLICIES -- The following nonfundamental policies of Cash
Management Fund may be changed without shareholder approval:

Investment restriction number 8 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 29
<PAGE>

MANAGEMENT OF THE SERIES

BOARD OF TRUSTEES AND OFFICERS

"INDEPENDENT" TRUSTEES/1/

NAME, AGE AND NUMBER OF
POSITION WITH FUND BOARDS/3/
(YEAR FIRST ELECTED/2/ AS A PRINCIPAL OCCUPATION(S) ON WHICH OTHER DIRECTORSHIPS/4/
TRUSTEE) DURING PAST FIVE YEARS TRUSTEE SERVES HELD BY TRUSTEE
--------------------------------------------------------------------------------------------------------------

Lee A. Ault III, 73 Private investor and corporate 37 Anworth Mortgage Asset
Trustee (1999) director; former Chairman of the Corporation; Office
Board, In-Q-Tel, Inc. (technology Depot, Inc.
venture company funded principally
by the Central Intelligence
Agency); former Chairman of the
Board, President and CEO,
Telecredit, Inc. (payment
services)
--------------------------------------------------------------------------------------------------------------
William H. Baribault, 64 Chairman and CEO, Oakwood 37 None
Trustee (2009) Enterprises (private investment
and consulting); former Chairman
of the Board, President and CEO,
Professional Business Bank
(financial services for small
businesses); former President and
CEO, Henry Company (building
products)
--------------------------------------------------------------------------------------------------------------
James G. Ellis, 62 Dean and Professor of Marketing, 40 Quiksilver, Inc.
Trustee (2010) Marshall School of Business,
University of Southern California

--------------------------------------------------------------------------------------------------------------
Martin Fenton, 74 Chairman of the Board, Senior 40 None
Chairman of the Board Resource Group LLC (development
(Independent and and management of senior living
Non-Executive) (1995) communities)
--------------------------------------------------------------------------------------------------------------
Leonard R. Fuller, 63 President and CEO, Fuller 40 None
Trustee (1999) Consulting (financial management
consulting firm)
--------------------------------------------------------------------------------------------------------------
W. Scott Hedrick, 64 Founding General Partner, 37 Hot Topic, Inc.;
Trustee (2007) InterWest Partners (venture Office Depot, Inc.
capital firm focused on
information technology and life
sciences); Visiting lecturer,
Stanford Graduate School of
Business
--------------------------------------------------------------------------------------------------------------
R. Clark Hooper, 63 Private investor; former 43 JPMorgan Value
Trustee (2010) President, Dumbarton Group LLC Opportunities Fund,
(securities industry consulting); Inc.;
former Executive Vice President - The Swiss Helvetia Fund,
Policy and Oversight, NASD Inc.
--------------------------------------------------------------------------------------------------------------
Merit E. Janow, 51 Professor, Columbia University, 40 The NASDAQ Stock Market
Trustee (2007) School of International and Public LLC; Trimble Navigation
Affairs; former Member, World Limited
Trade Organization Appellate Body

--------------------------------------------------------------------------------------------------------------
Laurel B. Mitchell, Ph.D., Director, Accounting Program, 37 None
54 University of Redlands
Trustee (2010)
--------------------------------------------------------------------------------------------------------------
Frank M. Sanchez, 66 Principal, The Sanchez Family 37 None
Trustee (2010) Corporation dba McDonald's
Restaurants (McDonald's licensee)

--------------------------------------------------------------------------------------------------------------
Margaret Spellings, 52 President and CEO, Margaret 37 None
Trustee (2010) Spellings & Company; former United
States Secretary of Education,
United States Department of
Education - Federal Government
Agency; former Assistant to the
President for Domestic Policy, The
White House - Federal Government,
Executive Branch - Domestic Policy

--------------------------------------------------------------------------------------------------------------
Steadman Upham, Ph.D., 60 President and Professor of 40 None
Trustee (2010) Anthropology, The University of
Tulsa; former President and
Professor of Archaeology,
Claremont Graduate University
--------------------------------------------------------------------------------------------------------------

American Funds Insurance Series -- Page 30
<PAGE>

[This page is intentionally left blank for this filing.]

American Funds Insurance Series -- Page 31
<PAGE>

"INTERESTED" TRUSTEES/5,6/

PRINCIPAL OCCUPATION(S)
DURING PAST FIVE YEARS NUMBER OF
NAME,AGE AND AND POSITIONS BOARDS/3/
POSITION WITH FUND HELD WITH AFFILIATED ENTITIES ON WHICH OTHER DIRECTORSHIPS/4/
(YEAR FIRST ELECTED/2/ AS A OR THE PRINCIPAL UNDERWRITER TRUSTEE OR HELD BY
TRUSTEE) OF THE SERIES OFFICER SERVES TRUSTEE OR OFFICER
----------------------------------------------------------------------------------------------------------

James K. Dunton, 71 Senior Vice President - Capital 17 None
Vice Chairman of the Board Research Global Investors,
(1993) Capital Research and Management
Company; Director, Capital
Research and Management Company

----------------------------------------------------------------------------------------------------------
Donald D. O'Neal, 49 Senior Vice President - Capital 18 None
President and Trustee Research Global Investors,
(1998) Capital Research and Management
Company; Director, The Capital
Group Companies, Inc.*

----------------------------------------------------------------------------------------------------------

OTHER OFFICERS/6/

NAME, AGE AND
POSITION WITH FUND PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
(YEAR FIRST ELECTED/2/ AS AND POSITIONS HELD WITH AFFILIATED ENTITIES
AN OFFICER) OR THE PRINCIPAL UNDERWRITER OF THE SERIES
-------------------------------------------------------------------------------

Michael J. Downer, 54 Director, Senior Vice President, Secretary and
Executive Vice President Coordinator of Legal and Compliance - Capital
(1991) Research and Management Company; Director, American
Funds Distributors, Inc.*; Chairman of the Board,
Capital Bank and Trust Company*
-------------------------------------------------------------------------------
Alan N. Berro, 49 Senior Vice President - Capital World Investors,
Senior Vice President Capital Research and Management Company
(1998)
-------------------------------------------------------------------------------
Abner D. Goldstine, 79 Senior Vice President - Fixed Income, Capital
Senior Vice President Research and Management Company; Director, Capital
(1993) Research and Management Company
-------------------------------------------------------------------------------
Claudia P. Huntington, Senior Vice President - Capital Research Global
57 Investors, Capital Research and Management Company;
Senior Vice President Director, The Capital Group Companies, Inc.*
(1994)
-------------------------------------------------------------------------------
John H. Smet, 53 Senior Vice President - Fixed Income, Capital
Senior Vice President Research and Management Company; Director, The
(1994) Capital Group Companies, Inc.*
-------------------------------------------------------------------------------
Carl M. Kawaja, 45 Senior Vice President - Capital World Investors,
Vice President (2008) Capital Research and Management Company; Director,
Capital Research and Management Company; Director,
Capital International, Inc.*; Director, Capital
International Asset Management, Inc.*
-------------------------------------------------------------------------------
Sung Lee, 43 Senior Vice President - Capital Research Global
Vice President (2008) Investors, Capital Research Company*; Director, The
Capital Group Companies, Inc.*
-------------------------------------------------------------------------------
Robert W. Lovelace, 47 Senior Vice President - Capital World Investors,
Vice President (1997) Capital Research and Management Company; Executive
Vice President and Director, Capital Research and
Management Company; Director, The Capital Group
Companies, Inc.*
-------------------------------------------------------------------------------
C. Ross Sappenfield, 44 Senior Vice President - Capital Research Global
Vice President (2008) Investors, Capital Research Company*
-------------------------------------------------------------------------------
Susan M. Tolson, 47 Senior Vice President - Fixed Income, Capital
Vice President (1999) Research and Management Company
-------------------------------------------------------------------------------
Steven I. Koszalka, 45 Vice President - Fund Business Management Group,
Secretary (2003) Capital Research and Management Company
-------------------------------------------------------------------------------
Gregory F. Niland, 38 Vice President - Fund Business Management Group,
Treasurer (2008) Capital Research and Management Company
-------------------------------------------------------------------------------
Karl C. Grauman, 41 Vice President - Fund Business Management Group,
Assistant Treasurer Capital Research and Management Company
(2006)
-------------------------------------------------------------------------------
Neal F. Wellons, 38 Vice President - Fund Business Management Group,
Assistant Treasurer Capital Research and Management Company
(2009)
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 32
<PAGE>

* Company affiliated with Capital Research and Management Company.

1 The term "independent" trustee refers to a trustee who is not an "interested
person" of the funds within the meaning of the 1940 Act.
2 Trustees and officers of the Series serve until their resignation, removal or
retirement.
3 Funds managed by Capital Research and Management Company, including the
American Funds; American Funds Target Date Retirement Series,(R)/ /Inc., which
is composed of nine funds and is available through tax-deferred retirement
plans and IRAs; and Endowments, which is composed of two portfolios and is
available to certain nonprofit organizations.
4 This includes all directorships (other than those in the American Funds or
other funds managed by Capital Research and Management Company) that are held
by each trustee as a director of a public company or a registered investment
company.
5 "Interested persons" of the funds 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.
6 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: SECRETARY.

American Funds Insurance Series -- Page 33
<PAGE>

FUND SHARES OWNED BY TRUSTEES AS OF DECEMBER 31, 2008:

AGGREGATE
DOLLAR
RANGE/1/ OF
INDEPENDENT
AGGREGATE TRUSTEES
DOLLAR RANGE/1/ DOLLAR DEFERRED
OF SHARES RANGE/1 /OF COMPENSATION/3/
OWNED IN INDEPENDENT ALLOCATED TO
ALL FUNDS TRUSTEES ALL FUNDS
IN THE DEFERRED WITHIN
DOLLAR RANGE/1/ AMERICAN FUNDS COMPENSATION/3/ AMERICAN FUNDS
OF FUND FAMILY OVERSEEN ALLOCATED FAMILY OVERSEEN
NAME SHARES OWNED/2/ BY TRUSTEE TO FUND BY TRUSTEE
----------------------------------------------------------------------------------------------

"INDEPENDENT" TRUSTEES
----------------------------------------------------------------------------------------------
Lee A. Ault III Over $100,000 Over $100,000 N/A N/A
----------------------------------------------------------------------------------------------
William H. None None N/A N/A
Baribault/4/
----------------------------------------------------------------------------------------------
James G. Ellis/5/ None Over $100,000 N/A N/A
----------------------------------------------------------------------------------------------
Martin Fenton $10,001 - Over $100,000 N/A Over $100,000
$50,000
----------------------------------------------------------------------------------------------
Leonard R. Fuller None $50,001 - N/A Over $100,000
$100,000
----------------------------------------------------------------------------------------------
W. Scott Hedrick None None N/A N/A
----------------------------------------------------------------------------------------------
R. Clark Hooper/5/ None Over $100,000 N/A $50,001 -
$100,000
----------------------------------------------------------------------------------------------
Merit E. Janow None Over $100,000 N/A N/A
----------------------------------------------------------------------------------------------
Laurel B. None None N/A N/A
Mitchell/5/
----------------------------------------------------------------------------------------------
Frank M. Sanchez/5/ None $10,001 - $50,000 N/A N/A
----------------------------------------------------------------------------------------------
Margaret None None N/A N/A
Spellings/5/
----------------------------------------------------------------------------------------------
Steadman Upham/5/ None Over $100,000 N/A Over $100,000
----------------------------------------------------------------------------------------------

American Funds Insurance Series -- Page 34
<PAGE>

AGGREGATE
DOLLAR RANGE/1/
OF SHARES
OWNED IN
ALL FUNDS
IN THE
DOLLAR RANGE/1/ AMERICAN FUNDS
OF FUND FAMILY OVERSEEN
NAME SHARES OWNED/2/ BY TRUSTEE
-----------------------------------------------------------------------------

"INTERESTED" TRUSTEES
-----------------------------------------------------------------------------
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 Shares of the funds may only be owned by purchasing variable annuity and
variable life insurance contracts. Each trustee's need for variable annuity or
variable life contracts and the role those contracts would play in his or her
comprehensive investment portfolio will vary and depend on a number of factors
including tax, estate planning, life insurance, alternative retirement plans or
other considerations.
3 Eligible trustees may defer their compensation under a nonqualified deferred
compensation plan. Deferred amounts accumulate at an earnings rate determined
by the total return of one or more American Funds as designated by the trustee.
4 Mr. Baribault was elected trustee on March 17, 2009.
5 James G. Ellis, R. Clark Hooper, Laurel B. Mitchell, Frank M. Sanchez,
Margaret Spellings and Steadman Upham were elected to the board effective
January 1, 2010.

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 boards of funds advised by the investment adviser typically meet
either individually or jointly with the boards of one or more other such funds
with substantially overlapping board membership (in each case referred to as a
"board cluster"). The Series typically pays each independent trustee an annual
fee, which ranges from $9,500 to $33,000, based primarily on the total number of
board clusters on which that independent trustee serves.

In addition, the Series generally pays independent trustees attendance and other
fees for meetings of the board and its committees. The Board chair receives an
additional fee for this service.

Independent trustees also receive attendance fees for certain special joint
meetings and information sessions with directors and trustees of other groupings
of funds advised by the investment adviser. The Series and the other funds
served by each independent trustee each pay an equal portion of these attendance
fees.

No pension or retirement benefits are accrued as part of Series expenses.
Independent 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 independent trustees.

American Funds Insurance Series -- Page 35
<PAGE>

TRUSTEE COMPENSATION EARNED DURING THE FISCAL YEAR ENDED DECEMBER 31, 2008:

TOTAL COMPENSATION
(INCLUDING
VOLUNTARILY DEFERRED
COMPENSATION/1/)
FROM ALL FUNDS MANAGED BY
CAPITAL RESEARCH AND
AGGREGATE COMPENSATION MANAGEMENT
DEFERRED COMPENSATION/1/) COMPANY OR ITS
NAME FROM THE SERIES AFFILIATES/2/
------------------------------------------------------------------------------------------------------------------------------------

Lee A. Ault III $134,182 $144,000
------------------------------------------------------------------------------------------------------------------------------------
William H. Baribault/3/ None None
------------------------------------------------------------------------------------------------------------------------------------
James G. Ellis/4/ None 132,063
------------------------------------------------------------------------------------------------------------------------------------
Martin Fenton/5/ 87,399 418,821
------------------------------------------------------------------------------------------------------------------------------------
Leonard R. Fuller/5/ 103,240 338,800
------------------------------------------------------------------------------------------------------------------------------------
W. Scott Hedrick 125,451 137,000
------------------------------------------------------------------------------------------------------------------------------------
R. Clark Hooper/4/ None 323,142
------------------------------------------------------------------------------------------------------------------------------------
Merit E. Janow 93,782 200,500
------------------------------------------------------------------------------------------------------------------------------------
Laurel B. Mitchell/4/ None None
------------------------------------------------------------------------------------------------------------------------------------
Frank M. Sanchez/4/ None 138,652
------------------------------------------------------------------------------------------------------------------------------------
Margaret Spellings/4/ None None
------------------------------------------------------------------------------------------------------------------------------------
Steadman Upham/4/ None 208,218
------------------------------------------------------------------------------------------------------------------------------------

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 shown in this table for the fiscal
year ended December 31, 2008 does not include earnings on amounts deferred in
previous fiscal years. See footnote 3 to this table for more information.
2 Funds managed by Capital Research and Management Company, including the
American Funds; American Funds Target Date Retirement Series,/(R)/ Inc., which
is composed of nine funds and is available through tax-deferred retirement
plans and IRAs; and Endowments, which is composed of two portfolios and is
available to certain nonprofit organizations.
3 Mr. Baribault was elected trustee on March 17, 2009.
4 James G. Ellis, R. Clark Hooper, Laurel B. Mitchell, Frank M. Sanchez,
Margaret Spellings and Steadman Upham were elected to the board effective
January 1, 2010.
5 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the Series (plus earnings thereon) through the 2008
fiscal year for participating trustees is as follows: Martin Fenton ($262,309)
and Leonard R. Fuller ($16,411). 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. At a meeting of the funds' shareholders on November 24, 2009,
shareholders approved the reorganization of the Series to a Delaware statutory
trust. The reorganization is expected to be completed in 2010 or early 2011;
however, the Series reserves the right to delay the implementation. A summary
comparison of the governing documents and state laws affecting the Delaware
statutory trust and the current form of organization of the Series can be found
in a proxy statement available on the SEC's website at sec.gov.

American Funds Insurance Series -- Page 36
<PAGE>

All Series operations are supervised by its board of trustees, which meets
periodically and performs duties required by applicable state and federal laws.
Independent board members 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 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.

The Series' declaration of trust and by-laws as well as separate indemnification
agreements that the Series has entered into with independent trustees provide in
effect that, subject to certain conditions, the Series will indemnify its
officers and trustees against liabilities or expenses actually and reasonably
incurred by them relating to their service to the Series. However, trustees 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.

COMMITTEES OF THE BOARD OF TRUSTEES -- The Series has an audit committee
comprised of William H. Baribault, Leonard R. Fuller, W. Scott Hedrick and R.
Clark Hooper, 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, its 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. Six audit committee meetings
were held during the 2008 fiscal year.

American Funds Insurance Series -- Page 37
<PAGE>

The Series has a contracts committee comprised of Lee A. Ault III, William H.
Baribault, James G. Ellis, Martin Fenton, Leonard R. Fuller, W. Scott Hedrick,
R. Clark Hooper, Merit E. Janow, Laurel B. Mitchell, Frank M. Sanchez, Margaret
Spellings and Steadman Upham, none of whom is an "interested person" of the
Series within the meaning of the 1940 Act. The committee's principal 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. One contracts
committee meeting was held during the 2008 fiscal year.

The Series has a nominating and governance committee comprised of Lee A. Ault
III, William H. Baribault, James G. Ellis, R. Clark Hooper, Merit E. Janow and
Laurel B. Mitchell, 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 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 and governance 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 and governance committee meetings were held
during the 2008 fiscal year.

PROXY VOTING PROCEDURES AND PRINCIPLES -- The funds' investment adviser, in
consultation with the Series' board, has adopted Proxy Voting Procedures and
Principles (the "Principles") with respect to voting proxies of securities held
by the funds, other American Funds and Endowments. The complete text of these
principles is available on the American Funds website at americanfunds.com.
Proxies are voted by a committee of the appropriate equity investment division
of the investment adviser under authority delegated by the funds' boards.
Therefore, if more than one fund invests in the same company, they may vote
differently on the same proposal. In addition, the funds' boards monitor the
proxy voting process and provide guidance with respect to the Principles.

All U.S. proxies are voted. Proxies for companies outside the U.S. also are
voted, provided there is sufficient time and information available. After a
proxy statement is received, the investment adviser prepares a summary of the
proposals contained in the proxy statement. A discussion of any potential
conflicts of interest also is included in the summary. For proxies of securities
managed by a particular investment division of the investment adviser, the
initial voting recommendation is made by one or more of the division's
investment analysts familiar with the company and industry. A second
recommendation is made by a proxy coordinator (an investment analyst with
experience in corporate governance and proxy voting matters) within the
appropriate investment division, based on knowledge of these Principles and
familiarity with proxy-related issues. The proxy summary and voting
recommendations are made available to the appropriate proxy voting committee for
a 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 Insurance Series -- Page 38
<PAGE>

American Funds is also a director of a company whose proxy is being voted. In
such instances, proxy voting committee members are alerted to the potential
conflict. The proxy voting 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 Principles, 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 Principles 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.

Information regarding how the fund voted proxies relating to portfolio
securities during the 12-month period ended June 30 of each year will be
available on or about September 1 of each year (a) without charge, upon request
by calling American Funds Service Company at 800/421-0180, (b) on the American
Funds website and (c) on the SEC's website at 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 Principles is available upon request, free of charge, by calling
American Funds Service Company or visiting the American Funds website.

DIRECTOR MATTERS -- The election of a company's slate of nominees for
director generally is 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 also may be
supported.

GOVERNANCE PROVISIONS -- Typically, proposals to declassify a board (elect
all directors annually) are supported based on the belief that this
increases the directors' sense of accountability to shareholders. Proposals
for cumulative voting generally are supported in order to promote
management and board accountability and an opportunity for leadership
change. Proposals designed to make director elections more meaningful,
either by requiring a majority vote or by requiring any director receiving
more withhold votes than affirmative votes to tender his or her
resignation, generally are supported.

SHAREHOLDER RIGHTS -- Proposals to repeal an existing poison pill generally
are supported. (There may be certain circumstances, however, when a proxy
voting committee of a fund or an investment division of the investment
adviser believes that a company needs to maintain anti-takeover
protection.) 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 typically are not 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.

American Funds Insurance Series -- Page 39
<PAGE>

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 generally are 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 December 1, 2009.
Unless otherwise indicated, the ownership percentages below represent ownership
of record rather than beneficial ownership.

GLOBAL DISCOVERY

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

Lincoln Life Insurance Company Record Class 1 53.11%
Omnibus Account Class 2 93.08
Fort Wayne, IN
----------------------------------------------------------------------------
Capital Research & Management Record Class 1 46.89
Company
Corporate Account
Irvine, CA
----------------------------------------------------------------------------
Lincoln Life & Annuity of New York Record Class 2 6.92
Omnibus Account
Fort Wayne, IN
----------------------------------------------------------------------------

GLOBAL GROWTH

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

John Hancock Life Insurance Co. USA Record Class 1 34.62%
JHT Global Diversification
Boston, MA
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 19.31
American Global Growth
Boston, MA
-------------------------------------------------------------------------------
SAST Record Class 1 14.83
Global Growth Portfolio
Los Angeles, CA
-------------------------------------------------------------------------------
Lincoln Life Insurance Company Record Class 1 14.02
Omnibus Account Class 2 45.81
Fort Wayne, IN
-------------------------------------------------------------------------------
Nationwide Variable Insurance Trust Record Class 1 12.47
Omnibus Account
Conshohocken, PA
-------------------------------------------------------------------------------
AIG Sunamerica Life Assurance Co. Record Class 2 18.32
Omnibus Account
Los Angeles, CA
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 17.07
Company
Omnibus Account
Hartford, CT
-------------------------------------------------------------------------------
MetLife Insurance Co. of Connecticut Record Class 2 7.09
Omnibus Account
Boston, MA
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 40
<PAGE>

GLOBAL SMALL CAPITALIZATION FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

Lincoln Life Insurance Company Record Class 1 23.13%
Omnibus Account Class 2 43.11
Fort Wayne, IN
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 22.42
JHT Global Diversification
Boston, MA
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 17.68
American Global Small Capitalization
Boston, MA
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 12.83
AFS Growth Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Hartford Series Funds, Inc. Record Class 1 9.92
AFS Global Small Capitalization HLS
Fund
Woodbury, MN
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 9.58
AFS Balanced Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Metropolitan Life Insurance Company Record Class 2 21.99
Omnibus Account
Irvine, CA
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 17.75
Company
Omnibus Account
Hartford, CT
-------------------------------------------------------------------------------
New England Life Insurance Company Record Class 2 5.11
American Forerunner Series
Des Moines, IA
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 41
<PAGE>

GROWTH FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

Lincoln Life Insurance Company Record Class 1 27.21%
Omnibus Account Class 2 41.11
Fort Wayne, IN
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 20.23
Omnibus Account
Boston, MA
-------------------------------------------------------------------------------
Pacific Life Record Class 1 14.29
Pacific Select Fund
Kansas City, MO
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 8.93
AFS Growth Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 6.22
AFS Balanced Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 18.50
Company
Omnibus Account
Hartford, CT
-------------------------------------------------------------------------------
ING Record Class 2 12.00
Growth Portfolio
Scottsdale, AZ
-------------------------------------------------------------------------------
Metropolitan Life Insurance Company Record Class 2 6.31
Omnibus Account
Irvine, CA
-------------------------------------------------------------------------------
AIG Sunamerica Life Assurance Co. Record Class 3 100.00
Omnibus Account
Los Angeles, CA
-------------------------------------------------------------------------------

INTERNATIONAL FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

Lincoln Life Insurance Company Record Class 1 35.05%
Omnibus Account Class 2 47.98
Fort Wayne, IN
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 30.92
Omnibus Account
Boston, MA
-------------------------------------------------------------------------------
Hartford Series Funds, Inc. Record Class 1 6.74
AFS International HLS Fund
Woodbury, MN
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 6.42
AFS International Portfolio
Irvine, CA
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 5.34
JHT Fundamental Holding
Boston, MA
-------------------------------------------------------------------------------
ING Record Class 2 22.53
International Portfolio
Scottsdale, AZ
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 17.66
Company
Omnibus Account
Hartford, CT
-------------------------------------------------------------------------------
AIG Sunamerica Life Assurance Co. Record Class 3 100.00
Omnibus Account
Los Angeles, CA
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 42
<PAGE>

NEW WORLD FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

Lincoln Life Insurance Company Record Class 1 21.28%
Omnibus Account Class 2 58.21
Fort Wayne, IN
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 17.58
JHT Global Diversification
Boston, MA
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 16.39
American New World
Boston, MA
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 15.59
AFS Growth Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 11.64
AFS Balanced Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Hartford Series Funds, Inc. Record Class 1 11.50
AFS New World HLS Fund
Woodbury, MN
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 31.54
Company
Omnibus Account #1
Hartford, CT
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 7.36
Company
Omnibus Account #2
Hartford, CT
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 43
<PAGE>

BLUE CHIP INCOME AND GROWTH FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

John Hancock Life Insurance Co. USA Record Class 1 53.49%
Omnibus Account
Boston, MA
-------------------------------------------------------------------------------
Lincoln Life Insurance Company Record Class 1 23.43
Omnibus Account Class 2 67.22
Fort Wayne, IN
-------------------------------------------------------------------------------
MML Record Class 1 14.28
American Funds Core Allocation Fund
Springfield, MA
-------------------------------------------------------------------------------
Hartford Series Funds, Inc. Record Class 1 7.01
AFS Blue Chip Income & Growth HLS Fund
Woodbury, MN
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 25.81
Company
Omnibus Account
Hartford, CT
-------------------------------------------------------------------------------

GLOBAL GROWTH AND INCOME FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

Hartford Series Funds, Inc. Record Class 1 55.23%
AFS Global Growth & Income HLS Fund
Woodbury, MN
-------------------------------------------------------------------------------
Lincoln Life Insurance Company Record Class 1 44.77
Omnibus Account Class 2 62.68
Fort Wayne, IN
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 29.12
Company
Omnibus Account #1
Hartford, CT
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 5.86
Company
Omnibus Account #2
Hartford, CT
-------------------------------------------------------------------------------

GROWTH-INCOME FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

Lincoln Life Insurance Company Record Class 1 23.87%
Omnibus Account Class 2 45.49
Fort Wayne, IN
-------------------------------------------------------------------------------
Pacific Life Record Class 1 18.56
Pacific Select Fund
Kansas City, MO
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 16.04
Omnibus Account
Boston, MA
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 10.73
AFS Growth Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 9.26
AFS Balanced Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 6.50
AFS Moderate Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Nationwide Variable Insurance Trust Record Class 1 6.10
Omnibus Account
Conshohocken, PA
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 20.77
Company
Omnibus Account #1
Hartford, CT
-------------------------------------------------------------------------------
ING Record Class 2 8.71
Growth-Income Portfolio
Scottsdale, AZ
-------------------------------------------------------------------------------
AIG Sunamerica Life Assurance Co. Record Class 2 6.19
Omnibus Account Class 3 100.00
Los Angeles, CA
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 5.10
Company
Omnibus Account #2
Hartford, CT
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 44
<PAGE>

INTERNATIONAL GROWTH AND INCOME FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

Capital Research & Management Record Class 1 57.61%
Company
Corporate Account
Irvine, CA
----------------------------------------------------------------------------
Lincoln Life Insurance Company Record Class 1 42.39
Omnibus Account Class 2 96.45
Fort Wayne, IN
----------------------------------------------------------------------------

American Funds Insurance Series -- Page 45
<PAGE>

ASSET ALLOCATION FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

John Hancock Life Insurance Co. USA Record Class 1 42.60%
American Asset Allocation
Boston, MA
-------------------------------------------------------------------------------
Nationwide Variable Insurance Trust Record Class 1 30.97
Omnibus Account
Conshohocken, PA
-------------------------------------------------------------------------------
Lincoln Life Insurance Company Record Class 1 13.35
Omnibus Account Class 2 56.03
Fort Wayne, IN
-------------------------------------------------------------------------------
ING Record Class 1 7.54
Asset Allocation Portfolio
Scottsdale, AZ
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 25.76
Company
Omnibus Account #1
Hartford, CT
-------------------------------------------------------------------------------
AIG Sunamerica Life Assurance Co. Record Class 2 8.56
Omnibus Account Class 3 100.00
Los Angeles, CA
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 6.15
Company
Omnibus Account #2
Hartford, CT
-------------------------------------------------------------------------------

BOND FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

John Hancock Life Insurance Co. USA Record Class 1 24.66%
Omnibus Account
Boston, MA
-------------------------------------------------------------------------------
Nationwide Variable Insurance Trust Record Class 1 14.84
Omnibus Account
Conshohocken, PA
-------------------------------------------------------------------------------
ING Record Class 1 13.29
Bond Portfolio
Scottsdale, AZ
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 11.96
JHT Fundamental Holding
Boston, MA
-------------------------------------------------------------------------------
Lincoln Life Insurance Company Record Class 1 6.45
Omnibus Account Class 2 54.99
Fort Wayne, IN
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 6.03
JHT Global Diversification
Boston, MA
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 5.85
AFS Moderate Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 28.40
Company
Omnibus Account #1
Hartford, CT
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 7.54
Company
Omnibus Account #2
Hartford, CT
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 46
<PAGE>

GLOBAL BOND FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------

Lincoln Life Insurance Company Record Class 1 32.36%
Omnibus Account Class 2 64.54
Fort Wayne, IN
-------------------------------------------------------------------------------
Hartford Series Funds, Inc. Record Class 1 24.44
AFS Global Bond HLS Fund
Woodbury, MN
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 22.69
AFS Balanced Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 11.38
AFS Growth Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 9.13
AFS Moderate Allocation Portfolio
Irvine, CA
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 25.93
Company
Omnibus Account #1
Hartford, CT
-------------------------------------------------------------------------------
Hartford Life and Annuity Insurance Record Class 2 7.57
Company
Omnibus Account #2
Hartford, CT
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 47
<PAGE>

HIGH-INCOME BOND FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

Lincoln Life Insurance Company Record Class 1 32.89%
Omnibus Account Class 2 96.50
Fort Wayne, IN
----------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 19.16
AFS Moderate Allocation Portfolio
Irvine, CA
----------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 17.86
AFS Balanced Allocation Portfolio
Irvine, CA
----------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 11.66
American Asset High-Yield Bond
Boston, MA
----------------------------------------------------------------------------
John Hancock Life Insurance Co. USA Record Class 1 10.77
JHT Global Diversification
Boston, MA
----------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 5.97
AFS Growth Allocation Portfolio
Irvine, CA
----------------------------------------------------------------------------
AIG Sunamerica Life Assurance Co. Record Class 3 100.00
Omnibus Account
Los Angeles, CA
----------------------------------------------------------------------------

U.S. GOVERNMENT/AAA-RATED SECURITIES FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------------

Met Investors Series Trust Record Class 1 35.64%
AFS Moderate Allocation Portfolio
Irvine, CA
----------------------------------------------------------------------------------
Lincoln Life Insurance Company Record Class 1 25.47
Omnibus Account Class 2 96.34
Fort Wayne, IN
----------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 23.99
AFS Balanced Allocation Portfolio
Irvine, CA
----------------------------------------------------------------------------------
Met Investors Series Trust Record Class 1 9.25
AFS Growth Allocation Portfolio
Irvine, CA
----------------------------------------------------------------------------------
AIG Sunamerica Life Assurance Co. Record Class 3 100.00
Omnibus Account
Los Angeles, CA
----------------------------------------------------------------------------------

American Funds Insurance Series -- Page 48
<PAGE>

CASH MANAGEMENT FUND

NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

Lincoln Life Insurance Company Record Class 1 96.10%
Omnibus Account Class 2 94.55
Fort Wayne, IN
----------------------------------------------------------------------------
Lincoln Life & Annuity of New York Record Class 2 5.45
Omnibus Account
Fort Wayne, IN
----------------------------------------------------------------------------
AIG Sunamerica Life Assurance Co. Record Class 3 100.00
Omnibus Account
Los Angeles, CA
----------------------------------------------------------------------------

INVESTMENT ADVISER -- Capital Research and Management Company, the Series'
investment adviser, 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). These facilities are staffed with
experienced investment professionals. The investment adviser is located at 333
South Hope Street, Los Angeles, CA 90071 and 6455 Irvine Center Drive, Irvine,
CA 92618. It is a wholly owned subsidiary of The Capital Group Companies, Inc.,
a holding company for several investment management subsidiaries. Capital
Research and Management Company manages equity assets through two investment
divisions, Capital World Investors and Capital Research Global Investors, and
manages fixed-income assets through its Fixed Income division. Capital World
Investors and Capital Research Global Investors make investment decisions on an
independent basis.

Rather than remain as investment divisions, Capital World Investors and Capital
Research Global Investors may be incorporated into wholly owned subsidiaries of
Capital Research and Management Company. In that event, Capital Research and
Management Company would continue to be the investment adviser, and day-to-day
investment management of equity assets would continue to be carried out through
one or both of these subsidiaries. Although not currently contemplated, Capital
Research and Management Company could incorporate its Fixed Income division in
the future and engage it to provide day-to-day investment management of
fixed-income assets. Capital Research and Management Company and each of the
funds it advises have applied to the U.S. Securities and Exchange Commission for
an exemptive order that would give Capital Research and Management Company the
authority to use, upon approval of the funds' board, its management subsidiaries
and affiliates to provide day-to-day investment management services to the
funds, including making changes to the management subsidiaries and affiliates
providing such services. The funds' shareholders approved this arrangement at a
meeting of the funds' shareholders on November 24, 2009. There is no assurance
that Capital Research and Management Company will incorporate its investment
divisions or exercise any authority, if granted, under an exemptive order.

The investment adviser has adopted policies and procedures that address issues
that may arise as a result of an investment professional's management of the
funds and other funds and accounts. Potential issues could involve allocation of
investment opportunities and trades among funds and accounts, use of information
regarding the timing of fund trades, investment professional compensation and
voting relating to portfolio securities. The investment adviser believes that
its policies and procedures are reasonably designed to address these issues.

American Funds Insurance Series -- Page 49
<PAGE>

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 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 plans will vary depending on
the individual's portfolio results, contributions to the organization and other
factors.

To encourage a long-term focus, bonuses based on investment results are
calculated by comparing pretax total investment returns to relevant benchmarks
over the most recent year, a four-year rolling average and an eight-year rolling
average with greater weight placed on the four-year and eight-year rolling
averages. For portfolio counselors, benchmarks may include measures of the
marketplaces in which the 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 makes periodic subjective
assessments of analysts' contributions to the investment process and this is an
element of their overall compensation. The investment results of each of the
funds' portfolio counselors may be measured against one or more of the following
benchmarks, depending on his or her investment focus:

Global Discovery Fund -- Lipper Multi-Cap Growth Funds Index, Global
Service and Information Index, Non-U.S. Service and Information Index;

Global Growth Fund -- MSCI World Index, Lipper Global Funds Index;

Global Small Capitalization Fund -- Lipper Small Cap Growth Funds Index,
Lipper International Small Cap Funds Index, MSCI All Country World Small
Cap Index, MSCI USA Small Cap Index, MSCI All Country World ex USA Small
Cap Index;

Growth Fund -- S&P 500, Lipper Growth Funds Index;

International Fund -- MSCI All Country World Index ex-USA, 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, Lipper Emerging Markets Debt Funds
Average;

Blue Chip Income and Growth Fund -- S&P 500, Lipper Growth & Income Funds
Index;

Global Growth and Income Fund -- MSCI World Index, Lipper Global Funds
Index;

Growth-Income Fund -- S&P 500, Lipper Growth & Income Funds Index;

International Growth and Income Fund -- MSCI World Index (ex-U.S.), Lipper
International Funds Index;

American Funds Insurance Series -- Page 50
<PAGE>

Asset Allocation Fund -- S&P 500, Lipper Growth & Income Funds Index,
Barclays Capital U.S. Aggregate Index, Barclays Capital U.S. Corporate High
Yield Index 2% Issuer Cap, Lipper High Current Yield Bond Funds Average,
Lipper Corporate Debt Funds A Rated Average;

Bond Fund -- Barclays Capital U.S. Aggregate Index, Barclays Capital U.S.
Corporate High Yield Index 2% Issuer Cap, Lipper High Current Yield Bond
Funds Average, Lipper Corporate Debt Funds A Rated Average;

Global Bond Fund -- Barclays Capital Global Aggregate Bond Index, Barclays
Capital U.S. Corporate High Yield Index 2% Issuer Cap, Lipper Global Income
Funds Average;

High-Income Bond Fund -- Barclays Capital U.S. Corporate High Yield Index
2% Issuer Cap, Lipper High Current Yield Bond Funds Index; and

U.S. Government/AAA Rated Securities Fund -- Citigroup Treasury/Government
Sponsored/Mortgage Index and Lipper General U.S. Government Funds Average.

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 need for variable annuity or
variable life contracts and the role those contracts would play in his or her
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 owns shares (through a
variable insurance contract) in the dollar range noted: Robert W. Lovelace,
Global Growth Fund, $10,001 - $50,000. The other portfolio counselors have
determined that variable insurance or annuity contracts do not meet their
current needs. Consequently, they do 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 as follows:

NUMBER NUMBER
OF OTHER OF OTHER NUMBER
REGISTERED POOLED OF OTHER
INVESTMENT INVESTMENT ACCOUNTS
COMPANIES (RICS) VEHICLES (PIVS) FOR WHICH
FOR WHICH FOR WHICH PORTFOLIO
PORTFOLIO PORTFOLIO COUNSELOR
COUNSELOR COUNSELOR IS A MANAGER
IS A MANAGER IS A MANAGER (ASSETS OF
PORTFOLIO (ASSETS OF RICS (ASSETS OF PIVS OTHER ACCOUNTS
COUNSELOR IN BILLIONS)/1/ IN BILLIONS)/2/ IN BILLIONS)/3/
--------------------------------------------------------------------------------

James K. Dunton 2 $ 62.2 None None
--------------------------------------------------------------------------------
Donald D. O'Neal 2 $171.0 1 $0.03 None
--------------------------------------------------------------------------------
Alan N. Berro 3 $ 95.0 None None
--------------------------------------------------------------------------------
Abner D. Goldstine 3 $ 98.3 None None
--------------------------------------------------------------------------------
Claudia P. 3 $ 32.8 None None
Huntington
--------------------------------------------------------------------------------
John H. Smet 7 $148.8 None 3 $2.06
--------------------------------------------------------------------------------
Carl M. Kawaja 4 $115.7 1 $0.71 None
--------------------------------------------------------------------------------
Sung Lee 2 $137.2 None None
--------------------------------------------------------------------------------
Robert W. Lovelace 3 $114.2 1 $0.71 None
--------------------------------------------------------------------------------
C. Ross Sappenfield 2 $ 68.6 1 $0.03 None
--------------------------------------------------------------------------------
Susan M. Tolson 3 $ 50.2 None None
--------------------------------------------------------------------------------
David C. Barclay 4 $108.0 2 $0.25 17 $5.54
--------------------------------------------------------------------------------
Donnalisa Barnum 1 $117.9 None None
--------------------------------------------------------------------------------
Christopher D. None None None
Buchbinder
--------------------------------------------------------------------------------
Gordon Crawford 3 $135.2 None None
--------------------------------------------------------------------------------
Mark H. Dalzell 3 $ 41.2 2 $0.16 17/4/ $5.23
--------------------------------------------------------------------------------
Mark E. Denning 5 $164.2 1 $0.08 None
--------------------------------------------------------------------------------
J. Blair Frank 2 $130.0 None None
--------------------------------------------------------------------------------
Nicholas J. Grace 2 $ 73.4 None None
--------------------------------------------------------------------------------
Alwyn W. Heong 3 $146.9 None None
--------------------------------------------------------------------------------
David A. Hoag 3 $ 80.6 None None
--------------------------------------------------------------------------------
Thomas H. Hogh 3 $ 22.2 1 $0.16 3 $0.31
--------------------------------------------------------------------------------
Gregg E. Ireland 2 $152.1 1 $0.06 None
--------------------------------------------------------------------------------
Gregory D. Johnson 3 $ 92.0 None None
--------------------------------------------------------------------------------
Michael T. Kerr 2 $151.9 None None
--------------------------------------------------------------------------------
Harold H. La 1 $ 5.2 None None
--------------------------------------------------------------------------------
Jeffrey T. Lager None None None
--------------------------------------------------------------------------------
Marcus B. Linden 1 $ 9.1 None None
--------------------------------------------------------------------------------
James B. Lovelace 4 $142.6 None None
--------------------------------------------------------------------------------
Jesper Lyckeus 1 $ 66.9 1 $0.08 None
--------------------------------------------------------------------------------
Mark R. Macdonald 4 $114.7 None None
--------------------------------------------------------------------------------
Ronald B. Morrow 3 $200.7 None None
--------------------------------------------------------------------------------
James R. Mulally 2 $ 52.0 None None
--------------------------------------------------------------------------------
David M. Riley 1 $ 73.0 None None
--------------------------------------------------------------------------------
Eugene P. Stein 1 $ 48.8 None None
--------------------------------------------------------------------------------
Andrew B. Suzman 2 $ 58.5 1 $0.06 None
--------------------------------------------------------------------------------
Christopher M. None None None
Thomsen
--------------------------------------------------------------------------------
Steven T. Watson 3 $ 92.7 None None
--------------------------------------------------------------------------------
Paul A. White None None None
--------------------------------------------------------------------------------
Dylan J. Yolles None None None
--------------------------------------------------------------------------------

American Funds Insurance Series -- Page 51
<PAGE>

[This page is intentionally left blank for this filing.]

American Funds Insurance Series -- Page 52
<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 the
total assets managed by the individual, which is a substantially lower amount.
No fund has an advisory fee that is based on the performance of the fund.

2 Represents funds advised or sub-advised by Capital Research and Management
Company or its affiliates 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
funds or accounts and are not the total assets managed by the individual, which
is a substantially lower amount.
3 Reflects other professionally managed accounts held at companies affiliated
with Capital Research and Management Company. Personal brokerage accounts of
portfolio counselors and their families are not reflected.
4 The advisory fee of one of these accounts (representing $0.24 billion in total
assets) is based partially on its investment results.

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 December 31, 2009, 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

American Funds Insurance Series -- Page 53
<PAGE>

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 notice to the other party, and that the Agreements automatically
terminate in the event of their assignment (as defined in the 1940 Act). In
addition, the Agreement provides that the investment adviser may delegate all,
or a portion of, its investment management responsibilities to one or more
subsidiary advisers that is approved by the Series' board, pursuant to an
agreement between the investment adviser and such subsidiary. Any such
subsidiary adviser will be paid solely by the investment adviser out of its
fees.

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% on 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% on 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 greater than $3.0 billion but not exceeding $5.0
billion; plus 0.46% on net assets in excess of $5.0 billion;

Global Small Capitalization Fund: 0.80% on 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 greater than $2.0 billion but not
exceeding $3.0 billion, plus 0.65% on net assets greater than $3.0 billion but
not exceeding $5.0 billion, plus 0.635% on net assets in excess of $5.0 billion;

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 $1.0 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 greater than $27.0
billion but not exceeding $34.0 billion, plus 0.280% on net assets in excess of
$34.0 billion;

International Fund: 0.69% on 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;

American Funds Insurance Series -- Page 54
<PAGE>

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 greater than $1.0 billion but not exceeding $1.5 billion, plus 0.66%
on net assets greater than $1.5 billion but not exceeding $2.5 billion, plus
0.62% on net assets in excess of $2.5 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;

Global Growth and Income Fund: 0.69% on 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
billion, plus 0.50% on net assets greater than $2 billion but not exceeding $3.0
billion, plus 0.48% on net assets in excess of $3.0 billion;

Growth-Income 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
0.32% on net assets greater than $2.5 billion but 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 greater than
$21.0 billion but not exceeding $27.0 billion, plus 0.222% on net assets greater
than $27.0 billion but not exceeding $34.0 billion, plus 0.219% on net assets in
excess of $34.0 billion;

International Growth and Income Fund: 0.69% on 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;

Asset Allocation Fund: 0.50% on 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 0.25% on net assets in excess of $8.0 billion;

Bond Fund: 0.48% on 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 greater than $3.0 billion but not exceeding $5.0 billion;
plus 0.34% on net assets in excess of $5.0 billion;

Global Bond Fund: 0.57% on the first $1.0 billion of net assets plus 0.50% on
net assets in excess of $1.0 billion;

High-Income Bond Fund: 0.50% on 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;

American Funds Insurance Series -- Page 55
<PAGE>

U.S. Government/AAA-Rated Securities Fund: 0.46% on 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 the first $1.0 billion of net assets, plus 0.29%
on net assets in excess of $1.0 billion.

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 investment adviser's total fees for the fiscal years ended December 31,
2008, 2007 and 2006 were:

FISCAL YEAR ENDED
------------------------------------------
2008 2007 2006
-------------------------------------------------------------------------------

GLOBAL DISCOVERY FUND $ 1,310,000 $ 1,306,000 $ 807,000
-------------------------------------------------------------------------------
GLOBAL GROWTH FUND 27,394,000 26,735,000 19,040,000
-------------------------------------------------------------------------------
GLOBAL SMALL CAPITALIZATION FUND 23,424,000 27,298,000 19,734,000
-------------------------------------------------------------------------------
GROWTH FUND 83,525,000 93,790,000 79,939,000
-------------------------------------------------------------------------------
INTERNATIONAL FUND 46,787,000 50,363,000 38,670,000
-------------------------------------------------------------------------------
NEW WORLD FUND 13,849,000 12,656,000 8,208,000
-------------------------------------------------------------------------------
BLUE CHIP INCOME AND GROWTH FUND 15,618,000 18,332,000 15,099,000
-------------------------------------------------------------------------------
GLOBAL GROWTH AND INCOME FUND 12,322,000 9,447,000 1,296,000
-------------------------------------------------------------------------------
GROWTH-INCOME FUND 65,897,000 75,627,000 64,732,000
-------------------------------------------------------------------------------
INTERNATIONAL GROWTH AND INCOME 10,000 N/A N/A
FUND
-------------------------------------------------------------------------------
ASSET ALLOCATION FUND 26,361,000 26,249,000 21,637,000
-------------------------------------------------------------------------------
BOND FUND 21,584,000 17,355,000 12,346,000
-------------------------------------------------------------------------------
GLOBAL BOND FUND 4,382,000 776,000 21,000
-------------------------------------------------------------------------------
HIGH-INCOME BOND FUND 6,092,000 6,066,000 4,946,000
-------------------------------------------------------------------------------
U.S. GOVERNMENT/AAA-RATED 5,079,000 3,222,000 2,884,000
SECURITIES FUND
-------------------------------------------------------------------------------
CASH MANAGEMENT FUND 2,746,000 1,566,000 1,068,000
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 56
<PAGE>

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. From April 1, 2005 through December 31, 2008,
this waiver increased to 10% of the management fees that it was otherwise
entitled to receive. The waiver was discontinued effective January 1, 2009.

Additionally, during the year ended December 31, 2007, the investment adviser
voluntarily reduced management fees to the rates provided by amended Agreements
for Global Growth Fund, Global Growth and Income Fund, and Bond Fund. During the
year ended December 31, 2006, the investment adviser voluntarily reduced
management fees to the rates provided by amended Agreements for Global Small
Capitalization Fund and Global Growth and Income Fund.

For the periods ended December 31, 2008, 2007 and 2006, management fees were
reduced by the following as a result of these waivers:

WAIVER REDUCTION
-------------------------------------------------------------------------------
2008 2007 2006
-------------------------------------------------------------------------------

GLOBAL DISCOVERY FUND $ 131,000 $ 131,000 $ 81,000
-------------------------------------------------------------------------------
GLOBAL GROWTH FUND 2,739,000 2,714,000 1,904,000
-------------------------------------------------------------------------------
GLOBAL SMALL CAPITALIZATION FUND 2,342,000 2,730,000 1,973,000
-------------------------------------------------------------------------------
GROWTH FUND 8,352,000 9,379,000 7,994,000
-------------------------------------------------------------------------------
INTERNATIONAL FUND 4,679,000 5,036,000 3,867,000
-------------------------------------------------------------------------------
NEW WORLD FUND 1,385,000 1,266,000 821,000
-------------------------------------------------------------------------------
BLUE CHIP INCOME AND GROWTH FUND 1,562,000 1,833,000 1,510,000
-------------------------------------------------------------------------------
GLOBAL GROWTH AND INCOME FUND 1,232,000 1,786,000 132,000
-------------------------------------------------------------------------------
GROWTH-INCOME FUND 6,589,000 7,563,000 6,473,000
-------------------------------------------------------------------------------
INTERNATIONAL GROWTH AND INCOME FUND 1,000 N/A N/A
-------------------------------------------------------------------------------
ASSET ALLOCATION FUND 2,636,000 2,625,000 2,164,000
-------------------------------------------------------------------------------
BOND FUND 2,158,000 1,736,000 1,235,000
-------------------------------------------------------------------------------
GLOBAL BOND FUND 438,000 78,000 2,000
-------------------------------------------------------------------------------
HIGH-INCOME BOND FUND 609,000 607,000 495,000
-------------------------------------------------------------------------------
U.S. GOVERNMENT/AAA-RATED SECURITIES 508,000 322,000 288,000
FUND
-------------------------------------------------------------------------------
CASH MANAGEMENT FUND 275,000 157,000 107,000
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 57
<PAGE>

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, 2008, the Series incurred distribution expenses for Class 2 shares
of $185,539,000 and Class 3 shares of $1,564,000, payable to certain life
insurance companies under the Plan. Accrued and unpaid distribution expenses
were $10,955,438 for Class 2 shares and $86,000 for Class 3 shares.

FUND EXPENSES -- In periods of market volatility, assets of the funds may
decline significantly, causing total annual fund operating expenses to become
higher than the numbers shown in the annual fund operating expenses tables in
the prospectus.

American Funds Insurance Series -- Page 58
<PAGE>

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.

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
Massachusetts Mutual Life Insurance Company
Merrill Lynch Life Insurance Company
Metropolitan Life Insurance Company
Nationwide Mutual Insurance Company
New York Life Insurance and Annuity Corporation
Pacific Life Insurance Company
Travelers Insurance Company

American Funds Distributors, Inc. receives a marketing expense allowance from
certain of the insurance companies listed above. These payments generally cover
expenses associated with the education and training efforts that American Funds
Distributors, Inc. provides to each insurance company sales force. Payments are
up to 0.16% of sales in a given calendar year.

American Funds Insurance Series -- Page 59
<PAGE>

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the Series'
portfolio transactions. Purchases and sales of equity securities on a securities
exchange or an over-the-counter market are effected through broker-dealers who
receive commissions for their services. Generally, commissions relating to
securities traded on foreign exchanges will be higher than commissions relating
to securities traded on U.S. exchanges and may not be subject to negotiation.
Equity securities may also be purchased from underwriters at prices that include
underwriting fees. Purchases and sales of fixed-income securities are generally
made with an issuer or a primary market-maker acting as principal with no stated
brokerage commission. The price paid to an underwriter for fixed-income
securities includes underwriting fees. Prices for fixed-income securities in
secondary trades usually include undisclosed compensation to the market-maker
reflecting the spread between the bid and ask prices for the securities.

In selecting broker-dealers, the investment adviser strives to obtain "best
execution" (the most favorable total price reasonably attainable under the
circumstances) for the Series' portfolio transactions, taking into account a
variety of factors. These factors include the size and type of transaction, the
nature and character of the markets for the security to be purchased or sold,
the cost, quality and reliability of the executions and the broker-dealer's
ability to offer liquidity and anonymity. The investment adviser considers these
factors, which involve qualitative judgments, when selecting broker-dealers and
execution venues for fund portfolio transactions. The investment adviser views
best execution as a process that should be evaluated over time as part of an
overall relationship with particular broker-dealer firms rather than on a
trade-by-trade basis. The Series does not consider the investment adviser as
having an obligation to obtain the lowest commission rate available for a
portfolio transaction to the exclusion of price, service and qualitative
considerations.

The investment adviser may execute portfolio transactions with broker-dealers
who provide certain brokerage and/or investment research services to it, but
only when in the investment adviser's judgment the broker-dealer is capable of
providing best execution for that transaction. The receipt of these services
permits the investment adviser to supplement its own research and analysis and
makes available the views of, and information from, individuals and the research
staffs of other firms. Such views and information may be provided in the form of
written reports, telephone contacts and meetings with securities analysts. These
services may include, among other things, reports and other communications with
respect to individual companies, industries, countries and regions, economic,
political and legal developments, as well as scheduling meetings with corporate
executives and seminars and conferences related to relevant subject matters. The
investment adviser considers these services to be supplemental to its own
internal research efforts and therefore the receipt of investment research from
broker-dealers does not tend to reduce the expenses involved in the investment
adviser's research efforts. If broker-dealers were to discontinue providing such
services it is unlikely the investment adviser would attempt to replicate them
on its own, in part because they would then no longer provide an independent,
supplemental viewpoint. Nonetheless, if it were to attempt to do so, the
investment adviser would incur substantial additional costs. Research services
that the investment adviser receives from broker-dealers may be used by the
investment adviser in servicing the Series and other funds and accounts that it
advises; however, not all such services will necessarily benefit the Series.

The investment adviser may pay commissions in excess of what other
broker-dealers might have charged - including on an execution-only basis - for
certain portfolio transactions in recognition of

American Funds Insurance Series -- Page 60
<PAGE>

brokerage and/or investment research services provided by a broker-dealer. In
this regard, the investment adviser has adopted a brokerage allocation procedure
consistent with the requirements of Section 28(e) of the U.S. Securities
Exchange Act of 1934. Section 28(e) permits an investment adviser to cause an
account to pay a higher commission to a broker-dealer that provides certain
brokerage and/or investment research services to the investment adviser, if the
investment adviser makes a good faith determination that such commissions are
reasonable in relation to the value of the services provided by such
broker-dealer to the investment adviser in terms of that particular transaction
or the investment adviser's overall responsibility to the Series and other
accounts that it advises. Certain brokerage and/or investment research services
may not necessarily benefit all accounts paying commissions to each such
broker-dealer; therefore, the investment adviser assesses the reasonableness of
commissions in light of the total brokerage and investment research services
provided by each particular broker-dealer.

In accordance with its internal brokerage allocation procedure, each equity
investment division of the investment adviser periodically assesses the
brokerage and investment research services provided by each broker-dealer from
which it receives such services. Using its judgment, each equity investment
division of the investment adviser then creates lists with suggested levels of
commissions for particular broker-dealers and provides those lists to its
trading desks. Neither the investment adviser nor the Series incurs any
obligation to any broker-dealer to pay for research by generating trading
commissions. The actual level of business received by any broker-dealer may be
less than the suggested level of commissions and can, and often does, exceed the
suggested level in the normal course of business. As part of its ongoing
relationships with broker-dealers, the investment adviser routinely meets with
firms, typically at the firm's request, to discuss the level and quality of the
brokerage and research services provided, as well as the perceived value and
cost of such services. In valuing the brokerage and investment research services
the investment adviser receives from broker-dealers in connection with its good
faith determination of reasonableness, the investment adviser does not attribute
a dollar value to such services, but rather takes various factors into
consideration, including the quantity, quality and usefulness of the services to
the investment adviser.

The investment adviser seeks, on an ongoing basis, to determine what the
reasonable levels of commission rates are in the marketplace. The investment
adviser takes various considerations into account when evaluating such
reasonableness, including, (a) rates quoted by broker-dealers, (b) the size of a
particular transaction in terms of the number of shares and dollar amount, (c)
the complexity of a particular transaction, (d) the nature and character of the
markets on which a particular trade takes place, (e) the ability of a
broker-dealer to provide anonymity while executing trades, (f) the ability of a
broker-dealer to execute large trades while minimizing market impact, (g) the
extent to which a broker-dealer has put its own capital at risk, (h) the level
and type of business done with a particular broker-dealer over a period of time,
(i) historical commission rates, and (j) commission rates that other
institutional investors are paying.

When executing portfolio transactions in the same equity security for the funds
and accounts, or portions of funds and accounts, over which the investment
adviser, through its equity investment divisions, has investment discretion,
each of the investment divisions will normally aggregate its respective
purchases or sales and execute them as part of the same transaction or series of
transactions. When executing portfolio transactions in the same fixed-income
security for the Series and the other funds or accounts over which it or one of
its affiliated companies has investment discretion, the investment adviser will
normally aggregate such purchases or sales and execute them as part of the same
transaction or series of transactions. The objective of aggregating purchases
and sales of a security is to allocate executions in an equitable manner

American Funds Insurance Series -- Page 61
<PAGE>

among the funds and other accounts that have concurrently authorized a
transaction in such security.

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 its affiliated companies; however, it does not consider whether a
broker-dealer has sold shares of the funds managed by the investment adviser or
its affiliated companies when placing any such orders for the Series' portfolio
transactions.

Brokerage commissions paid on portfolio transactions for the fiscal years ended
December 31, 2008, 2007, and 2006 were:

FISCAL YEAR ENDED
------------------------------------------
2008 2007 2006
-------------------------------------------------------------------------------------

GLOBAL DISCOVERY FUND $ 186,000 $ 222,000 $ 119,000
-------------------------------------------------------------------------------------
GLOBAL GROWTH FUND 5,006,000 4,883,000 2,792,000
-------------------------------------------------------------------------------------
GLOBAL SMALL CAPITALIZATION FUND 5,932,000 5,937,000 5,191,000
-------------------------------------------------------------------------------------
GROWTH FUND 12,525,000 15,510,000 15,320,000
-------------------------------------------------------------------------------------
INTERNATIONAL FUND 11,069,000 12,067,000 7,441,000
-------------------------------------------------------------------------------------
NEW WORLD FUND 1,746,000 2,110,000 1,561,000
-------------------------------------------------------------------------------------
BLUE CHIP INCOME AND GROWTH FUND 1,770,000 2,154,000 1,381,000
-------------------------------------------------------------------------------------
GLOBAL GROWTH AND INCOME FUND 2,785,000 2,034,000 614,000
-------------------------------------------------------------------------------------
GROWTH-INCOME FUND 13,650,000 12,227,000 10,703,000
-------------------------------------------------------------------------------------
INTERNATIONAL GROWTH AND INCOME FUND 5,000 N/A N/A
-------------------------------------------------------------------------------------
ASSET ALLOCATION FUND 4,896,000 1,994,000 2,635,000
-------------------------------------------------------------------------------------
BOND FUND 2,000 0 5,000
-------------------------------------------------------------------------------------
HIGH-INCOME BOND FUND 2,000 2,000 13,000
-------------------------------------------------------------------------------------

The volume of trading activity by Global Discovery Fund, Global Small
Capitalization Fund, Growth Fund, New World Fund and Blue Chip Income and Growth
Fund decreased during the year, resulting in a decrease in brokerage commissions
paid on portfolio transactions. The volume of trading activity by Global Growth
Fund, Global Growth and Income Fund, Growth-Income Fund, Asset Allocation Fund
and Bond Fund increased during the year, resulting in an increase in brokerage
commissions paid on portfolio transactions. The volume of trading activity by
International Fund increased during 2007 and 2008, resulting in increased
brokerage

American Funds Insurance Series -- Page 62
<PAGE>

commissions paid on portfolio transactions compared to 2006. Prior year
brokerage commissions for International Growth and Income Fund was not
representative of a full year.

The Series is required to disclose information regarding investments in the
securities of its "regular" broker-dealers (or parent companies of their regular
broker-dealers) that derive more than 15% of its 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 Citigroup Global Markets Inc., Credit Suisse Group AG,
Goldman Sachs & Co., J.P. Morgan Securities Inc., Lehman Brothers Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co., Incorporated
and UBS Financial Services 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 $ 1,117,000
-------------------------------------------------------------------------------
Global Growth Fund J.P. Morgan Chase & equity 22,071,000
Co.
-------------------------------------------------------------------------------
Growth Fund Citigroup Inc. equity 95,617,000
---------------------------------------------------
J.P. Morgan Chase & equity 73,780,000
Co.
-------------------------------------------------------------------------------
International Fund Credit Suisse Group AG equity 18,523,000
---------------------------------------------------
UBS AG equity 28,861,000
-------------------------------------------------------------------------------
New World Fund Citigroup Inc. equity 282,000
-------------------------------------------------------------------------------
Blue Chip Income and Citigroup Inc. equity 43,700,000
Growth Fund
---------------------------------------------------
J.P. Morgan Chase & equity 45,246,000
Co.
-------------------------------------------------------------------------------
Global Growth and Income Citigroup Inc. equity 6,710,000
Fund
---------------------------------------------------
J.P. Morgan Chase & equity 10,247,000
Co.
-------------------------------------------------------------------------------
Growth-Income Fund Citigroup Inc. equity 186,425,000
---------------------------------------------------
J.P. Morgan Chase & equity 187,853,000
Co.
-------------------------------------------------------------------------------
Asset Allocation Fund Citigroup Inc. equity 13,420,000
---------------------------------------------------
J.P. Morgan Chase & equity 80,710,000
Co.
---------------------------------------------------
Citigroup Inc. debt 9,347,000
---------------------------------------------------
Goldman Sachs Group, debt 2,888,000
Inc.
-------------------------------------------------------------------------------
U.S. Government/AAA-Rated Goldman Sachs Group, debt 2,879,000
Securities Fund Inc.
---------------------------------------------------
J.P. Morgan Chase & debt 2,859,000
Co.
-------------------------------------------------------------------------------
Bond Fund Citigroup Inc. equity 8,306,000
---------------------------------------------------
Citigroup Inc. debt 2,957,000
---------------------------------------------------
J.P. Morgan Chase & debt 5,327,000
Co.
---------------------------------------------------
J.P. Morgan Chase & equity 10,584,000
Co.
---------------------------------------------------
Lehman Brothers debt 1,116,000
Holdings, Inc.
---------------------------------------------------
Morgan Stanley debt 756,000
-------------------------------------------------------------------------------
Global Bond Fund Citigroup Inc. debt 253,000
---------------------------------------------------
Goldman Sachs Group, debt 241,000
Inc.
---------------------------------------------------
J.P. Morgan Chase & equity 625,000
Co.
---------------------------------------------------
Lehman Brothers debt 183,000
Holdings, Inc.
---------------------------------------------------
Merrill Lynch & Co., debt 2,072,000
Inc.
-------------------------------------------------------------------------------
High-Income Bond Fund Citigroup Inc. equity 1,543,000
---------------------------------------------------
J.P. Morgan Chase & equity 834,000
Co.
---------------------------------------------------
Morgan Stanley debt 504,000
-------------------------------------------------------------------------------

American Funds Insurance Series -- Page 63
<PAGE>

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American Funds Insurance Series -- Page 64
<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, each fund's complete list of portfolio
holdings available for public disclosure, dated as of the end of each calendar
quarter, is permitted to be provided to shareholders no earlier than the tenth
day after such calendar quarter. In addition, each fund's 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 provided to shareholders 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 made available to fund shareholders.
Currently, this information is being provided to Lipper, Inc. Morningstar,
Standard & Poor's Fund Services, Overlap, Value Line, Bloomberg, Vickers Stock
Research, Thomson Financial Research, Russell/Mellon Analytical Services and RBC
Dain Rauscher. The Series' custodian, outside counsel and auditor, each of which
require such information for legitimate business and fund oversight purposes,
may receive such information earlier.

Affiliated persons of the Series, including officers of the Series and employees
of the investment adviser and its affiliates, 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 not to
trade in securities based on confidential and proprietary investment
information, to maintain the confidentiality of such information, and to
preclear securities trades and report securities transactions activity, as
applicable. For more information on these restrictions and limitations, please
see the "Personal investment policy" section in this statement of additional
information and the Code of Ethics. Third party service providers of the Series,
as described in this statement of additional information, 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, such persons will be bound by agreements
(including confidentiality agreements) or fiduciary obligations that restrict
and limit their use of the information to legitimate business uses only, and
that include the duty not to trade on the information. 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.

American Funds Insurance Series -- Page 65
<PAGE>

Subject to Board policies, the authority to disclose a fund's portfolio
holdings, and to establish policies with respect to such disclosure, resides
with the appropriate investment-related committees of the Series' investment
adviser. In exercising their authority, the committees determine whether
disclosure of information about the funds' portfolio securities is appropriate
and in the best interest of Series 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 provided to fund shareholders, helps reduce potential
conflicts of interest between Series shareholders and the investment adviser and
its affiliates.

American Funds Insurance Series -- Page 66
<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 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 indicated below. Each fund follows
standard industry practice by typically reflecting changes in its holdings of
portfolio securities on the first business day following a portfolio trade.

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 one or more independent pricing vendors, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued in good faith at the mean
quoted bid and asked prices that are reasonably and timely available or at
prices for securities of comparable maturity, quality and type. The pricing
vendors base bond prices on, among other things, valuation matrices which may
incorporate dealer-supplied valuations, electronic data processing techniques
and an evaluation of the yield curve as of approximately 3 p.m. New York time.
The fund's investment adviser performs certain checks on these prices prior to
calculation of the fund's net asset value.

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.

American Funds Insurance Series -- Page 67
<PAGE>

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.

The valuation committee has adopted guidelines and procedures (consistent with
SEC rules and guidance) to consider certain relevant principles and factors 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. Fair valuations and valuations of investments that are not
actively trading involve judgment and may differ materially from valuations that
would have been used had greater market activity occurred. The valuation
committee considers relevant indications of value that are reasonably and timely
available to it in determining the "fair value" to be assigned to a particular
security such as 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 equity holdings 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).

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.

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.

American Funds Insurance Series -- Page 68
<PAGE>

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, net income from certain
publicly traded partnerships 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 any
one issuer (other than U.S. government securities or the securities of other
regulated investment companies), two or more issuers which the fund controls and
which are determined to be engaged in the same or similar trades or businesses
or the securities of certain publicly traded partnerships.

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. 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.

American Funds Insurance Series -- Page 69
<PAGE>

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 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.

The price of a bond purchased after its original issuance may reflect
market discount which, depending on the particular circumstances, may
affect the tax character and amount of income required to be recognized by
a fund holding the bond. In determining whether a bond is purchased with
market discount, certain de minimis rules apply.

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,

American Funds Insurance Series -- Page 70
<PAGE>

may reduce or eliminate these foreign taxes. Some foreign countries impose
taxes on capital gains with respect to investments by foreign investors.

CAPITAL GAIN DISTRIBUTIONS -- The funds also intend to distribute their net
capital gain each year. The funds' net capital gain is 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 carryforward 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 71
<PAGE>

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, One Lincoln Street,
Boston, MA 02111, 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 6455 Irvine Center Drive, Irvine, CA 92618.
American Funds Service Company was paid a fee of $1,000 for Class 1 shares,
$51,000 for Class 2 shares and $14,000 for Class 3 shares for the 2008 fiscal
year.

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 audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as
stated in their report appearing herein. Such financial statements have been so
included in reliance upon the report of such firm given upon their authority 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 -- Bingham McCutchen LLP, 355 South Grand Avenue,
Suite 4400, Los Angeles, CA 90071, serves as independent legal counsel
("counsel") for the Series and for trustees who are not interested persons (as
defined by the 1940 Act) of the Series. A determination with respect to the
independence of the Series' counsel will be made at least annually by the
independent trustees of the Series, as prescribed by the 1940 Act and the
related rules.

PROSPECTUSES AND REPORTS TO SHAREHOLDERS -- The Series' fiscal year ends on
December 31. Contract owners are provided updated summary prospectuses annually
and at least semi-annually with reports showing the funds' investment portfolios
or summary investment portfolios, financial statements and other information.
The Series' annual financial statements are audited by the independent
registered public accounting firm of PricewaterhouseCoopers LLP.

Shareholders may also elect to receive updated summary prospectuses, annual
reports and semi-annual reports electronically by signing up for electronic
delivery on our website americanfunds.com. Upon electing the electronic delivery
of updated summary prospectuses and other reports, a shareholder will no longer
automatically receive such documents in paper form by mail. A shareholder who
elects electronic delivery is able to cancel this service at any time and return
to receiving updated summary prospectuses and other reports in paper form by
mail.

American Funds Insurance Series -- Page 72
<PAGE>

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.

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 (now the Financial Industry
Regulatory Authority, or FINRA) filed an administrative complaint against
American Funds Distributors, Inc. The complaint alleges violations of certain
NASD rules by 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
August 30, 2006, a FINRA Hearing Panel ruled against American Funds
Distributors, Inc. and imposed a $5 million fine. On April 30, 2008, FINRA's
National Adjudicatory Council affirmed the decision by FINRA's Hearing Panel.
American Funds Distributors, Inc. has appealed this decision to the Securities
and Exchange Commission.

The investment adviser and American Funds Distributors, Inc. believes that the
likelihood that this matter could have a material adverse effect on the funds or
on the ability of the investment adviser or American Funds Distributors, Inc. to
perform their contracts with the funds is remote. In addition, class action
lawsuits have been filed in the U.S. District Court, Central District of
California, relating to this and other matters. Although most of the claims in
the suit were dismissed with prejudice, an amended complaint relating to
management fees has been filed. The investment adviser believes that these suits
are without merit and will defend itself vigorously.

American Funds Insurance Series -- Page 73
<PAGE>

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.

REDEMPTION OF SHARES -- While payment of redemptions normally will be in cash,
the series' declaration of trust permits payment of the redemption price wholly
or partly with portfolio securities or other fund assets under conditions and
circumstances determined by the series' board of trustees. For example,
redemptions could be made in this manner if the board determined that making
payments wholly in cash over a particular period would be unfair and/or harmful
to other series shareholders.

American Funds Insurance Series -- Page 74
<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 75
<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 76
<PAGE>

C
A C rating is assigned to obligations that are currently highly vulnerable to
nonpayment, obligations that have payment arrearages allowed by the terms of the
documents, or obligations of an issuer that is the subject of a bankruptcy
petition or similar action which have not experienced a payment default. Among
others, the C rating may be assigned to subordinated debt, preferred stock or
other obligations on which cash payments have been suspended in accordance with
the instrument's terms.

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.

American Funds Insurance Series -- Page 77
<PAGE>

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 78

....

[logo – American Funds®]

American Funds Insurance Series®

Global Discovery Fund

Investment portfolio

December 31, 2008

Common stocks — 88.53%	Shares			Value (000)

SOFTWARE & SERVICES — 17.84%
Microsoft Corp.		186,800		$	3,631
Yahoo! Inc.1		285,000			3,477
Global Payments Inc.		95,000			3,115
Google Inc., Class A1		10,000			3,076
SAP AG2		80,300			2,885
Oracle Corp.1		125,000			2,216
MasterCard Inc., Class A		15,000			2,144
Wirecard AG1,2		322,500			1,917
Autodesk, Inc.1		60,000			1,179
Tencent Holdings Ltd.2		151,600			987
United Internet AG2		108,000			969
eBay Inc.1		60,000			838
Moneysupermarket.com Group PLC2		235,000			183
					26,617


TECHNOLOGY HARDWARE & EQUIPMENT — 7.91%
Apple Inc.1		40,000			3,414
Cisco Systems, Inc.1		165,000			2,690
Delta Electronics, Inc.2		649,500			1,266
Logitech International SA1		70,000			1,091
EMC Corp.1		95,136			996
Avid Technology, Inc.1		85,000			927
HOYA CORP.2		45,200			783
Advantech Co., Ltd.2		430,720			632
					11,799


MEDIA — 7.61%
Time Warner Inc.		245,000			2,465
British Sky Broadcasting Group PLC2		305,000			2,146
Vivendi SA2		40,000			1,306
Daily Mail and General Trust PLC, Class A, nonvoting2		280,000			1,105
Walt Disney Co.		48,000			1,089
Omnicom Group Inc.		40,000			1,077
Scripps Networks Interactive, Inc., Class A		44,200			972
Grupo Televisa, SAB, ordinary participation certificates (ADR)		44,000			657
CTC Media, Inc.1		85,000			408
Next Media Ltd.2		1,157,000			135
					11,360


PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES — 7.50%
Teva Pharmaceutical Industries Ltd. (ADR)		122,000			5,194
Novo Nordisk A/S, Class B2		46,000			2,348
Vertex Pharmaceuticals Inc.1		50,000			1,519
Richter Gedeon NYRT2		5,500			828
Illumina, Inc.1		25,000			651
UCB SA2		19,654			642
					11,182


RETAILING — 5.84%
O’Reilly Automotive, Inc.1		69,200			2,127
Bed Bath & Beyond Inc.1		65,000			1,652
Tractor Supply Co.1		45,000			1,626
Best Buy Co., Inc.		43,000			1,209
Lowe’s Companies, Inc.		50,000			1,076
Amazon.com, Inc.1		20,000			1,026
					8,716


BANKS — 5.40%
Banco Bradesco SA, preferred nominative		146,500			1,431
M&T Bank Corp.		22,000			1,263
HSBC Holdings PLC (Hong Kong)2		110,000			1,056
PT Bank Mandiri (Persero) Tbk2		5,000,000			957
BOC Hong Kong (Holdings) Ltd.2		760,000			868
Banco Bilbao Vizcaya Argentaria, SA2		45,600			561
Grupo Financiero Banorte, SAB de CV, Series O		280,000			505
BNP Paribas SA2		11,110			470
Banco Santander, SA2		36,947			357
Siam City Bank PCL1,2		1,045,000			216
Mizuho Financial Group, Inc.2		75			213
Malayan Banking Bhd.2		95,625			142
Hypo Real Estate Holding AG2		5,127			23
					8,062


UTILITIES — 4.82%
Xinao Gas Holdings Ltd.2		2,610,000			2,775
Iberdrola Renovables, SA Unipersonal1,2		550,000			2,384
Veolia Environnement2		64,700			2,035
					7,194


HEALTH CARE EQUIPMENT & SERVICES — 4.50%
Inverness Medical Innovations, Inc.1		87,000			1,645
American Medical Systems Holdings, Inc.1		169,000			1,519
Hologic, Inc.1		80,000			1,046
Beckman Coulter, Inc.		20,000			879
Varian Medical Systems, Inc.1		23,200			813
Zimmer Holdings, Inc.1		20,000			808
					6,710


ENERGY — 4.32%
Schlumberger Ltd.		82,200			3,480
Smith International, Inc.		50,000			1,144
WorleyParsons Ltd.2		100,000			1,016
Baker Hughes Inc.		25,000			802
					6,442


COMMERCIAL & PROFESSIONAL SERVICES — 3.83%
Cintas Corp.		85,000			1,975
Randstad Holding NV2		80,000			1,628
Monster Worldwide, Inc.1		100,000			1,209
Downer EDI Ltd.2		327,173			898
					5,710


TRANSPORTATION — 3.68%
Ryanair Holdings PLC (ADR)1		186,400			5,421
Grupo Aeroportuario del Pacífico, SAB de CV, Class B (ADR)		2,700			62
					5,483


TELECOMMUNICATION SERVICES — 3.11%
MTN Group Ltd.2		100,000			1,171
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B2		1,574,000			1,029
Philippine Long Distance Telephone Co. (ADR)		9,100			427
Philippine Long Distance Telephone Co.2		9,100			419
OJSC Mobile TeleSystems (ADR)		25,000			667
Singapore Telecommunications Ltd.2		350,000			625
LG Telecom Ltd.2		38,855			305
					4,643


CAPITAL GOODS — 2.74%
Fluor Corp.		40,000			1,795
Max India Ltd.1,2		500,000			1,212
Wolseley PLC2		160,000			902
Boart Longyear Ltd.2,3		1,226,640			176
					4,085


INSURANCE — 2.55%
Sampo Oyj, Class A2		125,000			2,341
China Life Insurance Co. Ltd., Class H2		398,000			1,227
American International Group, Inc.		150,000			235
					3,803


DIVERSIFIED FINANCIALS — 1.28%
State Street Corp.		25,000			983
American Express Co.		50,000			928
					1,911


CONSUMER DURABLES & APPAREL — 1.23%
China Dongxiang (Group) Co., Ltd.2		3,760,000			918
GEOX SpA2		105,050			646
Burberry Group PLC2		84,000			273
					1,837


SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 1.16%
NVIDIA Corp.1		145,000			1,170
Siliconware Precision Industries Co., Ltd.2		609,647			534
Sunplus Technology Co. Ltd.2		62,573			25
					1,729


CONSUMER SERVICES — 0.95%
Las Vegas Sands Corp.1		150,000			890
OPAP (Greek Organization of Football Prognostics) SA2		18,490			533
					1,423


FOOD & STAPLES RETAILING — 0.21%
Wal-Mart de México, SAB de CV, Series V		118,600			318


REAL ESTATE — 0.14%
AEON Mall Co., Ltd.2		11,000			212


MISCELLANEOUS — 1.91%
Other common stocks in initial period of acquisition					2,854


Total common stocks (cost: $210,703,000)					132,090


				Value
Convertible securities — 0.77%	Shares				(000	)

DIVERSIFIED FINANCIALS — 0.75%
Citigroup Inc., Series D, 7.00% noncumulative convertible preferred2,3		38,000		$	1,117


MISCELLANEOUS — 0.02%
Other convertible securities in initial period of acquisition					25


Total convertible securities (cost: $2,121,000)					1,142


	Principal amount
Short-term securities — 10.04%		(000	)

Lowe’s Cos. Inc. 0.35% due 3/16/2009	$	3,500			3,491
AT&T Inc. 0.33% due 3/9/20094		2,500			2,499
Freddie Mac 0.90% due 1/14/2009		2,000			1,999
Brown-Forman Corp. 0.65% due 2/11/20094		2,000			1,999
Walt Disney Co. 1.05% due 2/17/2009		1,500			1,499
Jupiter Securitization Co., LLC 0.35% due 1/12/20094		1,400			1,400
Ranger Funding Co. LLC 0.45% due 1/7/20094		1,100			1,100
Caterpillar Financial Services Corp. 0.95% due 1/8/2009		1,000			1,000

Total short-term securities (cost: $14,991,000)					14,987


Total investment securities (cost: $227,815,000)					148,219
Other assets less liabilities					985

Net assets				$	149,204

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Security did not produce income during the last 12 months.

2	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $47,396,000, which represented 31.77% of the net assets of the fund.

3	Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition date	Cost (000)		Value (000)		Percent of net assets

Boart Longyear Ltd.	4/4/2007	$	1,857	$	176		.12	%
Citigroup Inc., Series D, 7.00% noncumulative convertible preferred	1/15/2008		1,900	$	1,117		.75

Total restricted securities		$	3,757	$	1,293		.87	%

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $6,998,000, which represented 4.69% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

Global Growth Fund

Summary investment portfolio, December 31, 2008

Largest individual equity securities	Percent of net assets

Koninklijke KPN		1.98	%
Novo Nordisk		1.92
Microsoft		1.90
Samsung Electronics		1.83
General Electric		1.45
Roche		1.36
Nokia		1.33
UCB		1.33
Deutsche Post		1.25
America Movil		1.24

							Percent
				Value			of net
Common stocks - 81.21%	Shares				(000	)	assets

Information technology - 15.95%
Microsoft Corp.		3,795,000		$	73,775			1.90	%
Samsung Electronics Co., Ltd. (1)		196,055			71,053			1.83
Nokia Corp. (1)		1,986,500			30,873
Nokia Corp. (ADR)		1,334,000			20,810			1.33
Cisco Systems, Inc. (2)		2,721,500			44,360			1.15
Oracle Corp. (2)		2,250,000			39,892			1.03
Google Inc., Class A (2)		111,200			34,211			.88
STMicroelectronics NV (1)		4,954,000			33,260			.86
International Business Machines Corp.		350,000			29,456			.76
SAP AG (1)		510,300			18,334
SAP AG (ADR)		200,000			7,244			.66
Other securities					214,598			5.55
					617,866			15.95

Health care - 9.94%
Novo Nordisk A/S, Class B (1)		1,455,200			74,267			1.92
Roche Holding AG (1)		343,500			52,548			1.36
UCB SA (1)		1,575,677			51,453			1.33
Other securities					206,617			5.33
					384,885			9.94

Consumer discretionary - 9.31%
Toyota Motor Corp. (1)		1,132,900			37,001			.96
Honda Motor Co., Ltd. (1)		1,551,800			33,580			.87
Virgin Media Inc. (2)		4,860,000			24,251			.63
Other securities					265,637			6.85
					360,469			9.31

Consumer staples - 8.27%
Unilever NV, depository receipts (1)		1,766,000			42,897			1.11
Avon Products, Inc.		1,521,200			36,554			.94
Anheuser-Busch InBev NV (1)		1,195,424			27,784			.72
Diageo PLC (1)		1,870,000			26,310			.68
Procter & Gamble Co.		135,000			8,346			.22
Other securities					178,433			4.60
					320,324			8.27

Telecommunication services - 7.86%
Koninklijke KPN NV (1)		5,275,830			76,694			1.98
América Móvil, SAB de CV, Series L (ADR)		1,547,000			47,942			1.24
Telefónica, SA (1)		1,670,799			37,545			.97
Vodafone Group PLC (1)		12,887,250			26,240			.68
Qwest Communications International Inc.		7,000,000			25,480			.66
AT&T Inc.		800,000			22,800			.59
Other securities					67,842			1.74
					304,543			7.86

Industrials - 7.71%
General Electric Co.		3,470,455			56,221			1.45
Deutsche Post AG (1)		2,858,700			48,484			1.25
Ryanair Holdings PLC (ADR) (2)		1,111,300			32,317			.84
United Technologies Corp.		492,000			26,371			.68
KBR, Inc.		1,605,000			24,396			.63
Other securities					110,877			2.86
					298,666			7.71

Financials - 6.16%
Macquarie Group Ltd. (1)		2,027,300			42,033			1.09
Allianz SE (1)		292,000			31,397			.81
AXA SA (1)		1,088,000			24,317			.63
JPMorgan Chase & Co.		700,000			22,071			.57
Other securities					118,936			3.06
					238,754			6.16

Energy - 4.67%
TOTAL SA (1)		590,000			32,245			.83
Reliance Industries Ltd. (1)		938,000			23,965			.62
Royal Dutch Shell PLC, Class B (1)		574,666			14,628
Royal Dutch Shell PLC, Class B (ADR)		139,643			7,182			.56
Other securities					102,826			2.66
					180,846			4.67

Utilities - 3.42%
RWE AG (1)		317,500			28,613			.74
GDF Suez (1)		553,000			27,456			.71
Other securities					76,409			1.97
					132,478			3.42

Materials - 3.08%
Sigma-Aldrich Corp.		659,649			27,864			.72
Other securities					91,267			2.36
					119,131			3.08

MISCELLANEOUS - 4.84%
Other common stocks in initial period of acquisition					187,478			4.84


Total common stocks (cost: $4,247,440,000)					3,145,440			81.21




Preferred stocks - 0.05%

Financials - 0.05%
Other Securities					2,111			.05


Total preferred stocks (cost: $2,117,000)					2,111			.05



	Principal amount
Short-term securities - 18.36%		(000	)


Federal Home Loan Bank 0.25%-1.00% due 2/9-3/13/2009	$	110,300			110,252			2.85
Freddie Mac 0.75%-2.15% due 1/16-2/23/2009		57,065			57,045			1.47
Canada Government 0.50% due 4/6/2009		40,000			39,973			1.03
Procter & Gamble International Funding S.C.A. 1.15%-1.55% due 1/6-1/15/2009 (3)		35,953			35,941			.93
Denmark (Kingdom of) 0.88% due 2/6/2009		32,800			32,770			.85
AT&T Inc. 0.40%-1.15% due 1/7-1/20/2009 (3)		31,700			31,693			.82
Park Avenue Receivables Co., LLC 1.40% due 1/5/2009 (3)		29,300			29,294			.76
BP Capital Markets PLC 0.65%-0.85% due 3/11-4/8/2009 (3)		28,250			28,234			.73
Total Capital Canada Ltd. 0.65%-1.05% due 1/9-2/17/2009 (3)		27,700			27,668			.71
Shell International Finance BV 0.40% due 4/30/2009 (3)		27,100			27,077			.70
Nestlé Capital Corp. 0.65% due 2/10/2009 (3)		24,800			24,778			.64
Rabobank USA Financial Corp. 0.85% due 1/9/2009		24,000			23,995			.62
Calyon North America Inc. 0.93% due 2/27/2009		23,700			23,665			.61
Unilever Capital Corp. 0.40%-0.80% due 4/13-4/21/2009 (3)		12,000			11,986			.31
Other securities					206,646			5.33
Total short-term securities (cost: $710,752,000)					711,017			18.36


Total investment securities (cost: $4,960,309,000)					3,858,568			99.62
Other assets less liabilities					14,829			.38

Net assets				$	3,873,397			100.00	%



"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. One of these securities (with a
value of $1,360,000, which represented .04% of the net assets of the fund) may be subject to legal or contractual restrictions on resale.

Investments in affiliates

A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. The value of the fund's affiliated-company holding is included in "Other securities" under its respective industry sector in the preceding summary investment portfolio. Further details on this holding and related transactions during the year ended December 31, 2008, appear below.

	Beginning shares		Additions		Reductions		Ending shares		Dividend income (000	)		Value of affiliate at 12/31/2008 (000	)

AMG Advanced Metallurgical Group NV (1) (2)		-		1,600,800		-		1,600,800	-		$	15,735

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.

(1) Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in "Miscellaneous" and "Other securities," was $1,905,130,000, which represented 49.18% of the net assets of the fund.

(2) Security did not produce income during the last 12 months.

(3) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $301,763,000, which represented 7.79% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

See notes to Financial Statements

Global Growth Fund

Investment portfolio

December 31, 2008

Common stocks — 81.21%	Shares			Value (000)

INFORMATION TECHNOLOGY — 15.95%
Microsoft Corp.		3,795,000		$	73,775
Samsung Electronics Co., Ltd.1		196,055			71,053
Nokia Corp.1		1,986,500			30,873
Nokia Corp. (ADR)		1,334,000			20,810
Cisco Systems, Inc.2		2,721,500			44,360
Oracle Corp.2		2,250,000			39,892
Google Inc., Class A2		111,200			34,211
STMicroelectronics NV1		4,954,000			33,260
International Business Machines Corp.		350,000			29,456
SAP AG1		510,300			18,334
SAP AG (ADR)		200,000			7,244
ASML Holding NV (New York registered)		1,031,044			18,631
ASML Holding NV1		111,111			1,988
Citizen Holdings Co., Ltd.1		5,659,800			20,510
Murata Manufacturing Co., Ltd.1		480,600			18,798
Taiwan Semiconductor Manufacturing Co. Ltd.1		9,092,214			12,469
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)		717,065			5,665
Yahoo! Inc.2		1,433,600			17,490
Texas Instruments Inc.		1,050,000			16,296
Intel Corp.		1,058,000			15,510
Hewlett-Packard Co.		415,000			15,060
Canon, Inc.1		379,000			11,871
Altera Corp.		550,000			9,190
HTC Corp.1		806,000			8,146
Hon Hai Precision Industry Co., Ltd.1		3,476,095			6,866
KLA-Tencor Corp.		287,921			6,274
Tyco Electronics Ltd.		366,250			5,937
Agilent Technologies, Inc.2		350,000			5,470
LDH Corp.1,2		64,000			5,283
EMC Corp.2		410,500			4,298
Dell Inc.2		400,000			4,096
Venture Corp. Ltd.1		1,300,000			3,990
Chartered Semiconductor Manufacturing Ltd1,2		6,009,000			760
					617,866


HEALTH CARE — 9.94%
Novo Nordisk A/S, Class B1		1,455,200			74,267
Roche Holding AG1		343,500			52,548
UCB SA1		1,575,677			51,453
Merck & Co., Inc.		679,600			20,660
Bayer AG, non-registered shares1		349,300			20,570
UnitedHealth Group Inc.		725,500			19,298
Hospira, Inc.2		630,000			16,897
Pharmaceutical Product Development, Inc.		544,350			15,792
Nobel Biocare Holding AG1		714,070			14,536
Aetna Inc.		500,000			14,250
Stryker Corp.		355,000			14,182
Sonic Healthcare Ltd.1		1,313,003			13,635
Smith & Nephew PLC1		2,052,000			13,168
Shire Ltd. (ADR)		250,000			11,195
Pfizer Inc		600,000			10,626
ResMed Inc2		267,000			10,007
RHÖN-KLINIKUM AG, non-registered shares1		301,600			7,267
Intuitive Surgical, Inc.2		35,700			4,534
					384,885


CONSUMER DISCRETIONARY — 9.31%
Toyota Motor Corp.1		1,132,900			37,001
Honda Motor Co., Ltd.1		1,551,800			33,580
Virgin Media Inc.2		4,860,000			24,251
OPAP (Greek Organization of Football Prognostics) SA1		771,800			22,259
Esprit Holdings Ltd.1		3,600,500			20,525
Yamada Denki Co., Ltd.1		290,500			20,123
News Corp., Class A		2,083,407			18,938
Yamaha Corp.1		1,863,500			17,240
GOME Electrical Appliances Holding Ltd.1		154,457,000			16,901
McDonald’s Corp.		250,000			15,548
Yue Yuen Industrial (Holdings) Ltd.1		7,700,000			15,260
H & M Hennes & Mauritz AB, Class B1		376,000			14,810
Target Corp.		370,000			12,776
adidas AG1		327,000			12,608
NIKE, Inc., Class B		160,000			8,160
Lagardère Groupe SCA1		200,000			8,138
Harman International Industries, Inc.		440,000			7,361
Bosideng International Holdings Ltd.1		71,950,000			6,812
Best Buy Co., Inc.		235,000			6,606
Carphone Warehouse Group PLC1		4,925,000			6,468
Aristocrat Leisure Ltd.1		2,178,931			6,141
Burberry Group PLC1		1,870,000			6,066
Carnival Corp., units		225,000			5,472
Suzuki Motor Corp.1		313,000			4,318
Nikon Corp.1		301,000			3,598
Liberty Media Corp., Liberty Interactive, Series A2		1,036,387			3,234
Kesa Electricals PLC1		2,473,400			3,199
Garmin Ltd.		89,500			1,716
Multi Screen Media Private Ltd.1,2,3		16,148			1,360
					360,469


CONSUMER STAPLES — 8.27%
Unilever NV, depository receipts1		1,766,000			42,897
Avon Products, Inc.		1,521,200			36,554
Anheuser-Busch InBev NV1		1,195,424			27,784
Diageo PLC1		1,870,000			26,310
Beiersdorf AG1		386,500			23,050
Pernod Ricard Co.1		299,750			22,283
Coca-Cola Co.		360,000			16,297
Cia. de Bebidas das Américas — AmBev, preferred nominative (ADR)		246,000			10,900
Cia. de Bebidas das Américas — AmBev, ordinary nominative (ADR)		44,000			1,595
Woolworths Ltd.1		608,483			11,581
PepsiCo, Inc.		200,000			10,954
SABMiller PLC1		600,000			10,218
Cosan Ltd., Class A2		2,600,000			8,996
Groupe Danone SA1		145,000			8,773
Procter & Gamble Co.		135,000			8,346
C&C Group PLC1		4,000,000			8,119
Nestlé SA1		200,000			7,834
Tesco PLC1		1,430,000			7,535
METRO AG1		170,608			6,933
L’Oréal SA1		64,303			5,602
Philip Morris International Inc.		125,000			5,439
Wal-Mart de México, SAB de CV, Series V (ADR)1		200,000			5,360
Kimberly-Clark de México, SAB de CV, Class A		1,540,000			5,081
Altria Group, Inc.		125,000			1,883
					320,324


TELECOMMUNICATION SERVICES — 7.86%
Koninklijke KPN NV1		5,275,830			76,694
América Móvil, SAB de CV, Series L (ADR)		1,547,000			47,942
Telefónica, SA1		1,670,799			37,545
Vodafone Group PLC1		12,887,250			26,240
Qwest Communications International Inc.		7,000,000			25,480
AT&T Inc.		800,000			22,800
Telekom Austria AG, non-registered shares1		1,445,200			20,941
Telecom Italia SpA1		6,595,500			10,755
Telecom Italia SpA, nonvoting1		6,921,500			7,743
SOFTBANK CORP.1		760,000			13,733
NTT DoCoMo, Inc.1		5,000			9,835
Telstra Corp. Ltd.1		1,770,000			4,835
					304,543


INDUSTRIALS — 7.71%
General Electric Co.		3,470,455			56,221
Deutsche Post AG1		2,858,700			48,484
Ryanair Holdings PLC (ADR)2		1,111,300			32,317
United Technologies Corp.		492,000			26,371
KBR, Inc.		1,605,000			24,396
Schneider Electric SA1		244,000			18,271
Vestas Wind Systems A/S1,2		238,870			14,238
Siemens AG1		176,200			13,230
Randstad Holding NV1		517,000			10,522
European Aeronautic Defence and Space Co. EADS NV1		500,000			8,462
Tyco International Ltd.		366,250			7,911
FANUC LTD1		100,000			7,096
Michael Page International PLC1		1,995,000			6,280
ABB Ltd1,2		355,000			5,318
Tata Motors Ltd.1		1,535,000			5,129
Macquarie Infrastructure Group1		4,000,000			4,894
United Parcel Service, Inc., Class B		75,000			4,137
Finmeccanica SpA1		235,000			3,609
ALSTOM SA1		30,066			1,780
					298,666


FINANCIALS — 6.16%
Macquarie Group Ltd.1		2,027,300			42,033
Allianz SE1		292,000			31,397
AXA SA1		1,088,000			24,317
JPMorgan Chase & Co.		700,000			22,071
Banco Santander, SA1		1,860,148			17,997
Prudential PLC1		2,609,000			16,066
HSBC Holdings PLC (United Kingdom)1		1,500,000			14,521
Industrial and Commercial Bank of China Ltd., Class H1		19,500,000			10,364
AFLAC Inc.		215,000			9,856
Mizuho Financial Group, Inc.1		3,000			8,510
Türkiye Garanti Bankasi AS1,2		4,800,000			8,242
Société Générale1		138,800			7,047
Türkiye Is Bankasi AS, Class C1		2,405,000			6,505
Bumiputra-Commerce Holdings Bhd.1		3,750,000			6,405
Erste Bank der oesterreichischen Sparkassen AG1		262,180			6,161
Bank of Nova Scotia		140,000			3,827
Ayala Land, Inc.1		19,300,000			2,676
ING Groep NV, depository receipts1		72,413			759
					238,754


ENERGY — 4.67%
Petróleo Brasileiro SA — Petrobras, ordinary nominative (ADR)		900,000			22,041
Petróleo Brasileiro SA — Petrobras, preferred nominative (ADR)		560,000			11,430
TOTAL SA1		590,000			32,245
Reliance Industries Ltd.1		938,000			23,965
Chevron Corp.		300,000			22,191
Royal Dutch Shell PLC, Class B1		574,666			14,628
Royal Dutch Shell PLC, Class B (ADR)		139,643			7,182
Canadian Natural Resources, Ltd.		280,700			11,230
Tenaris SA (ADR)		465,000			9,756
Imperial Oil Ltd.		257,928			8,677
Eni SpA1		300,000			7,126
StatoilHydro ASA1		366,435			6,075
OAO Gazprom (ADR)1		300,000			4,300
					180,846


UTILITIES — 3.42%
RWE AG1		317,500			28,613
GDF Suez1		553,000			27,456
Veolia Environnement1		598,463			18,829
E.ON AG1		428,400			17,366
CLP Holdings Ltd.1		2,430,000			16,523
Public Power Corp. SA1		926,700			14,917
Fortum Oyj1		407,462			8,774
					132,478


MATERIALS — 3.08%
Sigma-Aldrich Corp.		659,649			27,864
AMG Advanced Metallurgical Group NV1,2,4		1,600,800			15,735
JSC Uralkali (GDR)1		1,226,587			10,987
JSC Uralkali (GDR)1,5		160,015			1,433
Potash Corp. of Saskatchewan Inc.		151,000			11,056
Akzo Nobel NV1		258,000			10,666
First Quantum Minerals Ltd.		452,800			6,544
UPM-Kymmene Oyj1		490,000			6,228
Cia. Vale do Rio Doce, Class A, preferred nominative (ADR)		580,000			6,177
Weyerhaeuser Co.		200,000			6,122
Holcim Ltd.1		100,000			5,722
Nitto Denko Corp.1		273,000			5,233
Aracruz Celulose SA, Class B, preferred nominative (ADR)		179,523			2,025
Central African Mining & Exploration Co. PLC1,2		57,039,626			1,755
OAO Severstal (GDR)1		574,600			1,584
					119,131


MISCELLANEOUS — 4.84%
Other common stocks in initial period of acquisition					187,478


Total common stocks (cost: $4,247,440,000)					3,145,440



Preferred stocks — 0.05%	Shares

FINANCIALS — 0.05%
SMFG Capital USD 3 Ltd. 9.50%5,6		2,200,000			2,027
SMFG Capital USD 2 Ltd. 8.75% noncumulative5		100,000			84

Total preferred stocks (cost: $2,117,000)					2,111



	Principal amount
Short-term securities — 18.36%		(000	)

Federal Home Loan Bank 0.25%–1.00% due 2/9–3/13/2009	$	110,300			110,252
Freddie Mac 0.75%–2.15% due 1/16–2/23/2009		57,065			57,045
Canada Government 0.50% due 4/6/2009		40,000			39,973
Procter & Gamble International Funding S.C.A. 1.15%–1.55% due 1/6–1/15/20095		35,953			35,941
Denmark (Kingdom of) 0.88% due 2/6/2009		32,800			32,770
AT&T Inc. 0.40%–1.15% due 1/7–1/20/20095		31,700			31,693
Park Avenue Receivables Co., LLC 1.40% due 1/5/20095		29,300			29,294
BP Capital Markets PLC 0.65%–0.85% due 3/11–4/8/20095		28,250			28,234
Total Capital Canada Ltd. 0.65%–1.05% due 1/9–2/17/20095		27,700			27,668
Shell International Finance BV 0.40% due 4/30/20095		27,100			27,077
Nestlé Capital Corp. 0.65% due 2/10/20095		24,800			24,778
Rabobank USA Financial Corp. 0.85% due 1/9/2009		24,000			23,995
Calyon North America Inc. 0.93% due 2/27/2009		23,700			23,665
Société Générale North America, Inc. 0.11% due 1/2/2009		20,000			20,000
KfW 1.15% due 1/8/20095		20,000			19,995
Export Development Canada 1.05% due 5/8/2009		20,000			19,982
U.S. Treasury Bills 1.89% due 2/19/2009		19,900			19,900
Bank of Nova Scotia 1.25% due 2/11/2009		18,700			18,663
International Bank for Reconstruction and Development 0.75% due 1/20/2009		17,600			17,593
Caisse d’Amortissesment de la Dette Sociale 1.20% due 2/9/2009		16,300			16,264
BASF AG 2.00% due 2/10/20095		15,000			14,969
Fannie Mae 0.20%–0.27% due 2/18–4/15/2009		12,700			12,696
Unilever Capital Corp. 0.40%–0.80% due 4/13–4/21/20095		12,000			11,986
Ranger Funding Co. LLC 0.25% due 1/26/20095		10,900			10,898
Novartis Finance Corp. 0.25% due 2/19/20095		10,300			10,296
General Dynamics Corp. 0.15% due 1/15/20095		9,500			9,499
Thunder Bay Funding, LLC 0.80% due 1/15/20095		8,300			8,297
Private Export Funding Corp. 1.05% due 2/5/20095		5,000			4,995
Emerson Electric Co. 0.25% due 3/17/20095		2,600			2,599

Total short-term securities (cost: $710,752,000)					711,017


Total investment securities (cost: $4,960,309,000)					3,858,568
Other assets less liabilities					14,829

Net assets				$	3,873,397

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,”

	was $1,905,130,000, which represented 49.18% of the net assets of the fund.
2	Security did not produce income during the last 12 months.

3	Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 9/6/2000–4/18/2002 at a cost of $6,378,000) may be subject to legal or contractual restrictions on resale.

4	Represents an affiliated company as defined under the Investment Company Act of 1940.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $301,763,000, which represented 7.79% of the net assets of the fund.

6	Coupon rate may change periodically.

Key to abbreviations

ADR = American Depositary Receipts

GDR = Global Depositary Receipts

Global Small Capitalization Fund

Summary investment portfolio, December 31, 2008

Largest individual equity securities	Percent of net assets

Jumbo		2.31	%
Myriad Genetics		1.87
Xinao Gas Holdings		1.68
Volcano Corp.		1.62
NuVasive		1.23
Masimo		1.13
Kingboard Chemical Holdings		1.01
Fourlis		.96
ABIOMED		.96
Heartland Payment Systems		.85

							Percent
				Value			of net
Common stocks - 81.03%	Shares				(000	)	assets

Health care - 15.28%
Myriad Genetics, Inc. (1)		578,800		$	38,351			1.87	%
Volcano Corp. (1)		2,215,834			33,238			1.62
NuVasive, Inc. (1)		728,200			25,232			1.23
Masimo Corp. (1)		780,000			23,267			1.13
ABIOMED, Inc. (1)		1,195,000			19,622			.96
Illumina, Inc. (1)		663,500			17,284			.84
Applera Corp., Celera Corp. (1)		1,112,500			12,382			.61
Cochlear Ltd. (2)		308,079			12,372			.60
Nakanishi Inc. (2)		188,900			11,932			.58
Integra LifeSciences Holdings Corp. (1)		325,000			11,560			.56
Greatbatch, Inc. (1)		405,200			10,722			.52
Other securities					97,766			4.76
					313,728			15.28

Industrials - 14.77%
International Container Terminal Services, Inc. (2)		47,285,000			12,926			.63
TrueBlue, Inc. (1)		1,297,000			12,412			.60
Hyunjin Materials Co., Ltd. (2)		617,736			11,332			.55
Pfeiffer Vacuum Technology AG (2)		168,000			11,152			.54
Flowserve Corp.		200,000			10,300			.50
TaeWoong Co., Ltd. (2)		165,000			10,211			.50
Other securities					235,070			11.45
					303,403			14.77

Information technology - 14.24%
Kingboard Chemical Holdings Ltd. (2)		11,482,000			20,779			1.01
Heartland Payment Systems, Inc.		1,000,000			17,500			.85
Hittite Microwave Corp. (1)		525,000			15,466			.75
Semtech Corp. (1)		1,170,000			13,186			.64
Intersil Corp., Class A		1,425,000			13,096			.64
Novell, Inc. (1)		3,358,800			13,066			.64
IAC/InterActiveCorp (1)		800,000			12,584			.61
Global Unichip Corp. (2)		3,439,956			12,325			.60
SkillSoft PLC (ADR) (1)		1,550,000			11,067			.54
Ultimate Software Group, Inc. (1)		720,000			10,512			.51
TIBCO Software Inc. (1)		2,005,800			10,410			.51
Other securities					142,457			6.94
					292,448			14.24

Consumer discretionary - 12.66%
Jumbo SA (2) (3)		7,800,170			47,401			2.31
Fourlis (2) (3)		2,804,285			19,641			.96
Lions Gate Entertainment Corp. (1)		2,750,000			15,125			.74
MGM Mirage, Inc. (1)		909,173			12,510			.61
Central European Media Enterprises Ltd., Class A (1)		500,000			10,860			.52
Other securities					154,460			7.52
					259,997			12.66

Financials - 5.27%
First Niagara Financial Group, Inc.		704,800			11,397			.55
Hopewell Holdings Ltd. (2)		3,200,000			10,585			.52
Other securities					86,237			4.20
					108,219			5.27

Materials - 4.25%
European Goldfields Ltd. (1) (2)		4,691,100			11,108			.54
Other securities					76,186			3.71
					87,294			4.25

Utilities - 3.20%
Xinao Gas Holdings Ltd. (2)		32,539,000			34,596			1.68
Manila Electric Co. (2)		11,037,280			12,802			.62
EDF Energies Nouvelles SA (2)		354,250			12,567			.61
Other securities					5,875			.29
					65,840			3.20

Energy - 3.18%
Concho Resources Inc. (1)		649,000			14,810			.72
Heritage Oil Ltd. (1) (2)		4,563,000			13,690			.67
BJ Services Co.		1,010,000			11,787			.57
Other securities					25,007			1.22
					65,294			3.18

Consumer staples - 2.59%
China Agri-Industries Holdings Ltd. (1) (2)		21,558,000			10,849			.53
Other securities					42,388			2.06
					53,237			2.59

Telecommunication services - 0.63%
Other securities					12,915			.63


Miscellaneous - 4.96%
Other common stocks in initial period of acquisition					101,877			4.96


Total common stocks (cost: $2,849,782,000)					1,664,252			81.03



Rights & warrants - 0.02%

Other - 0.02%
Other securities					496			.02

Total rights & warrants (cost: $3,023,000)					496			.02




Convertible securities - 0.10%

Other - 0.10%
Other securities					2,131			.10

Total convertible securities (cost: $4,428,000)					2,131			.10



	Principal
	amount
Short-term securities - 18.16%		(000	)
Fannie Mae 0.08%-0.85% due 1/27-7/14/2009	$	65,900			65,842			3.20
Freddie Mac 0.24%-0.95% due 1/14-3/23/2009		64,200			64,167			3.13
Federal Home Loan Bank 0.18%-0.60%due 1/28-3/24/2009		60,200			60,177			2.93
Nokia Corp. 0.90%-2.30% due 1/14-1/23/2009 (4)		24,100			24,084			1.17
Total Capital Canada Ltd. 0.25%-0.29% due 2/17-2/18/2009 (4)		23,500			23,474			1.14
Denmark (Kingdom of) 0.50%-0.90% due 2/18-3/12/2009		21,300			21,288			1.04
KfW 0.60% due 1/12/2009 (4)		11,900			11,898			.58
BNP Paribas Finance Inc. 0.44% due 2/27/2009		10,200			10,193			.50
Other securities					91,831			4.47

Total short-term securities (cost: $372,945,000)					372,954			18.16


Total investment securities (cost: $3,230,178,000)					2,039,833			99.31
Other assets less liabilities					13,986			.69

Net assets				$	2,053,819			100.00	%


"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
"Other securities" includes all issues that are not disclosed separately in the summary portfolio. Some of these securities
(with aggregate value of $14,807,000, which represented .72% of the net assets of the fund) may be subject to legal or contractual restrictions on resale.

Investments in affiliates

A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. The fund's affiliated holdings listed below are either shown in the preceding summary investment portfolio or included in the value of "Other securities" under their respective industry sectors. Further details on these holdings and related transactions during the year ended December 31, 2008, appear below.

												Value
									Dividend			of affiliates
	Beginning						Ending		income			at 12/31/08
	shares		Additions		Reductions		shares			(000	)		(000	)

Jumbo SA (2)		3,436,686		4,363,484		-		7,800,170	$	2,203		$	47,401
Fourlis (2)		2,010,385		793,900		-		2,804,285		1,260			19,641
Allied Gold Ltd. (1) (2)		19,548,500		3,166,774		-		22,715,274		-			6,845
Allied Gold Ltd. (GBP denominated) (1) (2)		-		3,800,000		-		3,800,000		-			1,155
Horizon North Logistics Inc. (1)		-		5,700,000		-		5,700,000		-			4,070
JVM Co., Ltd. (2)		316,500		95,000		-		411,500		51			3,817
Rambler Media Ltd. (1) (2)		718,400		206,494		-		924,894		-			2,829
African Minerals Ltd. (1) (2)		6,905,000		-		-		6,905,000		-			2,020
African Minerals Ltd. (1) (2) (4)		2,480,000		-		-		2,480,000		-			725
Airesis SA (1) (2) (5)		981,036		2,313,115		-		3,294,151		-			2,103
OSIM International Ltd. (1) (2)		28,920,000		-		-		28,920,000		-			1,414
OSIM International Ltd., rights, expire 2008		-		7,230,000		7,230,000		-		-			-
CallWave, Inc. (1)		1,348,700		-		-		1,348,700		-			688
Ondine Biopharma Corp. (1) (4)		2,620,000		-		-		2,620,000		-			108
Ondine Biopharma Corp. (1)		400,000		-		-		400,000		-			16
Ondine Biopharma Corp. (GBP denominated) (1) (2) (4)		490,000		-		-		490,000		-			14
Akeena Solar, Inc. (6)		-		1,625,000		1,625,000		-		-			-
Gemfields Resources PLC (1) (2) (4) (6)		4,816,000		3,333,333		-		8,149,333		-			-
Gemfields Resources PLC (1) (2) (6)		2,000,000		-		-		2,000,000		-			-
Lonrho PLC (1) (2) (6)		20,224,000		13,383,000		-		33,607,000		-			-
S&T Holdings Co. Ltd. (2) (6)		-		580,200		-		580,200		142			-
Southern Pacific Resource Corp. (6)		5,950,000		-		5,950,000		-		-			-
Volcano Corp. (1) (6)		1,625,000		1,285,878		695,044		2,215,834		-			-
									$	3,656		$	92,846

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.

(1) Security did not produce income during the last 12 months.

(2) Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities , including those in "Miscellaneous" and "Other securities," was $835,310,000, which represented 40.67% of the net assets of the fund.

(3) Represents an affiliated company as defined under the Investment Company Act of 1940.

(4) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $123,854,000, which represented 6.03% of the net assets of the fund.

(5) This security was an unaffiliated issuer in its initial period of acquisition at 12/31/2007; it was not publicly disclosed.

(6) Unaffiliated issuer at 12/31/2008.

Key to abbreviations

ADR = American Depositary Receipts

GBP = British pounds

See Notes to Financial Statements

Global Small Capitalization Fund

Investment portfolio

December 31, 2008

Common stocks — 81.03%	Shares			Value (000)

HEALTH CARE — 15.28%
Myriad Genetics, Inc.1		578,800		$	38,351
Volcano Corp.1		2,215,834			33,238
NuVasive, Inc.1		728,200			25,232
Masimo Corp.1		780,000			23,267
ABIOMED, Inc.1		1,195,000			19,622
Illumina, Inc.1		663,500			17,284
Applera Corp., Celera Corp.1		1,112,500			12,382
Cochlear Ltd.2		308,079			12,372
Nakanishi Inc.2		188,900			11,932
Integra LifeSciences Holdings Corp.1		325,000			11,560
Greatbatch, Inc.1		405,200			10,722
ResMed Inc1		250,000			9,370
Millipore Corp.1		175,000			9,016
Gerresheimer AG, non-registered shares2		249,612			6,860
Inverness Medical Innovations, Inc.1		362,500			6,855
EGIS Nyrt.2		126,600			6,729
CardioNet, Inc.1		256,000			6,310
DiaSorin SpA2		262,800			5,238
Array BioPharma Inc.1		1,115,000			4,516
Sonic Healthcare Ltd.2		432,860			4,495
Haemonetics Corp.1		78,400			4,430
Laboratorios Almirall, SA2		561,400			4,385
ZOLL Medical Corp.1		227,100			4,290
American Medical Systems Holdings, Inc.1		299,596			2,693
ArthroCare Corp.1		562,300			2,682
Beckman Coulter, Inc.		57,500			2,527
AS ONE Corp.2		126,500			2,444
Invacare Corp.		140,000			2,173
Simcere Pharmaceutical Group (ADR)1		300,000			2,151
Laboratorios Farmacéuticos ROVI, SA2		255,000			2,091
Hologic, Inc.1		140,000			1,830
Phase Forward Inc.1		140,000			1,753
Sirona Dental Systems, Inc.1		96,243			1,011
AtriCure, Inc.1		379,900			843
Ipca Laboratories Ltd.2		95,000			732
A&D Pharma Holdings NV (GDR)1,2		232,200			679
WuXi PharmaTech (Cayman) Inc. (ADR)1		69,500			555
QRxPharma Ltd.1,2		3,000,000			427
Top Glove Corp. Bhd.2		285,540			291
Arpida Ltd.1,2		369,967			252
Ondine Biopharma Corp.1,3,4		2,620,000			108
Ondine Biopharma Corp.1,4		400,000			16
Ondine Biopharma Corp. (GBP denominated)1,2,3,4		490,000			14
					313,728


INDUSTRIALS — 14.77%
International Container Terminal Services, Inc.2		47,285,000			12,926
TrueBlue, Inc.1		1,297,000			12,412
Hyunjin Materials Co., Ltd.2		617,736			11,332
Pfeiffer Vacuum Technology AG2		168,000			11,152
Flowserve Corp.		200,000			10,300
TaeWoong Co., Ltd.2		165,000			10,211
Monster Worldwide, Inc.1		735,000			8,886
GS Engineering & Construction Corp.2		175,000			8,310
Prysmian SpA2		525,000			8,266
Michael Page International PLC2		2,620,000			8,248
Sungkwang Bend Co., Ltd.2		748,934			7,636
Herman Miller, Inc.		542,500			7,069
Société BIC SA2		120,000			6,912
Pyeong San Co., Ltd.1,2		318,000			6,475
Navigant Consulting, Inc.1		400,000			6,348
Container Corp. of India Ltd.2		481,526			6,184
TK Corp.1,2		330,750			5,917
John Bean Technologies Corp.		714,689			5,839
Aboitiz Equity Ventures, Inc.2		48,700,000			5,751
Koninklijke BAM Groep NV2		602,000			5,427
Corrections Corporation of America1		330,300			5,404
Downer EDI Ltd.2		1,797,509			4,935
Bradken Ltd.2		2,445,000			4,806
MSC Industrial Direct Co., Inc., Class A		125,000			4,604
J&P-AVAX SA2		1,406,000			4,473
Hopewell Highway Infrastructure Ltd.2		7,896,000			4,404
ALL — América Latina Logística, units		1,000,000			4,323
Textron Inc.		301,400			4,180
Horizon North Logistics Inc.1,4		5,700,000			4,070
JVM Co., Ltd.2,4		411,500			3,817
Jain Irrigation Systems Ltd.2		525,000			3,807
BayWa AG2		101,450			3,678
Dalian Port (PDA) Co. Ltd., Class H2		13,700,000			3,487
Charter International PLC2		710,000			3,427
Uponor Oyj2		303,000			3,296
Hays PLC2		3,180,000			3,243
PRONEXUS INC.2		318,000			2,948
Goodpack Ltd.2		4,940,000			2,868
Advisory Board Co.1		124,304			2,772
Ellaktor SA2		460,000			2,768
S&T Holdings Co. Ltd.2		580,200			2,720
SIA Engineering Co. Ltd.2		1,929,000			2,708
Beacon Roofing Supply, Inc.1		194,600			2,701
Intertek Group PLC2		235,000			2,692
Mine Safety Appliances Co.		110,000			2,630
DCC PLC2		175,000			2,553
Houston Wire & Cable Co.		267,600			2,491
Danieli & C. Officine Meccaniche SpA, nonconvertible shares2		400,000			2,478
BELIMO Holding AG2		3,450			2,430
United Stationers Inc.1		70,000			2,344
Kaba Holding AG2		9,500			2,322
Lonrho PLC1,2		33,607,000			2,244
S1 Corp.2		50,000			2,164
CRA International, Inc.1		80,000			2,154
Seco Tools AB, Class B2		275,000			2,122
MISUMI Group Inc.2		165,000			1,975
Frigoglass SAIC2		408,473			1,955
GfK AG2		62,500			1,931
Watsco, Inc.		48,000			1,843
Geberit AG2		16,500			1,767
Sintex Industries Ltd.2		429,100			1,683
Permasteelisa SpA2		120,000			1,645
Georg Fischer Ltd1,2		7,000			1,598
Aalberts Industries NV2		214,883			1,539
De La Rue PLC2		112,179			1,484
Indutrade AB2		168,000			1,441
Trakya Cam Sanayii AS1,2		2,366,730			1,428
American Shipping Co. ASA1,2		188,000			892
I. Kloukinas — I. Lappas SA2		403,000			805
G-Shank Enterprise Co., Ltd.2		1,958,745			756
Aker Philadelphia Shipyard ASA2,3		110,800			621
Northgate PLC2		334,246			376
					303,403


INFORMATION TECHNOLOGY — 14.24%
Kingboard Chemical Holdings Ltd.2		11,482,000			20,779
Heartland Payment Systems, Inc.		1,000,000			17,500
Hittite Microwave Corp.1		525,000			15,466
Semtech Corp.1		1,170,000			13,186
Intersil Corp., Class A		1,425,000			13,096
Novell, Inc.1		3,358,800			13,066
IAC/InterActiveCorp1		800,000			12,584
Global Unichip Corp.2		3,439,956			12,325
SkillSoft PLC (ADR)1		1,550,000			11,067
Ultimate Software Group, Inc1		720,000			10,512
TIBCO Software Inc.1		2,005,800			10,410
AAC Acoustic Technologies Holdings Inc.1,2		20,577,000			9,281
Autodesk, Inc.1		460,000			9,039
ACI Worldwide, Inc.1		535,000			8,507
Red Hat, Inc.1		637,656			8,430
Delta Electronics (Thailand) PCL2		23,250,000			8,253
Perfect World Co., Ltd., Class B (ADR)1		445,000			7,676
Halma PLC2		2,182,500			6,469
KLA-Tencor Corp.		290,000			6,319
Mentor Graphics Corp.1		1,155,000			5,971
Infotech Enterprises Ltd.2		2,585,988			5,582
Advantech Co., Ltd.2		3,712,535			5,446
DTS, Inc.1		264,095			4,846
austriamicrosystems AG, non-registered shares2		384,868			4,562
Concur Technologies, Inc.1		128,682			4,223
Verifone Holdings, Inc.1		775,000			3,798
Kingboard Laminates Holdings Ltd.2		15,393,509			3,611
Hana Microelectronics PCL2		11,370,000			3,327
SupportSoft, Inc.1		1,225,000			2,732
LoopNet, Inc.1		400,000			2,728
DemandTec, Inc.1		335,000			2,703
Wistron Corp.2		3,333,000			2,567
Renishaw PLC2		355,000			2,559
Varian Semiconductor Equipment Associates, Inc.1		140,800			2,551
Logitech International SA1		150,000			2,337
Stratasys, Inc.1		210,000			2,258
Wincor Nixdorf AG2		40,000			1,912
Veeco Instruments Inc.1		250,000			1,585
Spectris PLC2		200,000			1,566
Tripod Technology Corp.2		1,546,752			1,538
Redington (India) Ltd.2		587,671			1,432
DFI, Inc.2		997,435			1,278
Ono Sokki Co., Ltd.2		287,000			1,257
Cyntec Co., Ltd.2		1,450,370			1,207
Delta Networks, Inc.2		7,000,000			1,096
HSW International, Inc.1,3		1,902,173			723
HSW International, Inc.1,2,3		674,303			183
Monotype Imaging Holdings Inc.1		138,900			806
CallWave, Inc.1,4		1,348,700			688
i2 Technologies, Inc.1		95,294			609
Kaboose Inc.1		1,500,000			431
Rubicon Technology, Inc.1		74,500			317
Avid Technology, Inc.1		4,922			54
					292,448


CONSUMER DISCRETIONARY — 12.66%
Jumbo SA2,4		7,800,170			47,401
Fourlis2,4		2,804,285			19,641
Lions Gate Entertainment Corp.1		2,750,000			15,125
MGM Mirage, Inc.1		909,173			12,510
Central European Media Enterprises Ltd., Class A1		500,000			10,860
Royal Caribbean Cruises Ltd.		725,000			9,969
Pantaloon Retail (India) Ltd.2		2,000,000			9,046
Schibsted ASA2		741,000			8,906
Las Vegas Sands Corp.1		1,500,000			8,895
Live Nation, Inc.1		1,350,000			7,749
Café de Coral Holdings Ltd.2		3,800,000			7,717
Blue Nile, Inc.1		300,400			7,357
Xinyi Glass Holdings Ltd.2		26,900,000			7,274
GEOX SpA2		1,145,750			7,046
Integrated Distribution Services Group Ltd.2		6,161,000			6,795
Harman International Industries, Inc.		375,000			6,274
Marvel Entertainment, Inc.1		200,000			6,150
Tiffany & Co.		252,900			5,976
Cheil Worldwide Inc.2		37,100			5,781
Chipotle Mexican Grill, Inc., Class A1		86,689			5,373
CTC Media, Inc.1		1,100,000			5,280
Rightmove PLC2		1,582,552			4,069
American Axle & Manufacturing Holdings, Inc.		1,260,000			3,641
Life Time Fitness, Inc.1		265,000			3,432
Raffles Education Corp. Ltd.2		8,200,000			3,250
Titan Industries Ltd.2		166,700			3,204
Ekornes ASA2		293,100			2,854
Rambler Media Ltd.1,2,4		924,894			2,829
Gafisa SA, ordinary nominative		500,000			2,268
Billabong International Ltd.2		380,000			2,168
USS Co., Ltd.2		37,800			1,996
Timberland Co., Class A1		150,000			1,732
Bloomsbury Publishing PLC2		625,000			1,454
OSIM International Ltd.1,2,4		28,920,000			1,414
Kuoni Reisen Holding AG, Class B2		3,437			1,160
Beter Bed Holding NV2		82,500			984
Ten Alps PLC1,2		2,600,000			967
Next Media Ltd.2		4,506,000			525
Phorm, Inc.1,2		125,000			516
Gaming VC Holdings SA2		200,000			288
Entertainment Rights PLC1,2		8,500,000			85
Mobile Travel Guide, Inc.1,2,3		219,739			36
CEC Unet PLC1,2		14,911,148			—
					259,997


FINANCIALS — 5.27%
First Niagara Financial Group, Inc.		704,800			11,397
Hopewell Holdings Ltd.2		3,200,000			10,585
Redwood Trust, Inc.		400,000			5,964
Portfolio Recovery Associates, Inc.1		160,700			5,438
Champion Real Estate Investment Trust2		19,418,000			5,231
Central Pattana PCL2		11,818,000			4,989
Hargreaves Lansdown PLC2		2,108,000			4,979
Dolphin Capital Investors Ltd.1,2		7,805,320			4,789
Banco Daycoval SA, preferred nominative		2,085,700			4,779
Asya Katilim Bankasi AS, Class B1,2		5,774,040			4,400
Daegu Bank, Ltd.2		790,000			4,307
Azimut Holding SpA2		760,000			4,104
Union Bank of the Philippines2		7,758,200			3,559
United Bankshares, Inc.		105,000			3,488
eHealth, Inc.1		255,000			3,386
Indiabulls Real Estate Ltd.2		1,200,000			3,314
Dah Sing Financial Holdings Ltd.2		1,200,000			3,099
Banco Cruzeiro do Sol SA, preferred nominative		1,377,100			2,977
Pusan Bank2		575,000			2,608
Frasers Commercial Trust2		13,607,000			2,236
Airesis SA1,2,4		3,294,151			2,103
Banco Pine SA, preferred nominative		1,200,000			1,863
Gruppo MutuiOnline SpA2		475,000			1,837
Robinsons Land Corp., Class B2		13,811,700			1,452
MGIC Investment Corp.		325,000			1,131
Islamic Arab Insurance Co.1		5,250,000			1,115
Banco ABC Brasil SA, preferred nominative		364,300			817
TICON Industrial Connection PCL2		4,585,000			775
Public Service Properties Investments Ltd.2		1,222,000			675
Paraná Banco SA, preferred nominative		382,280			413
Golden Land Property Development PCL, nonvoting depository receipt2		5,265,943			327
Banco Patagonia SA, Class B (BDR)		11,400			82
					108,219


MATERIALS — 4.25%

European Goldfields Ltd.1,2		4,691,100			11,108
Allied Gold Ltd.1,2,4		22,715,274			6,845
Allied Gold Ltd. (GBP denominated)1,2,4		3,800,000			1,155
KazakhGold Group Ltd. (GDR)1,2,5		1,500,000			5,933
KazakhGold Group Ltd. (GDR)1,2		164,402			650
FUCHS PETROLUB AG2		91,000			4,989
Jaguar Mining Inc.1,3		952,500			4,878
Rusoro Mining Ltd.1,3		6,011,765			3,206
Rusoro Mining Ltd.1		1,666,667			889
Prism Cement Ltd.2		9,500,000			3,620
Eastern Platinum Ltd.1		12,650,000			3,478
Mineral Deposits Ltd.1,2		4,731,343			2,363
Mineral Deposits Ltd. (CAD denominated)1,2		2,100,000			1,049
Sika AG, non-registered shares2		3,900			3,298
Lynas Corp. Ltd.1,2		15,117,916			3,053
Major Drilling Group International Inc.		274,800			2,819
African Minerals Ltd.1,2,4		6,905,000			2,020
African Minerals Ltd.1,2,3,4		2,480,000			725
J.K. Cement Ltd.2		2,923,000			2,654
Anadolu Cam Sanayii AS1,2		2,972,448			2,238
Kenmare Resources PLC1,2		19,842,759			2,208
Nihon Parkerizing Co., Ltd.2		243,000			2,103
Coal of Africa Ltd.1,2		2,500,000			1,564
Northern Iron Ltd.1,2		2,483,549			1,530
Central African Mining & Exploration Co. PLC1,2		49,705,000			1,529
Oxus Gold PLC1,2		18,084,300			1,463
Gemfields Resources PLC1,2,3		8,149,333			1,067
Gemfields Resources PLC1,2		2,000,000			262
Polo Resources Ltd.1,2		42,847,500			1,247
Intrepid Potash, Inc.1		51,100			1,061
Gem Diamonds Ltd.1,2		265,000			994
AMG Advanced Metallurgical Group NV1,2		85,507			841
Mangalam Cement Ltd.2		790,000			762
Banro Corp.1		698,000			716
Gindalbie Metals Ltd.1,2		1,646,980			700
Orsu Metals Corp.1		5,882,318			483
Kemira Oyj2		49,077			412
Gladstone Pacific Nickel Ltd.1,2		1,394,000			345
Mwana Africa PLC1,2		6,757,454			332
Chaarat Gold Holdings Ltd.1,2,3		1,710,000			224
Hard Creek Nickel Corp.1,3		1,997,100			172
Zoloto Resources Ltd.1		2,395,200			157
Murchison Metals Ltd.1,2		227,027			104
PT Sumalindo Lestari Jaya, Tbk1,2		2,967,000			48
					87,294


UTILITIES — 3.20%
Xinao Gas Holdings Ltd.2		32,539,000			34,596
Manila Electric Co.2		11,037,280			12,802
EDF Energies Nouvelles SA2		354,250			12,567
Energy Development Corp.2		56,950,000			2,363
Cascal NV		336,100			1,351
Electricity Generating PCL2		550,000			1,109
Glow Energy PCL2		1,586,500			1,052
					65,840


ENERGY — 3.18%
Concho Resources Inc.1		649,000			14,810
Heritage Oil Ltd.1,2		4,563,000			13,690
BJ Services Co.		1,010,000			11,787
Oceaneering International, Inc.1		200,000			5,828
Regal Petroleum PLC1,2		7,555,500			4,415
KNM Group Bhd.2		35,500,000			4,253
OPTI Canada Inc.1		2,131,100			3,148
Serica Energy PLC1,2		4,667,000			2,115
Oilexco Inc. (GBP denominated)1,2,3		1,900,000			558
Oilexco Inc. (GBP denominated)1,2		1,755,000			515
Oilexco Inc.1,3		985,000			230
Oilexco Inc.1		303,900			71
Rex Energy Corp.1		434,594			1,278
Bankers Petroleum Ltd.1,3		1,000,000			607
Bankers Petroleum Ltd.1		695,333			423
Leni Gas & Oil PLC1,2,3		25,500,000			725
Timan Oil & Gas PLC1,2		5,335,000			368
Mart Resources, Inc.1,3		7,875,625			258
Coalcorp Mining Inc.1		1,285,715			206
Enterprise Energy Resources Ltd.1,3		126,000			9
					65,294


CONSUMER STAPLES — 2.59%
China Agri-Industries Holdings Ltd.1,2		21,558,000			10,849
China Green (Holdings) Ltd.2		8,796,000			7,031
Andersons, Inc.		400,000			6,592
Kernel Holding SA1,2		1,555,000			6,502
Chattem, Inc.1		90,000			6,438
Lakshmi Energy and Foods Ltd.1,2		1,497,000			6,073
Hain Celestial Group, Inc.1		240,000			4,582
PT Indofood Sukses Makmur Tbk2		19,958,500			1,796
Drogasil SA, ordinary nominative		341,900			1,478
Indage Vintners Ltd.2		618,483			1,321
Universal Robina Corp.2		4,638,400			575
					53,237


TELECOMMUNICATION SERVICES — 0.63%
True Corp. PCL1,2		104,000,000			5,545
tw telecom inc.1		650,000			5,505
StarHub Ltd2		1,372,250			1,865
					12,915


MISCELLANEOUS — 4.96%
Other common stocks in initial period of acquisition					101,877


Total common stocks (cost: $2,849,782,000)					1,664,252



Rights & warrants — 0.02%

MATERIALS — 0.02%
Rusoro Mining Ltd., warrants, expire 20121,3		4,500,000			425
Rusoro Mining Ltd., warrants, expire 20111,2		833,334			—
Rusoro Mining Ltd., warrants, expire 20121,2,3		755,882			—
Hard Creek Nickel Corp., warrants, expire 20101,2,3		998,550			16
					441


INDUSTRIALS — 0.00%
Goodpack Ltd., warrants, expire 20091		617,500			52


ENERGY — 0.00%
Leni Gas & Oil PLC, warrants, expire 20131,2,3		12,750,000			3


Total rights & warrants (cost: $3,023,000)					496



Convertible securities — 0.10%	Principal amount

TELECOMMUNICATION SERVICES — 0.10%
tw telecom inc. 2.375% convertible debentures 2026	$	3,300,000			2,112

ENERGY — 0.00%
High Arctic Energy Services Inc. 12.00% convertible debentures 20122,3	$	C2,300,000			19


Total convertible securities (cost: $4,428,000)					2,131



	Principal amount			Value
Short-term securities — 18.16%		(000	)		(000	)

Fannie Mae 0.08%–0.85% due 1/27–7/14/2009	$	65,900		$	65,842
Freddie Mac 0.24%–0.95% due 1/14–3/23/2009		64,200			64,167
Federal Home Loan Bank 0.18%–0.60% due 1/28–3/24/2009		60,200			60,177
Nokia Corp. 0.90%–2.30% due 1/14–1/23/20095		24,100			24,084
Total Capital Canada Ltd. 0.25%–0.29% due 2/17–2/18/20095		23,500			23,474
Denmark (Kingdom of) 0.50%–0.90% due 2/18–3/12/2009		21,300			21,288
KfW 0.60% due 1/12/20095		11,900			11,898
BNP Paribas Finance Inc. 0.44% due 2/27/2009		10,200			10,193
Enterprise Funding Co. LLC 1.45% due 1/9/20095		10,000			9,996
Statoil ASA 1.40% due 1/20/20095		10,000			9,992
Shell International Finance BV 0.30% due 4/30/20095		10,000			9,992
Toyota Motor Credit Corp. 1.45% due 1/28/2009		10,000			9,989
Lowe’s Cos. Inc. 0.35% due 3/16/2009		9,000			8,978
AT&T Inc. 0.33% due 3/9/20095		8,600			8,595
Procter & Gamble International Funding S.C.A. 1.15% due 1/12/20095		8,000			7,997
Brown-Forman Corp. 0.65% due 2/11/20095		7,700			7,694
Caterpillar Financial Services Corp. 0.95% due 1/8/2009		7,500			7,498
HSBC Finance Corp. 0.05% due 1/2/2009		6,900			6,900
Jupiter Securitization Co., LLC 0.35% due 1/12/20095		4,200			4,200

Total short-term securities (cost: $372,945,000)					372,954


Total investment securities (cost: $3,230,178,000)					2,039,833
Other assets less liabilities					13,986

Net assets				$	2,053,819

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Security did not produce income during the last 12 months.

2	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $835,310,000, which represented 40.67%

of the net assets of the fund.

3	Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition date(s)	Cost (000)		Value (000)		Percent of net assets

Jaguar Mining Inc.	3/22/2006	$	4,293	$	4,878		.24	%
Rusoro Mining Ltd.	2/23/2007–10/29/2007		14,709		3,206		.16
Rusoro Mining Ltd., warrants, expire 2012	10/29/2007		1,477		425		.02
Rusoro Mining Ltd., warrants, expire 2012	2/23/2007		256		—		—
Gemfields Resources PLC	11/7/2005–6/6/2008		6,715		1,067		.05
HSW International, Inc.	10/2/2007		7,000		723		.03
HSW International, Inc.	12/17/2007		2,076		183		.01
Oilexco Inc. (GBP denominated)	12/15/2005		6,195		558		.03
Oilexco Inc.	12/22/2005–3/7/2007		2,762		230		.01
Leni Gas & Oil PLC	7/28/2008		3,389		725		.04
Leni Gas & Oil PLC, warrants, expire 2013	7/28/2008		681		3		—
African Minerals Ltd.	12/12/2006		5,606		725		.04
Aker Philadelphia Shipyard ASA	12/5/2007		1,161		621		.03
Bankers Petroleum Ltd.	3/8/2005		2,479		607		.03
Mart Resources, Inc.	1/16/2007–9/7/2007		3,509		258		.01
Chaarat Gold Holdings Ltd.	10/30/2007		2,121		224		.01
Hard Creek Nickel Corp.	5/22/2007		3,436		172		.01
Hard Creek Nickel Corp., warrants, expire 2010	5/22/2007		609		16		—
Ondine Biopharma Corp.	6/23/2004–10/25/2006		4,110		108		—
Ondine Biopharma Corp. (GBP denominated)	5/18/2005		766		14		—
Mobile Travel Guide, Inc.	12/17/2007		55		36		—
Enterprise Energy Resources Ltd.	2/6/2007		1,586		9		—
High Arctic Energy Services Inc. 12.00% convertible debentures 2012	11/19/2007		2,370		19		—

Total restricted securities		$	77,361	$	14,807		.72	%

4	Represents an affiliated company as defined under the Investment Company Act of 1940.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $123,854,000, which represented 6.03% of the net assets of the fund.

Key to abbreviations and symbol

ADR = American Depositary Receipts

BDR = Brazilian Depositary Receipts

GDR = Global Depositary Receipts

GBP = British pounds

CAD/C$ = Canadian dollars

Growth Fund

Summary investment portfolio, December 31, 2008

Largest individual equity securities	Percent of net assets

Cisco Systems		2.92	%
Google		2.78
Philip Morris International		2.11
Barrick Gold		2.10
Newmont Mining		2.06
Berkshire Hathaway		1.93
Microsoft		1.89
Gilead Sciences		1.84
Roche		1.76
Lowe's		1.70

							Percent
				Value			of net
Common stocks - 87.91%	Shares				(000	)	assets

Information technology - 21.13%
Cisco Systems, Inc. (1)		32,915,000		$	536,515			2.92	%
Google Inc., Class A (1)		1,656,000			509,468			2.78
Microsoft Corp.		17,830,000			346,615			1.89
Nokia Corp. (ADR)		11,830,000			184,548
Nokia Corp. (2)		6,184,000			96,108			1.53
EMC Corp. (1)		17,827,000			186,649			1.02
Yahoo! Inc. (1)		14,365,000			175,253			.96
Lender Processing Services, Inc. (3)		5,785,000			170,368			.93
Oracle Corp. (1)		8,790,540			155,856			.85
International Business Machines Corp.		1,600,000			134,656			.73
Fidelity National Information Services, Inc.		7,190,000			116,981			.64
Samsung Electronics Co., Ltd. (2)		310,000			112,348			.61
Red Hat, Inc. (1)		7,646,624			101,088			.55
Trimble Navigation Ltd. (1)		4,500,000			97,245			.53
Other securities					952,345			5.19
					3,876,043			21.13

Energy - 11.08%
Suncor Energy Inc.		10,886,605			211,925			1.15
Canadian Natural Resources, Ltd.		4,625,700			185,066			1.01
Devon Energy Corp.		1,836,744			120,692			.66
Murphy Oil Corp.		2,698,800			119,692			.65
Noble Energy, Inc.		2,400,000			118,128			.64
Tenaris SA (ADR)		5,245,000			110,040			.60
Petróleo Brasileiro SA - Petrobras, ordinary nominative (ADR)		4,260,000			104,327			.57
Other securities					1,063,817			5.80
					2,033,687			11.08

Consumer discretionary - 10.20%
Lowe's Companies, Inc.		14,526,000			312,599			1.70
Target Corp.		6,090,000			210,288			1.15
Johnson Controls, Inc.		10,949,100			198,836			1.08
Best Buy Co., Inc.		5,780,000			162,476			.89
Other securities					988,113			5.38
					1,872,312			10.20

Health care - 9.83%
Gilead Sciences, Inc. (1)		6,600,000			337,524			1.84
Roche Holding AG (2)		2,115,000			323,548			1.76
Shire Ltd. (ADR)		2,700,000			120,906			.66
Endo Pharmaceuticals Holdings Inc. (1)		4,500,000			116,460			.63
Medtronic, Inc.		3,415,000			107,299			.59
Other securities					797,911			4.35
					1,803,648			9.83

Materials - 8.22%
Barrick Gold Corp.		10,500,000			386,085			2.10
Newmont Mining Corp.		9,305,000			378,713			2.06
Potash Corp. of Saskatchewan Inc.		1,800,000			131,796			.72
Gold Fields Ltd. (2)		10,000,000			99,213			.54
Other securities					512,844			2.80
					1,508,651			8.22

Financials - 8.08%
Berkshire Hathaway Inc., Class A (1)		3,661			353,653			1.93
Wells Fargo & Co.		6,202,196			182,841			.99
White Mountains Insurance Group, Ltd.		389,800			104,119			.57
Marsh & McLennan Companies, Inc.		4,253,600			103,235			.56
Other securities					738,888			4.03
					1,482,736			8.08

Industrials - 7.86%
General Electric Co.		12,240,000			198,288			1.08
Iron Mountain Inc. (1)		7,245,000			179,169			.98
Boeing Co.		3,665,000			156,386			.85
FedEx Corp.		2,080,000			133,432			.73
Other securities					775,543			4.22
					1,442,818			7.86

Consumer staples - 6.03%
Philip Morris International Inc.		8,895,000			387,022			2.11
Coca-Cola Co.		4,515,000			204,394			1.11
Wal-Mart Stores, Inc.		1,826,100			102,371			.56
Altria Group, Inc.		6,605,200			99,474			.54
Other securities					312,623			1.71
					1,105,884			6.03

Telecommunication services - 1.63%
Qwest Communications International Inc.		35,000,000			127,400			.70
Other securities					171,286			.93
					298,686			1.63

Utilities - 1.28%
Other securities					235,598			1.28


MISCELLANEOUS - 2.57%
Other common stocks in initial period of acquisition					471,490			2.57


Total common stocks (cost: $22,674,160,000)					16,131,553			87.91




Bonds, notes & other debt instruments - 0.04%

Financials - 0.04%
Other securities					6,622			.04



Total bonds, notes & other debt instruments (cost: $36,796,000)					6,622			.04



	Principal amount
Short-term securities - 11.01%		(000	)


Freddie Mac 0.32%-2.70% due 2/3-9/30/2009	$	384,899			384,364			2.09
Federal Home Loan Bank 0.14%-2.55% due 1/9-5/20/2009		274,100			273,898			1.49
Fannie Mae 0.20%-0.85% due 2/24-7/14/2009		219,500			219,228			1.19
Procter & Gamble International Funding S.C.A. 0.40%-1.85% due 1/14-3/27/2009 (4)		108,400			108,319
Procter & Gamble Co. 0.60%-1.55% due 1/14-3/31/2009 (4)		76,000			75,963			1.00
U.S. Treasury Bills 0.21%-1.94% due 1/2-8/27/2009		140,600			140,562			.77
Coca-Cola Co. 2.25%-2.30% due 1/7-1/13/2009 (4)		83,800			83,776			.46
NetJets Inc. 1.00%-1.05% due 1/15-1/16/2009 (4)		42,000			41,968			.23
Other securities					691,482			3.78

Total short-term securities (cost: $2,017,732,000)					2,019,560			11.01


Total investment securities (cost: $24,728,688,000)					18,157,735			98.96
Other assets less liabilities					191,296			1.04

Net assets				$	18,349,031			100.00	%

"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio.

Investments in affiliates

A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. The fund's affiliated holdings listed below are either shown in the preceding summary investment portfolio or included in the value of "Other securities" under their respective industry sectors. Further details on these holdings and related transactions during the year ended December 31, 2008, appear below.

	Beginning shares		Additions		Reductions		Ending shares			Dividend income (000	)		Value of affiliates at 12/31/08 (000	)

Lender Processing Services, Inc.		-		5,785,000		-		5,785,000	$	857		$	170,368
Chipotle Mexican Grill, Inc., Class B (1)		1,195,200		-		-		1,195,200		-			68,473
Chipotle Mexican Grill, Inc., Class A (1)		920,000		-		-		920,000		-			57,022
Panalpina Welttransport (Holding) AG (2)		650,000		833,282		-		1,483,282		1,698			82,621
Core Laboratories NV		1,197,700		-		-		1,197,700		1,222			71,694
Graco Inc. (5)		3,000,000		970,647		951,940		3,018,707		2,619			71,634
Digital River, Inc. (1)		2,430,000		195,000		-		2,625,000		-			65,100
Heartland Payment Systems, Inc. (5)		1,400,000		1,026,600		-		2,426,600		758			42,466
Minerals Technologies Inc.		1,000,000		25,000		-		1,025,000		205			41,922
Uranium One Inc. (1)		-		24,544,500		-		24,544,500		-			36,056
KGen Power Corp. (1) (2)		3,166,128		-		-		3,166,128		-			30,870
Blue Nile, Inc. (1)		824,000		219,000		-		1,043,000		-			25,543
Pacific Rubiales Energy Corp. (1)		-		12,550,000		-		12,550,000		-			22,556
DataPath, Inc. (1) (2) (6)		2,819,968		-		-		2,819,968		-			28
Bare Escentuals, Inc. (1) (7)		5,850,000		70,000		1,650,000		4,270,000		-			-
Georgia Gulf Corp. (7)		2,224,000		-		1,114,000		1,110,000		267			-
lululemon athletica inc. (1) (7)		-		4,185,000		-		4,185,000		-			-
Red Hat, Inc. (1) (7)		11,511,000		601,400		4,465,776		7,646,624		-			-
Rosetta Resources Inc. (1) (7)		2,980,000		-		2,068,504		911,496		-			-
									$	7,626		$	786,353

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.

(1) Security did not produce income during the last 12 months.

(2) Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in "Other securities," was $1,464,781,000, which represented 7.98% of the net assets of the fund.

(3) Represents an affiliated company as defined under the Investment Company Act of 1940.

(4) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $803,795,000, which represented 4.38% of the net assets of the fund.

(5) This security was an unaffiliated issuer in its initial period of acquisition at 12/31/2007; it was not publicly disclosed.

(6) Purchased in a transaction exempt from registration under the securities Act of 1933. This security (acquired 6/23/2006 at a cost of 31,020,000) may be subject to legal or contractual restrictions on resale. The total value of all such securities, including those in "Other securities," was $105,709,000, which represented .58% of the net assets of the fund.

(7) Unaffiliated issuer at 12/31/2008.

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

Growth Fund

Investment portfolio

December 31, 2008

Common stocks — 87.91%	Shares			Value (000)

INFORMATION TECHNOLOGY — 21.13%
Cisco Systems, Inc.1		32,915,000		$	536,515
Google Inc., Class A1		1,656,000			509,468
Microsoft Corp.		17,830,000			346,615
Nokia Corp. (ADR)		11,830,000			184,548
Nokia Corp.2		6,184,000			96,108
EMC Corp.1		17,827,000			186,649
Yahoo! Inc.1		14,365,000			175,253
Lender Processing Services, Inc.3		5,785,000			170,368
Oracle Corp.1		8,790,540			155,856
International Business Machines Corp.		1,600,000			134,656
Fidelity National Information Services, Inc.		7,190,000			116,981
Samsung Electronics Co., Ltd.2		310,000			112,348
Red Hat, Inc.1		7,646,624			101,088
Trimble Navigation Ltd.1		4,500,000			97,245
Paychex, Inc.		3,445,000			90,535
Apple Inc.1		1,000,000			85,350
Applied Materials, Inc.		7,545,000			76,431
Texas Instruments Inc.		4,830,000			74,962
QUALCOMM Inc.		2,000,000			71,660
Maxim Integrated Products, Inc.		5,845,000			66,750
Digital River, Inc.1,3		2,625,000			65,100
Linear Technology Corp.		2,895,000			64,037
Corning Inc.		5,000,000			47,650
KLA-Tencor Corp.		2,165,000			47,175
Juniper Networks, Inc.1		2,500,000			43,775
Heartland Payment Systems, Inc.3		2,426,600			42,466
ASML Holding NV2		2,250,000			40,251
SAP AG (ADR)		925,000			33,504
Dell Inc.1		3,000,000			30,720
salesforce.com, inc.1		760,590			24,347
Comverse Technology, Inc.1		2,827,300			17,699
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)		1,390,101			10,982
Tyco Electronics Ltd.		649,125			10,522
THQ Inc.1		2,005,000			8,401
DataPath, Inc.1,2,3,4		2,819,968			28
					3,876,043


ENERGY — 11.08%
Suncor Energy Inc.		10,886,605			211,925
Canadian Natural Resources, Ltd.		4,625,700			185,066
Devon Energy Corp.		1,836,744			120,692
Murphy Oil Corp.		2,698,800			119,692
Noble Energy, Inc.		2,400,000			118,128
Tenaris SA (ADR)		5,245,000			110,040
Petróleo Brasileiro SA — Petrobras, ordinary nominative (ADR)		4,260,000			104,327
EOG Resources, Inc.		1,413,928			94,139
BJ Services Co.		7,898,244			92,173
Transocean Inc.1		1,714,446			81,008
Schlumberger Ltd.		1,899,600			80,410
Concho Resources Inc.1,4		3,321,156			75,789
Core Laboratories NV3		1,197,700			71,694
Diamond Offshore Drilling, Inc.		1,170,000			68,960
Peabody Energy Corp.		2,653,000			60,356
Petro-Canada		2,105,300			46,166
Exxon Mobil Corp.		550,000			43,907
BG Group PLC2		3,050,000			42,830
CNX Gas Corp.1		1,378,834			37,642
Uranium One Inc.1,3		24,544,500			36,056
Arch Coal, Inc.		2,000,000			32,580
Denbury Resources Inc.1		2,800,000			30,576
Pacific Rubiales Energy Corp.1,3		12,550,000			22,556
OAO Gazprom (ADR)2		1,300,000			18,633
Apache Corp.		250,000			18,633
Halliburton Co.		1,012,700			18,411
Hess Corp.		324,000			17,379
Cameco Corp.		1,000,000			17,250
Newfield Exploration Co.1		673,508			13,302
Patriot Coal Corp.1		2,030,600			12,691
Saipem SpA, Class S2		593,700			9,994
OPTI Canada Inc.1		4,439,500			6,558
Rosetta Resources Inc.1		911,496			6,453
Quicksilver Resources Inc.1		1,120,000			6,238
Energy XXI (Bermuda) Ltd.		1,813,683			1,433
					2,033,687


CONSUMER DISCRETIONARY — 10.20%
Lowe’s Companies, Inc.		14,526,000			312,599
Target Corp.		6,090,000			210,288
Johnson Controls, Inc.		10,949,100			198,836
Best Buy Co., Inc.		5,780,000			162,476
Chipotle Mexican Grill, Inc., Class B1,3		1,195,200			68,473
Chipotle Mexican Grill, Inc., Class A1,3		920,000			57,022
Time Warner Inc.		9,393,000			94,494
News Corp., Class A		9,490,000			86,264
Shaw Communications Inc., Class B, nonvoting		4,500,000			79,560
Starbucks Corp.1		6,993,000			66,154
CarMax, Inc.1		7,842,500			61,799
International Game Technology		5,043,505			59,967
MGM Mirage, Inc.1		3,798,677			52,270
Penn National Gaming, Inc.1		2,363,000			50,521
Garmin Ltd.		2,095,862			40,178
Wyndham Worldwide Corp.		5,570,000			36,483
lululemon athletica inc.1		4,185,000			33,187
NIKE, Inc., Class B		650,000			33,150
Weight Watchers International, Inc.		1,062,000			31,244
Blue Nile, Inc.1,3		1,043,000			25,543
Toyota Motor Corp.2		765,000			24,985
Magna International Inc., Class A		725,000			21,699
Harman International Industries, Inc.		1,245,000			20,829
Liberty Media Corp., Liberty Interactive, Series A1		6,255,100			19,516
Melco Crown Entertainment Ltd. (ADR)1		4,997,000			15,840
Saks Inc.1		2,040,000			8,935
					1,872,312


HEALTH CARE — 9.83%
Gilead Sciences, Inc.1		6,600,000			337,524
Roche Holding AG2		2,115,000			323,548
Shire Ltd. (ADR)		2,700,000			120,906
Endo Pharmaceuticals Holdings Inc.1		4,500,000			116,460
Medtronic, Inc.		3,415,000			107,299
Amgen Inc.1		1,525,197			88,080
Charles River Laboratories International, Inc.1		3,135,000			82,137
Hologic, Inc.1		6,085,000			79,531
C. R. Bard, Inc.		800,000			67,408
Hospira, Inc.1		2,400,000			64,368
Intuitive Surgical, Inc.1		500,000			63,495
Stryker Corp.		1,335,955			53,371
Covance Inc.1		870,000			40,046
Onyx Pharmaceuticals, Inc.1		1,000,000			34,160
Merck & Co., Inc.		1,112,746			33,828
Celgene Corp.1		600,000			33,168
Vertex Pharmaceuticals Inc.1		1,000,000			30,380
McKesson Corp.		665,000			25,756
Boston Scientific Corp.1		3,200,000			24,768
Cardinal Health, Inc.		700,000			24,129
Schering-Plough Corp.		1,379,900			23,500
Allergan, Inc.		320,000			12,902
Abraxis BioScience, Inc.1		166,975			11,007
Aveta Inc.1,2,4		3,918,000			5,877
					1,803,648


MATERIALS — 8.22%
Barrick Gold Corp.		10,500,000			386,085
Newmont Mining Corp.		9,305,000			378,713
Potash Corp. of Saskatchewan Inc.		1,800,000			131,796
Gold Fields Ltd.2		10,000,000			99,213
Rio Tinto PLC2		4,334,233			94,983
Newcrest Mining Ltd.2		3,707,999			89,709
Shin-Etsu Chemical Co., Ltd.2		1,835,000			83,979
Freeport-McMoRan Copper & Gold Inc.		3,304,500			80,762
CRH PLC2		1,793,530			45,377
Minerals Technologies Inc.3		1,025,000			41,922
Syngenta AG2		201,466			38,788
Cia. Vale do Rio Doce, Class A, preferred nominative (ADR)		3,000,000			31,950
Buzzi Unicem SpA, nonconvertible shares2		449,426			4,186
Georgia Gulf Corp.		1,110,000			1,188
					1,508,651


FINANCIALS — 8.08%
Berkshire Hathaway Inc., Class A1		3,661			353,653
Wells Fargo & Co.		6,202,196			182,841
White Mountains Insurance Group, Ltd.		389,800			104,119
Marsh & McLennan Companies, Inc.		4,253,600			103,235
Citigroup Inc.		14,250,000			95,617
Bank of America Corp.		5,500,000			77,440
JPMorgan Chase & Co.		2,340,000			73,780
Wachovia Corp.		12,500,000			69,250
Onex Corp.		4,600,500			68,677
American Express Co.		2,900,000			53,795
T. Rowe Price Group, Inc.		1,500,000			53,160
State Street Corp.		1,285,000			50,539
PNC Financial Services Group, Inc.		982,200			48,128
National City Corp.4		8,750,000			15,837
National City Corp.		8,349,000			15,112
AMP Ltd.2		7,860,210			30,481
M&T Bank Corp.		500,000			28,705
Zions Bancorporation		1,146,000			28,088
Bank of Ireland2		9,096,177			10,745
American International Group, Inc.		6,750,000			10,598
PMI Group, Inc.		2,000,000			3,900
MGIC Investment Corp.		1,000,000			3,480
Thornburg Mortgage, Inc.1,4		10,038,514			1,556
					1,482,736


INDUSTRIALS — 7.86%
General Electric Co.		12,240,000			198,288
Iron Mountain Inc.1		7,245,000			179,169
Boeing Co.		3,665,000			156,386
FedEx Corp.		2,080,000			133,432
Lockheed Martin Corp.		1,150,000			96,692
Panalpina Welttransport (Holding) AG2,3		1,483,282			82,621
KBR, Inc.		5,397,130			82,036
General Dynamics Corp.		1,300,000			74,867
Graco Inc.3		3,018,707			71,634
First Solar, Inc.1		500,000			68,980
Roper Industries, Inc.		1,540,000			66,851
Northrop Grumman Corp.		1,150,000			51,796
MSC Industrial Direct Co., Inc., Class A		1,000,000			36,830
Joy Global Inc.		1,400,000			32,046
United Parcel Service, Inc., Class B		500,000			27,580
Actuant Corp., Class A		1,300,000			24,726
Tyco International Ltd.		699,125			15,101
Grafton Group PLC, units1,2		4,200,000			13,601
Raytheon Co.		246,000			12,556
Kingspan Group PLC2		2,800,000			12,237
Brady Corp., Class A		225,000			5,389
					1,442,818


CONSUMER STAPLES — 6.03%
Philip Morris International Inc.		8,895,000			387,022
Coca-Cola Co.		4,515,000			204,394
Wal-Mart Stores, Inc.		1,826,100			102,371
Altria Group, Inc.		6,605,200			99,474
Bunge Ltd.		1,343,600			69,558
Walgreen Co.		2,520,000			62,169
Constellation Brands, Inc., Class A1		2,624,000			41,381
Diageo PLC2		2,650,000			37,285
SYSCO Corp.		1,400,000			32,116
Bare Escentuals, Inc.1		4,270,000			22,332
Cosan Ltd., Class A1		6,153,000			21,289
Avon Products, Inc.		775,000			18,623
Estée Lauder Companies Inc., Class A		254,200			7,870
					1,105,884


TELECOMMUNICATION SERVICES — 1.63%
Qwest Communications International Inc.		35,000,000			127,400
Telefónica, SA2		2,930,000			65,840
Telephone and Data Systems, Inc., Special Common Shares		1,190,000			33,439
KDDI Corp.2		4,490			31,909
Sprint Nextel Corp., Series 11		15,500,000			28,365
SOFTBANK CORP.2		649,300			11,733
					298,686


UTILITIES — 1.28%
Allegheny Energy, Inc.		1,870,284			63,328
Reliant Energy, Inc.1		5,696,500			32,926
Edison International		1,000,000			32,120
KGen Power Corp.1,2,3		3,166,128			30,870
NRG Energy, Inc.1		1,300,000			30,329
Dynegy Inc., Class A1		13,900,000			27,800
Mirant Corp.1		965,834			18,225
					235,598


MISCELLANEOUS — 2.57%
Other common stocks in initial period of acquisition					471,490


Total common stocks (cost: $22,674,160,000)					16,131,553


	Principal amount
Bonds, notes & other debt instruments — 0.04%		(000	)

FINANCIALS — 0.04%
Thornburg Mortgage, Inc. 18.00% 20152,4	$	38,571			6,075
Thornburg Mortgage, Inc. 18.00% 20152,4,5		3,471			547

Total bonds, notes & other debt instruments (cost: $36,796,000)					6,622



Short-term securities — 11.01%

Freddie Mac 0.32%–2.70% due 2/3–9/30/2009		384,899			384,364
Federal Home Loan Bank 0.14%–2.55% due 1/9–5/20/2009		274,100			273,898
Fannie Mae 0.20%–0.85% due 2/24–7/14/2009		219,500			219,228
Procter & Gamble International Funding S.C.A. 0.40%–1.85% due 1/14–3/27/20096		108,400			108,319
Procter & Gamble Co. 0.60%–1.55% due 1/8–3/31/20096		76,000			75,963
U.S. Treasury Bills 0.21%–0.94% due 1/2–8/27/2009		140,600			140,562
Coca-Cola Co. 2.25%–2.30% due 1/7–1/13/20096		83,800			83,776
Hewlett-Packard Co. 0.12%–2.20% due 2/4–2/12/20096		69,275			69,228
Ranger Funding Co. LLC 1.45% due 1/9/20096		45,000			44,984
Enterprise Funding Co. LLC 1.00% due 2/24/20096		20,000			19,956
Eli Lilly and Co. 1.35% due 1/12–1/14/20096		61,600			61,565
Park Avenue Receivables Co., LLC 0.60%–1.05% due 1/14–3/9/20096		37,000			36,991
Jupiter Securitization Co., LLC 0.70% due 3/3/20096		23,470			23,415
Medtronic Inc. 0.27%–0.30% due 1/14–1/22/20096		51,100			51,093
Walt Disney Co. 1.70% due 1/26/2009		51,100			51,048
Illinois Tool Works Inc. 1.15%–1.80% due 1/6–2/2/2009		50,107			50,077
NetJets Inc. 1.00%–1.05% due 1/15–1/16/20096		42,000			41,968
International Bank for Reconstruction and Development 0.30%–1.15% due 2/20–4/14/2009		40,200			40,169
Ciesco LLC 1.55% due 1/22/20096		36,500			36,447
Wal-Mart Stores Inc. 0.25% due 6/16/20096		27,900			27,868
Genentech, Inc. 0.55% due 1/21/20096		25,000			24,992
Johnson & Johnson 0.75% due 2/27/20096		25,000			24,992
Merck & Co. Inc. 1.15% due 1/20/2009		23,600			23,585
Honeywell International Inc. 1.15% due 2/11/20096		20,997			20,973
Chevron Corp. 1.00% due 1/21/2009		20,000			19,986
AT&T Inc. 1.25% due 1/29/20096		20,000			19,980
Brown-Forman Corp. 0.65% due 2/11/20096		16,300			16,288
Walgreen & Co. 0.25% due 1/30/20096		15,000			14,997
Becton, Dickinson and Co. 0.25% due 1/22/2009		12,850			12,848

Total short-term securities (cost: $2,017,732,000)					2,019,560

Total investment securities (cost: $24,728,688,000)					18,157,735
Other assets less liabilities					191,296

Net assets				$	18,349,031

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Security did not produce income during the last 12 months.

2	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $1,464,781,000, which represented 7.98% of the net assets of the fund.

3	Represents an affiliated company as defined under the Investment Company Act of 1940.

4	Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition date(s)	Cost (000)		Value (000)		Percent of net assets

Concho Resources Inc.	7/21/2008	$	100,000	$	75,789		.41	%
National City Corp.	4/21/2008		43,750		15,837		.09
Thornburg Mortgage, Inc. 18.00% 2015	3/28/2008		33,286		6,075		.04
Thornburg Mortgage, Inc.	5/6/2008–12/18/2008		6,665		1,556		.01
Thornburg Mortgage, Inc. 18.00% 2015	10/1/2008		3,509		547		.00
Aveta Inc.	12/21/2005		52,893		5,877		.03
DataPath, Inc.	6/23/2006		31,020		28		.00

Total restricted securities		$	271,123	$	105,709		.58	%

5	Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $803,795,000, which represented 4.38% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

International Fund

Investment portfolio

December 31, 2008

Common stocks — 86.04%	Shares			Value (000)

HEALTH CARE — 17.07%
Bayer AG, non-registered shares1		5,025,023		$	295,926
Roche Holding AG1		1,698,768			259,874
Teva Pharmaceutical Industries Ltd. (ADR)		5,224,000			222,386
Novartis AG1		1,930,000			96,101
Merck KGaA1		972,655			88,651
Richter Gedeon NYRT1		307,000			46,244
Terumo Corp.1		540,900			25,275
Nobel Biocare Holding AG1		1,211,547			24,663
EGIS Nyrt.1		389,200			20,688
OJSC Pharmstandard (GDR)1,2		1,280,000			13,555
OJSC Pharmstandard (GDR)1,2,3		307,300			3,254
Smith & Nephew PLC1		2,393,000			15,357
UCB SA1		470,000			15,348
Shionogi & Co., Ltd.1		593,000			15,198
Daiichi Sankyo Co., Ltd.1		529,600			12,561
Straumann Holding AG1		55,000			9,627
					1,164,708


FINANCIALS — 12.99%
Mitsubishi Estate Co., Ltd.1		4,850,000			79,806
Unibanco-União de Bancos Brasileiros SA, units (GDR)		1,165,000			75,282
QBE Insurance Group Ltd.1		3,921,273			72,711
AXA SA1		3,126,611			69,880
HSBC Holdings PLC (Hong Kong)1		6,277,600			60,265
HSBC Holdings PLC (United Kingdom)1		767,460			7,430
Banco Santander, SA1		6,979,231			67,525
UniCredit SpA1		18,534,000			46,256
Commerzbank AG1		4,116,495			39,337
Banco Bilbao Vizcaya Argentaria, SA1		2,553,500			31,411
Ping An Insurance (Group) Co. of China, Ltd., Class H1		5,906,000			28,864
UBS AG1,2		2,002,308			28,861
Erste Bank der oesterreichischen Sparkassen AG1		1,191,837			28,009
Skandinaviska Enskilda Banken AB, Class A1		3,410,784			27,616
Sun Hung Kai Properties Ltd.1		3,026,000			25,446
Ayala Land, Inc.1		182,465,000			25,301
BNP Paribas SA1		496,000			20,996
Credit Suisse Group AG1		680,000			18,523
Globe Trade Center SA1,2		3,541,195			18,313
Sampo Oyj, Class A1		941,723			17,634
Banco do Brasil SA, ordinary nominative		2,445,000			15,517
Société Générale1		238,750			12,122
Standard Chartered PLC1		899,975			11,636
GuangZhou R&F Properties Co., Ltd., Class H1		9,460,000			10,575
Admiral Group PLC1		787,000			10,514
Shinhan Financial Group Co., Ltd.1		332,300			7,681
ICICI Bank Ltd.1		559,400			5,241
Shui On Land Ltd.1		16,000,000			5,111
DnB NOR ASA1		1,217,800			4,896
AMP Ltd.1		1,117,151			4,332
Kerry Properties Ltd.1		1,165,680			3,138
Prudential PLC1		420,000			2,586
Orco Property Group SA1		266,356			2,443
United Overseas Bank Ltd.1		131,000			1,187
Fortis SA/NV1,2		1,950,000			—
					886,445


TELECOMMUNICATION SERVICES — 10.29%
MTN Group Ltd.1		12,800,199			149,914
América Móvil, SAB de CV, Series L (ADR)		4,251,500			131,754
France Télécom SA1		2,925,000			82,019
Philippine Long Distance Telephone Co.1		809,800			37,303
Philippine Long Distance Telephone Co. (ADR)		340,000			15,963
NTT DoCoMo, Inc.1		26,000			51,141
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B1		77,865,500			50,878
Bharti Airtel Ltd.1,2		2,493,900			36,947
Koninklijke KPN NV1		2,482,300			36,085
Singapore Telecommunications Ltd.1		14,458,330			25,831
Vodafone Group PLC1		11,771,250			23,968
Telenor ASA1		3,068,624			20,669
KDDI Corp.1		2,130			15,137
Orascom Telecom Holding SAE (GDR)1		462,982			12,661
Telekom Austria AG, non-registered shares1		583,453			8,454
Joint-Stock Financial Corp. Sistema (GDR)1		642,000			3,543
Bayan Telecommunications, Inc., Class A1,2,4		43,010			0
Bayan Telecommunications, Inc., Class B1,2,4		14,199			0
					702,267


CONSUMER DISCRETIONARY — 9.61%
Industria de Diseno Textil, SA1		3,106,000			137,630
Esprit Holdings Ltd.1		14,785,900			84,287
JCDecaux SA1		3,470,802			59,907
Marks and Spencer Group PLC1		14,618,000			46,017
Fiat SpA1		6,920,000			45,231
China Dongxiang (Group) Co., Ltd.1		165,628,000			40,454
Daimler AG1		997,000			37,976
Burberry Group PLC1		11,521,100			37,373
H & M Hennes & Mauritz AB, Class B1		774,000			30,486
Kingfisher PLC1		9,530,000			18,851
Porsche Automobil Holding SE, nonvoting preferred1		213,751			16,694
AB Electrolux, Series B1		1,750,000			15,172
Honda Motor Co., Ltd.1		691,000			14,953
Kesa Electricals PLC1		9,575,630			12,384
OPAP (Greek Organization of Football Prognostics) SA1		429,330			12,382
Renault SA1		419,000			10,956
Carnival PLC1		485,000			10,688
Techtronic Industries Co. Ltd.1		39,690,000			7,979
Multi Screen Media Private Ltd.1,2,4		82,217			6,923
British Sky Broadcasting Group PLC1		972,500			6,844
Li & Fung Ltd.1		1,152,000			1,988
Shangri-La Asia Ltd.1		240,000			277
					655,452


ENERGY — 8.24%
OAO Gazprom (ADR)1		10,348,300			148,322
China National Offshore Oil Corp.1		109,835,000			104,383
Aker Solutions ASA1		7,945,000			52,866
Woodside Petroleum Ltd.1		1,683,000			44,306
Eni SpA1		1,725,000			40,977
Sasol Ltd.1		1,165,820			35,251
Reliance Industries Ltd.1		1,221,000			31,195
Royal Dutch Shell PLC, Class B1		782,719			19,924
Royal Dutch Shell PLC, Class A1		372,000			9,720
Canadian Natural Resources, Ltd.		740,000			29,606
Oil & Natural Gas Corp. Ltd.1		1,743,000			24,053
TOTAL SA1		256,000			13,991
StatoilHydro ASA1		431,100			7,147
					561,741


INDUSTRIALS — 7.63%
Siemens AG1		1,411,000			105,947
Ryanair Holdings PLC (ADR)2		3,311,400			96,295
SMC Corp.1		831,200			84,853
Schneider Electric SA1		540,000			40,436
Samsung Engineering Co., Ltd.1		1,105,000			39,219
Wolseley PLC1		5,953,000			33,571
Sandvik AB1		4,875,000			31,218
ASSA ABLOY AB, Class B1		2,419,000			27,666
Atlas Copco AB, Class A1		2,335,700			20,266
Vallourec SA1		150,000			17,103
Kingspan Group PLC1		2,154,426			9,416
FANUC LTD1		130,100			9,232
AB Volvo, Class B1		965,000			5,375
					520,597


INFORMATION TECHNOLOGY — 7.12%
Murata Manufacturing Co., Ltd.1		1,737,500			67,960
Taiwan Semiconductor Manufacturing Co. Ltd.1		27,583,065			37,826
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)		1,898,236			14,996
HOYA CORP.1		2,864,800			49,657
HTC Corp.1		4,667,500			47,173
SAP AG1		1,045,000			37,545
Canon, Inc.1		1,053,100			32,986
Lenovo Group Ltd.1		118,836,000			32,614
Delta Electronics, Inc.1		15,270,458			29,774
Redecard SA, ordinary nominative		2,605,000			28,944
Mediatek Incorporation1		3,490,317			23,623
Rohm Co., Ltd.1		456,100			22,980
Hirose Electric Co., Ltd.1		217,300			21,891
Ibiden Co., Ltd.1		1,000,000			20,569
Toshiba Corp.1		2,280,000			9,367
Samsung Electronics Co., Ltd.1		19,000			6,886
Hon Hai Precision Industry Co., Ltd.1		583,759			1,153
					485,944


CONSUMER STAPLES — 4.73%
L’Oréal SA1		1,536,011			133,805
Nestlé SA1		2,118,800			82,989
Anheuser-Busch InBev NV, nonvoting1		1,933,414			44,936
Groupe Danone SA1		424,800			25,702
Koninklijke Ahold NV1		1,308,000			16,116
Tesco PLC1		1,923,357			10,135
SABMiller PLC1		379,600			6,465
ITC Ltd.1		582,436			2,075
Wal-Mart de México, SAB de CV, Series V		100,240			269
					322,492


MATERIALS — 2.97%
Linde AG1		552,500			46,870
JSR Corp.1		4,100,600			46,050
JSC Uralkali (GDR)1		2,520,760			22,579
JSC Uralkali (GDR)1,3		521,427			4,670
ArcelorMittal1		1,065,000			25,792
POSCO1		78,956			23,278
L’Air Liquide SA, non-registered shares1		174,240			15,982
CRH PLC1		377,897			9,561
Nitto Denko Corp.1		409,000			7,840
					202,622


UTILITIES — 1.67%
GDF Suez1		1,059,589			52,608
RWE AG1		534,000			48,124
E.ON AG1		197,300			7,998
SUEZ Environnement Co.1,2		315,250			5,329
					114,059


MISCELLANEOUS — 3.72%
Other common stocks in initial period of acquisition					253,476


Total common stocks (cost: $7,983,909,000)					5,869,803


	Principal amount
Short-term securities — 13.20%		(000	)

Freddie Mac 0.45%–2.65% due 1/6–5/21/2009	$	212,000			211,840
Federal Home Loan Bank 0.15%–2.10% due 1/16–3/16/2009		90,500			90,456
Caisse d’Amortissement de la Dette Sociale 0.25%–0.75% due 2/9–3/2/2009		75,000			74,846
Park Avenue Receivables Co., LLC 1.40% due 1/5/20093		50,500			50,490
Nestlé Capital Corp. 0.65% due 2/10/20093		50,000			49,956
Shell International Finance BV 0.40%–2.15% due 2/3–4/30/20093		45,200			45,157
Denmark (Kingdom of) 0.55%–0.88% due 2/6–2/9/2009		43,300			43,268
Unilever Capital Corp. 0.55%–0.80% due 2/23–4/13/20093		41,400			41,361
Hewlett-Packard Co. 0.60% due 3/2/20093		35,000			34,979
KfW 1.15% due 1/8/20093		30,000			29,992
Enterprise Funding Co. LLC 1.40% due 1/9/20093		12,900			12,895
Ranger Funding Co. LLC 0.25%–0.45% due 1/7–1/26/20093		16,700			16,697
BASF AG 2.05% due 2/20/20093		25,000			24,957
European Investment Bank 1.30% due 3/3/2009		25,000			24,955
Siemens Capital Co. LLC 0.30%–0.70% due 1/13–2/13/20093		24,000			23,992
BMW U.S. Capital LLC 2.10% due 1/6/20093		20,100			20,092
Fannie Mae 0.20% due 2/18/2009		16,300			16,296
HSBC Finance Corp. 0.50% due 1/2/2009		15,000			15,000
AT&T Inc. 0.35% due 1/20/20093		15,000			14,997
Chevron Funding Corp. 0.25% due 2/5/2009		15,000			14,996
Calyon North America Inc. 0.93% due 2/27/2009		14,600			14,578
Microsoft Corp. 0.30% due 3/13/20093		9,900			9,895
Caterpillar Financial Services Corp. 0.40% due 2/4/2009		6,800			6,797
Brown-Forman Corp. 1.20% due 2/3/20093		4,800			4,795
General Dynamics Corp. 0.15% due 1/15/20093		3,300			3,300
Pfizer Inc 1.30% due 3/13/20093		2,600			2,599
Procter & Gamble International Funding S.C.A. 0.35% due 3/6/20093		1,100			1,100

Total short-term securities (cost: $900,064,000)					900,286


Total investment securities (cost: $8,883,973,000)					6,770,089
Other assets less liabilities					51,944

Net assets				$	6,822,033

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,”

was $5,219,346,000, which represented 76.51% of the net assets of the fund.

2	Security did not produce income during the last 12 months.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $395,178,000, which represented 5.79% of the net assets of the fund.

4	Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition dates	Cost (000)		Value (000)		Percent of net assets

Multi Screen Media Private Ltd.	9/6/2000–4/18/2002	$	32,519	$	6,923		.10	%
Bayan Telecommunications, Inc., Class A	2/11/1998–8/31/1998		104		0		.00
Bayan Telecommunications, Inc., Class B	2/11/1998–8/31/1998		34		0		.00

Total restricted securities		$	32,657	$	6,923		.10	%

Key to abbreviations

ADR = American Depositary Receipts

GDR = Global Depositary Receipts

New World Fund

Investment portfolio

December 31, 2008

Common stocks — 68.65%	Shares			Value (000)

CONSUMER STAPLES — 11.79%
Tesco PLC1		3,683,418		$	19,410
Nestlé SA1		315,000			12,338
Beiersdorf AG1		205,000			12,226
Coca-Cola Co.		232,000			10,503
Fomento Económico Mexicano, SAB de CV (ADR)		329,700			9,934
Wal-Mart de México, SAB de CV, Series V (ADR)1		298,000			7,987
Wal-Mart de México, SAB de CV, Series V		705,000			1,889
Anheuser-Busch InBev NV1		416,000			9,669
SABMiller PLC1		469,000			7,987
British American Tobacco PLC1		293,000			7,700
Grupo Nacional de Chocolates SA		935,000			6,494
China Yurun Food Group Ltd.1		5,019,000			5,938
Avon Products, Inc.		245,288			5,894
IOI Corp. Bhd.1		4,778,500			4,970
PepsiCo, Inc.		90,000			4,929
Unilever NV, depository receipts1		154,500			3,753
Procter & Gamble Co.		55,000			3,400
Cia. de Bebidas das Américas — AmBev, preferred nominative (ADR)		60,000			2,659
Cia. de Bebidas das Américas — AmBev, ordinary nominative (ADR)		12,000			435
Groupe Danone SA1		50,000			3,025
Diageo PLC1		190,000			2,673
X5 Retail Group NV (GDR)1,2,3		281,776			2,433
X5 Retail Group NV (GDR)1,3		14,200			123
Poslovni sistem Mercator, dd1		11,274			2,485
Olam International Ltd.1		2,399,100			1,940
Kimberly-Clark de México, SAB de CV, Class A		480,000			1,584
Cosan Ltd., Class A3		155,000			536
					152,914


INDUSTRIALS — 7.95%
China Railway Construction Corp. Ltd., Class H1,3		8,559,500			12,847
General Electric Co.		675,000			10,935
Schneider Electric SA1		142,050			10,637
Murray & Roberts Holdings Ltd.1		1,988,242			10,304
Enka Insaat ve Sanayi AS1		1,936,666			6,672
Siemens AG1		83,100			6,240
United Technologies Corp.		100,000			5,360
ABB Ltd1,3		352,000			5,273
Container Corp. of India Ltd.1		379,800			4,878
Boart Longyear Ltd.1		31,450,000			4,525
Wienerberger AG1		223,300			3,738
FedEx Corp.		50,000			3,208
IVRCL Infrastructures & Projects Ltd.1		1,000,000			3,022
Caterpillar Inc.		61,500			2,747
Bidvest Group Ltd.1,3		220,905			2,500
IJM Corp. Bhd.1,3		2,503,800			2,046
KBR, Inc.		124,900			1,899
Embraer — Empresa Brasileira de Aeronáutica SA, ordinary nominative (ADR)		105,000			1,702
Hyundai Engineering & Construction Co., Ltd.1		30,000			1,395
Italian-Thai Development PCL1		15,221,100			1,009
GS Engineering & Construction Corp.1		20,700			983
Daelim Industrial Co., Ltd.1,3		21,484			787
Doosan Heavy Industries and Construction Co., Ltd.1		8,070			413
					103,120


INFORMATION TECHNOLOGY — 7.55%
Nokia Corp. (ADR)		618,700			9,652
Nokia Corp.1		598,600			9,303
Samsung Electronics Co., Ltd.1		45,725			16,571
Infosys Technologies Ltd.1		600,000			13,935
Google Inc., Class A3		43,000			13,229
HTC Corp.1		1,027,000			10,380
Cisco Systems, Inc.3		311,500			5,078
Yahoo! Inc.3		370,000			4,514
HOYA CORP.1		234,400			4,063
Agilent Technologies, Inc.3		245,000			3,829
Kingboard Chemical Holdings Ltd.1		1,859,000			3,364
NetEase.com, Inc. (ADR)3		120,000			2,652
Venture Corp. Ltd.1		440,000			1,350
Kingboard Laminates Holdings Ltd.1		84,500			20
					97,940


TELECOMMUNICATION SERVICES — 7.47%
América Móvil, SAB de CV, Series L (ADR)		714,875			22,154
Telefónica, SA1		687,000			15,438
China Mobile Ltd.1		1,400,000			14,195
Partner Communications Co. Ltd.1		721,500			11,775
Partner Communications Co. Ltd. (ADR)		10,000			165
Telekomunikacja Polska SA1		1,643,333			10,690
Cellcom Israel Ltd.		322,000			7,116
Vodafone Group PLC1		2,132,500			4,342
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B1		5,440,000			3,555
Telekom Austria AG, non-registered shares1		220,000			3,188
TIM Participações SA, ordinary nominative3		825,000			1,751
TIM Participações SA, preferred nominative (ADR)		80,000			999
China Unicom Ltd.1		1,150,000			1,399
HT — Hrvatske telekomunikacije dd (GDR)1,2		4,380			171
					96,938


FINANCIALS — 6.97%
PT Bank Rakyat Indonesia (Persero) Tbk1		25,653,150			11,391
Amil Participações SA, ordinary nominative		2,752,410			8,568
FirstRand Ltd.1		4,526,627			7,859
Housing Development Finance Corp. Ltd.1		213,600			6,680
Industrial and Commercial Bank of China Ltd., Class H1		12,550,000			6,670
Bancolombia SA (ADR)		210,000			4,903
Unibanco-União de Bancos Brasileiros SA, units (GDR)		75,000			4,846
China Life Insurance Co. Ltd., Class H1		1,525,000			4,700
Banco Santander, SA1		465,254			4,501
Itaúsa — Investimentos Itaú SA, preferred nominative		1,212,383			4,199
Asya Katilim Bankasi AS, Class B1,3		4,800,000			3,658
Türkiye Is Bankasi AS, Class C1		1,050,000			2,840
Banco Itaú Holding Financeira SA, preferred nominative		234,500			2,646
Bank Muscat (SAOG) (GDR)1		383,655			2,590
Bank Pekao SA1		60,000			2,578
Bumiputra-Commerce Holdings Bhd.1		1,500,000			2,562
Bank of the Philippine Islands1		2,656,246			2,253
Kotak Mahindra Bank Ltd.1		259,943			1,939
Bank Hapoalim BM1,3		830,000			1,801
Erste Bank der oesterreichischen Sparkassen AG1		58,424			1,373
Türkiye Garanti Bankasi AS1,3		513,000			881
Banco Industrial e Comercial SA, preferred nominative		512,900			648
Citigroup Inc.		42,000			282
China Construction Bank Corp., Class H1		500			—
					90,368


CONSUMER DISCRETIONARY — 6.91%
Toyota Motor Corp.1		563,400			18,401
McDonald’s Corp.		175,000			10,883
Nitori Co., Ltd.1		138,000			10,686
Honda Motor Co., Ltd.1		485,000			10,495
Truworths International Ltd.1		1,282,000			4,712
Yue Yuen Industrial (Holdings) Ltd.1		2,277,500			4,513
Desarrolladora Homex, SA de CV (ADR)3		160,000			3,653
Swatch Group Ltd1		80,000			2,173
Swatch Group Ltd, non-registered shares1		10,450			1,451
WABCO Holdings Inc.		215,000			3,395
GOME Electrical Appliances Holding Ltd.1		30,036,000			3,287
Grupo Televisa, SAB, ordinary participation certificates (ADR)		215,000			3,212
Nokian Renkaat Oyj1		247,500			2,782
Melco Crown Entertainment Ltd. (ADR)3		760,000			2,409
TVN SA1		500,000			2,288
Central European Media Enterprises Ltd., Class A3		75,000			1,629
Li & Fung Ltd.1		886,600			1,530
Gafisa SA, ordinary nominative		300,000			1,361
C C Land Holdings Ltd.1		3,000,000			763
					89,623


ENERGY — 5.85%
Petróleo Brasileiro SA — Petrobras, ordinary nominative (ADR)		605,200			14,821
Petróleo Brasileiro SA — Petrobras, preferred nominative (ADR)		212,000			4,327
OAO Gazprom (ADR)1		907,500			13,007
Saipem SpA, Class S1		466,000			7,844
Cairn India Ltd.1,3		1,507,000			5,427
TOTAL SA1		60,000			3,279
TOTAL SA (ADR)		32,500			1,797
Tenaris SA (ADR)		238,000			4,993
Noble Energy, Inc.		70,000			3,445
Chevron Corp.		45,000			3,329
Oil and Gas Development Co. Ltd.1		4,530,000			2,588
Nexen Inc.		128,035			2,254
Reliance Industries Ltd.1		80,000			2,044
Cameco Corp.		100,000			1,728
Oil & Natural Gas Corp. Ltd.1		97,000			1,339
Eurasia Drilling Co. Ltd. (GDR)1,2,3		254,800			895
Eurasia Drilling Co. Ltd. (GDR)1,3		49,500			174
OAO TMK (GDR)1,2		142,826			557
OAO TMK (GDR)1		127,000			495
Sterling Energy PLC1,3		24,852,500			990
Smith International, Inc.		25,000			572
					75,905


HEALTH CARE — 3.87%
Novo Nordisk A/S, Class B1		350,320			17,879
Krka, dd, Novo mesto1		184,640			12,359
Cochlear Ltd.1		303,000			12,168
Teva Pharmaceutical Industries Ltd. (ADR)		155,000			6,598
Richter Gedeon NYRT1		7,400			1,115
					50,119


MATERIALS — 3.63%
Sigma-Aldrich Corp.		215,000			9,082
Votorantim Celulose e Papel SA, preferred nominative (ADR)3		851,100			6,749
Anglo American PLC1		241,850			5,535
BHP Billiton PLC1		262,664			5,004
Israel Chemicals Ltd.1		635,000			4,440
PT Semen Gresik1		10,500,000			4,121
Cia. Vale do Rio Doce, Class A, preferred nominative		252,000			2,603
Cia. Vale do Rio Doce, Class A, preferred nominative (ADR)		130,000			1,384
First Quantum Minerals Ltd.		198,000			2,862
United Phosphorus Ltd.1		800,000			1,822
Holcim Ltd.1		31,500			1,803
ACC Ltd.1		105,000			1,044
Aracruz Celulose SA, Class B, preferred nominative (ADR)		54,000			609
					47,058


UTILITIES — 2.69%
China Resources Power Holdings Co. Ltd.1		5,424,000			10,543
Cia. Energética de Minas Gerais — Cemig, preferred nominative		620,000			8,516
CLP Holdings Ltd.1		887,000			6,031
Cheung Kong Infrastructure Holdings Ltd.1		1,245,000			4,698
NTPC Ltd.1		910,000			3,400
Veolia Environnement1		55,125			1,734
					34,922


MISCELLANEOUS — 3.97%
Other common stocks in initial period of acquisition					51,485


Total common stocks (cost: $1,165,934,000)					890,392



Rights & warrants — 0.00%

MISCELLANEOUS — 0.00%
Other rights & warrants in initial period of acquisition					14


Total rights & warrants (cost: $26,000)					14



				Value
Convertible securities — 0.03%					(000	)

MISCELLANEOUS — 0.03%
Other convertible securities in initial period of acquisition				$	358


Total convertible securities (cost: $568,000)					358


	Principal amount
Bonds, notes & other debt instruments — 11.26%		(000	)

BONDS & NOTES OF GOVERNMENTS OUTSIDE THE U.S. — 10.24%
Brazilian Treasury Bill 6.00% 20101,4	BRL6,944				2,921
Brazil (Federal Republic of) Global 9.25% 2010	$	2,200			2,422
Brazilian Treasury Bill 6.00% 20111,4	BRL 908				377
Brazil (Federal Republic of) 10.00% 20141		7,600			2,941
Brazilian Treasury Bill 6.00% 20151,4		4,273			1,657
Brazil (Federal Republic of) Global 12.50% 2016		1,500			684
Brazil (Federal Republic of) Global 6.00% 2017	$	1,800			1,867
Brazil (Federal Republic of) 10.00% 20171	BRL8,500				3,122
Brazil (Federal Republic of) Global 8.00% 20185	$	3,334			3,751
Brazil (Federal Republic of) Global 8.875% 2019		1,000			1,225
Brazil (Federal Republic of) Global 12.50% 2022	BRL2,600				1,169
Brazil (Federal Republic of) Global 8.875% 2024	$	100			124
Brazil (Federal Republic of) Global 10.125% 2027		1,425			1,974
Brazil (Federal Republic of) Global 7.125% 2037		400			456
Brazil (Federal Republic of) Global 11.00% 2040		4,375			5,731
Brazilian Treasury Bill 6.00% 20451,4	BRL3,560				1,287
United Mexican States Government Global 5.519% 20096	$	1,250			1,252
United Mexican States Government Global 10.375% 2009		397			400
United Mexican States Government Global 9.875% 2010		4,125			4,465
United Mexican States Government 9.00% 2012	MXN10,000				759
United Mexican States Government Global 6.375% 2013	$	3,875			4,088
United Mexican States Government, Series MI10, 8.00% 2013	MXN 7,671				560
United Mexican States Government, Series MI10, 9.50% 2014		33,500			2,617
United Mexican States Government, Series M10, 8.00% 2015		30,000			2,183
United Mexican States Government Global 5.625% 2017	$	3,400			3,417
United Mexican States Government, Series M20, 10.00% 2024	MXN25,000				2,085
United Mexican States Government Global 7.50% 2033	$	350			402
United Mexican States Government Global 6.05% 2040		780			760
Colombia (Republic of) Global 11.75% 2010	COP6,000,000				2,769
Colombia (Republic of) Global 10.00% 2012	$	3,300			3,704
Colombia (Republic of) Global 10.75% 2013		1,360			1,591
Colombia (Republic of) Global 8.25% 2014		400			433
Colombia (Republic of) Global 12.00% 2015	COP3,380,000				1,662
Colombia (Republic of) Global 7.375% 2017	$	2,800			2,926
Colombia (Republic of) Global 11.75% 2020		315			424
Colombia (Republic of) Global 8.125% 2024		500			537
Colombia (Republic of) Global 9.85% 2027	COP1,810,000				806
Colombia (Republic of) Global 7.375% 2037	$	2,499			2,462
Turkey (Republic of) 14.00% 2011	TRY7,400				4,662
Turkey (Republic of) 10.00% 20121,4		3,454			2,130
Turkey (Republic of) 16.00% 2012		2,500			1,611
Turkey (Republic of) 16.00% 2013		1,650			1,059
Turkey (Republic of) 7.25% 2015	$	1,700			1,700
Turkey (Republic of) 7.00% 2016		2,800			2,744
Turkey (Republic of) 6.75% 2018		2,500			2,387
Turkey (Republic of) 7.00% 2019		1,000			970
Russian Federation 8.25% 20105		2,400			2,496
Russian Federation 8.25% 20102,5		189			196
Russian Federation 7.50% 20305		5,194			4,558
Russian Federation 7.50% 20302,5		3,338			2,929
Philippines (Republic of) 8.375% 2009		1,665			1,673
Philippines (Republic of) 8.25% 2014		1,000			1,045
Philippines (Republic of) 9.875% 20191		2,200			2,486
Philippines (Republic of) 7.75% 2031		2,235			2,269
Peru (Republic of) 8.375% 2016		4,953			5,362
Peru (Republic of) 7.35% 2025		500			500
Peru (Republic of) 6.55% 20375		782			702
Panama (Republic of) Global 7.25% 2015		1,175			1,204
Panama (Republic of) Global 7.125% 2026		890			843
Panama (Republic of) Global 8.875% 2027		300			328
Panama (Republic of) Global 9.375% 2029		1,148			1,269
Panama (Republic of) Global 6.70% 20365		1,824			1,651
Polish Government 5.00% 2013	PLN4,280				1,438
Polish Government 5.25% 2013		4,550			1,543
Polish Government 5.25% 2017		1,200			402
Polish Government 5.75% 2022		1,000			351
Malaysian Government 3.756% 2011	MYR6,300				1,857
Malaysian Government 3.833% 2011		3,200			947
Malaysian Government 4.24% 2018		2,700			842
Egypt (Arab Republic of) Treasury Bill 0% 2009	EGP3,425				593
Egypt (Arab Republic of) 9.10% 2010		1,000			177
Egypt (Arab Republic of) 8.60% 2011		4,560			788
Egypt (Arab Republic of) 8.75% 2012		3,000			454
Egypt (Arab Republic of) 11.625% 2014		2,679			486
Argentina (Republic of) 5.83% 20331,4,5,7	ARS17,707				1,612
Argentina (Republic of) GDP-Linked 2035		43,865			527
Argentina (Republic of) 0.63% 20381,4,5		5,649			148
Dominican Republic 9.50% 2011	$	231			195
Dominican Republic 9.04% 2018		437			273
Dominican Republic 8.625% 20272,5		2,150			1,107
Czech Republic 3.70% 2013	CZK3,820				197
South Africa (Republic of) 6.50% 2014	$	150			142
					132,863


ENERGY — 0.60%
Gaz Capital SA 7.343% 2013		100			82
Gaz Capital SA 8.146% 2018		3,380			2,400
Gazprom International SA 7.201% 20205		1,572			1,218
Gaz Capital SA, Series 9, 6.51% 2022		1,500			896
Gaz Capital SA 6.51% 20222		600			358
Open Joint Stock Co. Gazprom, Series 2, 8.625% 2034		375			302
Gaz Capital SA 7.288% 2037		1,600			952
Pemex Project Funding Master Trust 6.625% 2035		1,800			1,526
					7,734


MATERIALS — 0.18%
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		975			830
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		370			304
Vale Overseas Ltd. 6.25% 2017		800			756
C10 Capital (SPV) Ltd. 6.722% (undated)2,6		1,000			477
					2,367


UTILITIES — 0.14%
AES Panamá, SA 6.35% 20162		1,100			884
Enersis SA 7.375% 2014		650			678
AES Gener SA 7.50% 2014		250			248
					1,810


FINANCIALS — 0.04%
Kazkommerts International BV 8.00% 2015		1,000			475


TELECOMMUNICATION SERVICES — 0.03%
Orascom Telecom 7.875% 20142		850			455


INDUSTRIALS — 0.03%
TFM, SA de CV 9.375% 2012		400			368


Total bonds, notes & other debt instruments (cost: $159,973,000)					146,072



Short-term securities — 19.53%

Federal Home Loan Bank 0.25%–0.80% due 2/24–4/9/2009		28,100			28,086
Nestlé Capital Corp. 0.65% due 2/10/20092		25,200			25,178
Freddie Mac due 0.75%–0.90% 1/16–2/23/2009		25,100			25,091
Rabobank USA Financial Corp. 0.85% due 1/9/2009		21,200			21,195
AT&T Inc. 1.15% due 1/7/20092		19,700			19,696
Denmark (Kingdom of) 0.88% due 2/6/2009		14,600			14,587
Thunder Bay Funding, LLC 0.60% due 1/15/20092		14,500			14,496
Ranger Funding Co. LLC 0.25% due 1/26/20092		12,200			12,198
BASF AG 0.90% due 1/12/20092		11,000			10,997
Caisse d’Amortissement de la Dette Sociale 1.20% due 2/9/2009		11,000			10,976
Calyon North America Inc. 0.93% due 2/27/2009		10,400			10,384
Park Avenue Receivables Co., LLC 0.45% due 1/14/20092		10,000			9,998
Total Capital SA 0.65% due 2/17/20092		8,500			8,485
Bank of Nova Scotia 1.25% due 2/11/2009		8,400			8,383
British Columbia Hydro and Power Authority 0.25% due 3/18/2009		6,900			6,883
BMW U.S. Capital LLC 2.10% due 1/6/20092		6,500			6,497
Brown-Forman Corp. 1.20% due 2/3/20092		6,500			6,493
Walgreen & Co. 0.25% due 1/30/20092		5,100			5,099
Shell International Finance BV 0.40% due 4/30/20092		4,700			4,696
Siemens Capital Co. LLC 0.30% due 1/13/20092		3,900			3,900

Total short-term securities (cost: $253,334,000)					253,318


Total investment securities (cost: $1,579,835,000)					1,290,154
Other assets less liabilities					6,940

Net assets				$	1,297,094

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $626,958,000, which represented 48.34% of the net assets of the fund.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $138,195,000, which represented 10.65% of the net assets of the fund.

3	Security did not produce income during the last 12 months.

4	Index-linked bond whose principal amount moves with a government retail price index.

5	Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

6	Coupon rate may change periodically.

7	Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

Key to abbreviations

ADR = American Depositary Receipts

GDR = Global Depositary Receipts

ARS = Argentine pesos

BRL = Brazilian reais

COP = Colombian pesos

CZK = Czech korunas

EGP = Egyptian pounds

MXN = Mexican pesos

MYR = Malaysian ringgits

PLN = Polish zloty

TRY = New Turkish liras

Blue Chip Income and Growth Fund

Investment portfolio

December 31, 2008

Common stocks — 90.61%	Shares			Value (000)

HEALTH CARE — 19.11%
Merck & Co., Inc.		2,715,000		$	82,536
Aetna Inc.		2,500,000			71,250
Medtronic, Inc.		1,800,000			56,556
UnitedHealth Group Inc.		1,900,000			50,540
Amgen Inc.1		875,000			50,531
Eli Lilly and Co.		1,125,000			45,304
Abbott Laboratories		750,000			40,028
AstraZeneca PLC (ADR)		975,000			40,004
Pfizer Inc		1,900,000			33,649
Cardinal Health, Inc.		850,000			29,299
Bristol-Myers Squibb Co.		1,125,000			26,156
Schering-Plough Corp.		420,000			7,153
Covidien Ltd.		175,000			6,342
					539,348


INFORMATION TECHNOLOGY — 18.92%
Microsoft Corp.		5,460,000			106,142
Hewlett-Packard Co.		2,650,000			96,169
International Business Machines Corp.		830,000			69,853
Nokia Corp. (ADR)		4,000,000			62,400
Oracle Corp.1		2,350,000			41,665
Intel Corp.		2,200,000			32,252
Texas Instruments Inc.		1,900,000			29,488
Cisco Systems, Inc.1		1,650,000			26,895
Yahoo! Inc.1		1,989,600			24,273
Linear Technology Corp.		550,000			12,166
Automatic Data Processing, Inc.		250,000			9,835
SAP AG (ADR)		255,000			9,236
KLA-Tencor Corp.		280,000			6,101
Maxim Integrated Products, Inc.		400,000			4,568
Tyco Electronics Ltd.		175,000			2,837
					533,880


INDUSTRIALS — 13.24%
General Electric Co.		6,550,000			106,110
United Parcel Service, Inc., Class B		750,000			41,370
United Technologies Corp.		760,000			40,736
Norfolk Southern Corp.		592,800			27,891
Illinois Tool Works Inc.		650,000			22,782
Rockwell Automation		600,000			19,344
Emerson Electric Co.		500,000			18,305
Waste Management, Inc.		500,000			16,570
Eaton Corp.		300,000			14,913
Burlington Northern Santa Fe Corp.		160,000			12,114
Avery Dennison Corp.		350,000			11,456
Ingersoll-Rand Co. Ltd., Class A		600,000			10,410
Southwest Airlines Co.		1,000,000			8,620
Pitney Bowes Inc.		300,000			7,644
Tyco International Ltd.		300,000			6,480
Union Pacific Corp.		115,000			5,497
Lockheed Martin Corp.		40,000			3,363
					373,605


CONSUMER DISCRETIONARY — 10.25%
Lowe’s Companies, Inc.		4,300,000			92,536
Target Corp.		1,230,000			42,472
CBS Corp., Class B		4,409,600			36,115
Leggett & Platt, Inc.		2,000,000			30,380
Carnival Corp., units		650,000			15,808
Harley-Davidson, Inc.		860,000			14,594
Time Warner Inc.		1,360,000			13,682
Mattel, Inc.		700,000			11,200
Home Depot, Inc.		300,000			6,906
Royal Caribbean Cruises Ltd.		500,000			6,875
Johnson Controls, Inc.		280,000			5,085
Honda Motor Co., Ltd. (ADR)		180,000			3,841
Whirlpool Corp.		85,700			3,544
Magna International Inc., Class A		115,000			3,442
Daimler AG (New York registered)		70,000			2,679
					289,159


TELECOMMUNICATION SERVICES — 7.58%
Verizon Communications Inc.		2,900,000			98,310
AT&T Inc.		3,191,250			90,951
Embarq Corp.		349,000			12,550
Qwest Communications International Inc.		2,850,000			10,374
Sprint Nextel Corp., Series 11		988,839			1,810
					213,995


FINANCIALS — 6.33%
JPMorgan Chase & Co.		1,435,000			45,246
Citigroup Inc.		6,250,000			41,937
Bank of America Corp.		2,500,000			35,200
Capital One Financial Corp.		900,000			28,701
Bank of New York Mellon Corp.		460,000			13,032
HSBC Holdings PLC (ADR)		225,000			10,951
XL Capital Ltd., Class A		530,000			1,961
American International Group, Inc.		500,000			785
Freddie Mac		650,000			474
Fannie Mae		485,800			369
Washington Mutual, Inc.2		228,571			5
Washington Mutual, Inc.2,3		480,000			—
					178,661


CONSUMER STAPLES — 6.12%
Walgreen Co.		1,707,083			42,114
PepsiCo, Inc.		650,000			35,600
Kimberly-Clark Corp.		555,000			29,271
Kellogg Co.		592,000			25,959
ConAgra Foods, Inc.		1,200,000			19,800
General Mills, Inc.		250,000			15,188
H.J. Heinz Co.		80,000			3,008
Avon Products, Inc.		71,700			1,723
					172,663


ENERGY — 5.78%
Schlumberger Ltd.		1,250,000			52,913
Royal Dutch Shell PLC, Class A (ADR)		800,000			42,352
Exxon Mobil Corp.		200,000			15,966
ConocoPhillips		300,000			15,540
EOG Resources, Inc.		200,000			13,316
Marathon Oil Corp.		332,700			9,103
Halliburton Co.		250,000			4,545
Baker Hughes Inc.		130,000			4,169
Eni SpA (ADR)		70,000			3,347
Spectra Energy Corp		130,000			2,046
					163,297


UTILITIES — 1.72%
FPL Group, Inc.		400,000			20,132
Southern Co.		500,000			18,500
Xcel Energy Inc.		250,000			4,637
Duke Energy Corp.		260,000			3,903
FirstEnergy Corp.		25,901			1,258
					48,430


MATERIALS — 0.44%
Air Products and Chemicals, Inc.		250,000			12,567


MISCELLANEOUS — 1.12%
Other common stocks in initial period of acquisition					31,554


Total common stocks (cost: $3,382,104,000)					2,557,159



Rights & warrants — 0.00%

FINANCIALS — 0.00%
Washington Mutual, Inc., warrants, expire 20131,2,3		60,000			—


Total rights & warrants (cost: $230,000)					—



Convertible securities — 0.08%

FINANCIALS — 0.06%
Citigroup Inc., Series D, 7.00% noncumulative convertible preferred2,3		60,000			1,763


MISCELLANEOUS — 0.02%
Other convertible securities in initial period of acquisition					438


Total convertible securities (cost: $3,540,000)					2,201


	Principal amount			Value
Bonds, notes & other debt instruments — 0.01%		(000	)		(000	)

FINANCIALS — 0.01%
National City Corp. 5.80% 2017	$	300		$	255


Total bonds, notes & other debt instruments (cost: $246,000)					255



Short-term securities — 9.08%

Federal Home Loan Bank 0.18%–0.53% due 2/17–6/16/2009		53,000			52,947
Freddie Mac 0.22%–0.45% due 5/12–6/9/2009		48,500			48,415
Ranger Funding Co. LLC 0.40%–0.45% due 1/7–3/20/20094		28,000			27,990
U.S. Treasury Bills 1.635% due 1/15/2009		23,000			22,999
Walt Disney Co. 1.05%–1.70% due 1/26–2/17/2009		20,400			20,387
Honeywell International Inc. 0.30% due 3/19/20094		15,300			15,288
HSBC Finance Corp. 0.05% due 1/2/2009		11,000			11,000
Merck & Co. Inc. 0.80% due 1/26/2009		10,300			10,294
Medtronic Inc. 0.30% due 1/22/20094		10,000			9,998
International Bank for Reconstruction and Development 0.18% due 3/16/2009		10,000			9,994
Illinois Tool Works Inc. 1.80% due 1/6/2009		9,300			9,298
Genentech, Inc. 0.70% due 1/7/20094		8,700			8,699
Private Export Funding Corp. 0.15% due 3/2/20094		5,000			4,999
Emerson Electric Co. 0.40% due 3/10/20094		4,100			4,098

Total short-term securities (cost: $256,397,000)					256,406


Total investment securities (cost: $3,642,517,000)					2,816,021
Other assets less liabilities					6,206

Net assets				$	2,822,227

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Security did not produce income during the last 12 months.

2	Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition date	Cost (000)		Value (000)		Percent of net assets

Citigroup Inc., Series D, 7.00% noncumulative convertible preferred	1/15/2008	$	3,000	$	1,763		.06	%
Washington Mutual, Inc.	4/8/2008		2,000		5		—
Washington Mutual, Inc.	4/8/2008		3,970		—		—
Washington Mutual, Inc., warrants, expire 2013	4/8/2008		230		—		—

Total restricted securities		$	9,200	$	1,768		.06	%

3	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $1,763,000, which represented .06% of the net assets of the fund.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $71,072,000, which represented 2.52% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

Global Growth and Income Fund

Summary investment portfolio, December 31, 2008

Largest individual equity securities	Percent of net assets

Microsoft		3.36	%
AT&T		2.19
Newmont Mining		2.01
Telefónica		1.92
Yamana Gold		1.91
General Electric		1.85
Qwest Communications International		1.82
Merck		1.58
Barrick Gold		1.47
IBM		1.43

Common stocks - 75.84%	Shares		Value (000)			Percent of net assets

Information technology - 12.59%
Microsoft Corp.		2,810,000	$	54,626			3.36	%
International Business Machines Corp.		275,000		23,144			1.43
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)		1,618,220		12,784
Taiwan Semiconductor Manufacturing Co. Ltd. (1)		3,000,000		4,114			1.04
Google Inc., Class A (2)		51,000		15,690			.97
Novellus Systems, Inc. (2)		1,000,000		12,340			.76
Samsung Electronics Co., Ltd. (1)		30,600		11,090			.68
KLA-Tencor Corp.		500,000		10,895			.67
Yahoo! Inc. (2)		888,000		10,834			.67
Other securities				48,901			3.01
				204,418			12.59

Telecommunication services - 11.10%
AT&T Inc.		1,250,000		35,625			2.19
Telefónica, SA (1)		1,385,000		31,122			1.92
Qwest Communications International Inc.		8,100,000		29,484			1.82
Koninklijke KPN NV (1)		1,382,000		20,090			1.24
NTT DoCoMo, Inc. (1)		7,000		13,769			.85
Verizon Communications Inc.		400,000		13,560			.83
Other securities				36,618			2.25
				180,268			11.10

Materials - 10.68%
Newmont Mining Corp.		800,000		32,560			2.01
Yamana Gold Inc.		4,000,000		31,022			1.91
Barrick Gold Corp.		650,000		23,900			1.47
United States Steel Corp.		500,000		18,600			1.15
Rio Tinto PLC (1)		500,000		10,957			.68
Alcoa Inc.		900,000		10,134			.62
Other securities				46,193			2.84
				173,366			10.68

Financials - 10.57%
Macquarie Group Ltd. (1)		805,000		16,691			1.03
Industrial and Commercial Bank of China Ltd., Class H (1)		24,137,000		12,829			.79
National City Corp. (3)		6,125,000		11,086
National City Corp.		693,986		1,256			.76
Berkshire Hathaway Inc., Class B (2)		3,720		11,956			.74
People's United Financial, Inc.		585,000		10,431			.64
JPMorgan Chase & Co.		325,000		10,247			.63
Other securities				97,170			5.98
				171,666			10.57

Industrials - 7.53%
General Electric Co.		1,857,100		30,085			1.85
Schneider Electric SA (1)		256,000		19,170			1.18
Joy Global Inc.		550,000		12,589			.78
Other securities				60,404			3.72
				122,248			7.53

Consumer discretionary - 7.23%
McDonald's Corp.		200,000		12,438			.77
Yamada Denki Co., Ltd. (1)		179,500		12,434			.76
Toyota Motor Corp. (1)		378,000		12,346			.76
Carnival Corp., units		500,000		12,160			.75
Other securities				67,976			4.19
				117,354			7.23

Health care - 6.02%
Merck & Co., Inc.		842,000		25,597			1.58
UCB SA (1)		500,000		16,327			1.01
Bayer AG, non-registered shares (1)		218,500		12,868			.79
Roche Holding AG (1)		75,850		11,603			.71
Other securities				31,364			1.93
				97,759			6.02

Energy - 4.24%
China National Offshore Oil Corp. (1)		20,000,000		19,008			1.17
Royal Dutch Shell PLC, Class A (ADR)		129,000		6,829			.42
Other securities				43,022			2.65
				68,859			4.24

Consumer staples - 3.74%
Unilever NV, depository receipts (1)		90,300		2,193			.13
Other securities				58,595			3.61
				60,788			3.74

Utilities - 2.14%
Other securities				34,822			2.14


Total common stocks (cost: $1,920,857,000)				1,231,548			75.84




Preferred stocks - 1.06%

Financials - 1.06%
SMFG Preferred Capital USD 3 Ltd. 9.50% (4) (5)		11,600,000		10,686			.66
Other securities				6,508			.40

Total preferred stocks (cost: $24,585,000)				17,194			1.06





Bonds, notes & other debt instruments - 3.98%

Other - 3.98%
Other securities				64,660			3.98

Total bonds, notes & other debt instruments (cost: $83,183,000)				64,660			3.98



Short-term securities - 19.39%		Principal amount (000)

Calyon North America Inc. 0.93% due 2/27/2009	$	31,500		31,453			1.94
Freddie Mac 0.75%-0.90% due 1/16-2/23/2009		30,100		30,090			1.85
Federal Home Loan Bank 0.32%-0.50% due 2/9-4/9/2009		29,600		29,576			1.82
Total Capital Canada Ltd. 1.10% due 1/9/2009 (4)		25,500		25,493			1.57
Unilever Capital Corp. 0.50% due 4/8/2009 (4)		25,000		24,974			1.54
Fannie Mae 0.20% due 2/18/2009		20,700		20,694			1.27
Park Avenue Receivables Co., LLC 1.40% due 1/5/2009 (4)		19,700		19,696			1.21
Novartis Finance Corp. 0.25% due 2/19/2009 (4)		18,600		18,594			1.15
International Bank for Reconstruction and Development 0.25% due 3/18/2009		17,900		17,889			1.10
Denmark (Kingdom of) 0.88% due 2/6/2009		13,300		13,288			.82
General Dynamics Corp. 0.15% due 1/15/2009 (4)		12,200		12,199			.75
Shell International Finance BV 2.15% due 2/3/2009 (4)		10,000		9,989			.62
Other securities				60,904			3.75

Total short-term securities (cost: $314,819,000)				314,839			19.39

Total investment securities (cost: $2,343,444,000)				1,628,241			100.27
Other assets less liabilities				(4,304	)		(.27	)
Net assets			$	1,623,937			100.00	%

"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio.

Investments in affiliates

	Beginning shares		Additions		Reductions		Ending shares		Dividend income (000)		Value of affiliate as 12/31/08 (000)

Rickmers Maritime (1)		8,750,000		15,620,000		-		24,370,000	$	968	$	6,635

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed

as a single line item.

(1) Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in "Other securities," was $570,799,000, which represented 35.15% of the net assets of the fund.

(2) Security did not produce income during the last 12 months.

(3) Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 4/21/2008 at a cost of $30,625,000) may be subject to legal or contractual restrictions on resale. The total value of all such securities, including those in "Other securities," was $12,415,000, which represented .76% of the net assets of the fund.

(4) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $175,450,000, which represented 10.80% of the net assets of the fund.

(5) Coupon rate may change periodically.

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

Global Growth and Income Fund

Investment portfolio

December 31, 2008

Common stocks — 75.84%	Shares			Value (000)

INFORMATION TECHNOLOGY — 12.59%
Microsoft Corp.		2,810,000		$	54,626
International Business Machines Corp.		275,000			23,144
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)		1,618,220			12,784
Taiwan Semiconductor Manufacturing Co. Ltd.1		3,000,000			4,114
Google Inc., Class A2		51,000			15,690
Novellus Systems, Inc.2		1,000,000			12,340
Samsung Electronics Co., Ltd.1		30,600			11,090
KLA-Tencor Corp.		500,000			10,895
Yahoo! Inc.2		888,000			10,834
Nokia Corp.1		635,640			9,879
Cisco Systems, Inc.2		502,000			8,182
EMC Corp.2		747,000			7,821
STMicroelectronics NV1		1,000,000			6,714
Mediatek Incorporation1		985,000			6,667
Lite-On Technology Corp.1		6,030,752			3,990
Apple Inc.2		20,000			1,707
Tyco Electronics Ltd.		100,000			1,621
HTC Corp.1		132,600			1,340
Hynix Semiconductor Inc.1,2		180,000			980
					204,418


TELECOMMUNICATION SERVICES — 11.10%
AT&T Inc.		1,250,000			35,625
Telefónica, SA1		1,385,000			31,122
Qwest Communications International Inc.		8,100,000			29,484
Koninklijke KPN NV1		1,382,000			20,090
NTT DoCoMo, Inc.1		7,000			13,769
Verizon Communications Inc.		400,000			13,560
SOFTBANK CORP.1		509,300			9,203
China Unicom (Hong Kong) Ltd.1		5,173,948			6,294
Telecom Italia SpA1		2,332,000			3,802
Telecom Italia SpA, nonvoting1		1,969,900			2,204
Far EasTone Telecommunications Co., Ltd.1		3,716,913			4,251
Telekomunikacja Polska SA1		575,200			3,742
Telefónica 02 Czech Republic, AS1		165,000			3,648
Vodafone Group PLC1		1,706,000			3,474
					180,268


MATERIALS — 10.68%
Newmont Mining Corp.		800,000			32,560
Yamana Gold Inc.		4,000,000			31,022
Barrick Gold Corp.		650,000			23,900
United States Steel Corp.		500,000			18,600
Rio Tinto PLC1		500,000			10,957
Alcoa Inc.		900,000			10,134
MeadWestvaco Corp.		750,000			8,393
Cia. Vale do Rio Doce, Class A, preferred nominative (ADR)		570,000			6,071
Evraz Group SA (GDR)1		600,000			5,189
Anglo American PLC1		220,575			5,048
Grupo México, SAB de CV, Series B		7,791,599			4,972
Gold Fields Ltd.1		500,000			4,961
Impala Platinum Holdings Ltd.1		316,648			4,625
James Hardie Industries NV1		850,000			2,840
Sterlite Industries (India) Ltd.1		400,000			2,177
Nitto Denko Corp.1		100,000			1,917
					173,366


FINANCIALS — 10.57%
Macquarie Group Ltd.1		805,000			16,691
Industrial and Commercial Bank of China Ltd., Class H1		24,137,000			12,829
National City Corp.3		6,125,000			11,086
National City Corp.		693,986			1,256
Berkshire Hathaway Inc., Class B2		3,720			11,956
People’s United Financial, Inc.		585,000			10,431
JPMorgan Chase & Co.		325,000			10,247
AXA SA1		407,222			9,101
SLM Corp.2		992,600			8,834
Fairfax Financial Holdings Ltd.		27,000			8,642
Prudential PLC1		1,385,000			8,529
Champion Real Estate Investment Trust1		30,418,000			8,194
Macquarie International Infrastructure Fund Ltd.1		35,188,164			7,276
Citigroup Inc.		1,000,000			6,710
CapitaMall Trust, units1		4,660,000			5,206
Onex Corp.		335,000			5,001
Allianz SE1		41,500			4,462
Bank of America Corp.		250,000			3,520
Wells Fargo & Co.		110,000			3,243
Banco Santander, SA1		300,000			2,902
BNP Paribas SA1		65,000			2,752
Frasers Commercial Trust1		16,000,000			2,629
M&T Bank Corp.		37,500			2,153
ING Groep NV, depository receipts1		200,000			2,096
China Life Insurance Co. Ltd., Class H1		615,000			1,895
PNC Financial Services Group, Inc.		37,500			1,838
Erste Bank der oesterreichischen Sparkassen AG1		59,200			1,391
Société Générale1		10,000			508
Saizen Real Estate Investment Trust1		3,168,000			288
					171,666


INDUSTRIALS — 7.53%
General Electric Co.		1,857,100			30,085
Schneider Electric SA1		256,000			19,170
Joy Global Inc.		550,000			12,589
Ryanair Holdings PLC (ADR)2		313,000			9,102
Deutsche Lufthansa AG1		450,000			7,142
Rickmers Maritime1,4		24,370,000			6,635
Finmeccanica SpA1		382,583			5,875
Österreichische Post AG1		151,530			5,102
Outotec Oyj1		265,000			4,113
Enka Insaat ve Sanayi AS1		1,166,666			4,019
Siemens AG1		46,500			3,492
Capita Group PLC1		262,000			2,824
URS Corp.2		64,000			2,609
ABB Ltd1,2		168,500			2,524
Tyco International Ltd.		100,000			2,160
SembCorp Industries Ltd1		1,090,000			1,777
Randstad Holding NV1		81,000			1,649
Murray & Roberts Holdings Ltd.1		266,500			1,381
					122,248


CONSUMER DISCRETIONARY — 7.23%
McDonald’s Corp.		200,000			12,438
Yamada Denki Co., Ltd.1		179,500			12,434
Toyota Motor Corp.1		378,000			12,346
Carnival Corp., units		500,000			12,160
Virgin Media Inc.2		2,015,000			10,055
Honda Motor Co., Ltd.1		449,000			9,716
Esprit Holdings Ltd.1		1,177,000			6,710
Saks Inc.2		1,200,000			5,256
Time Warner Inc.		480,000			4,829
Bosideng International Holdings Ltd.1		50,000,000			4,734
Yue Yuen Industrial (Holdings) Ltd.1		2,038,500			4,040
News Corp., Class A		425,000			3,863
Carphone Warehouse Group PLC1		2,021,100			2,654
Target Corp.		76,500			2,642
Fiat SpA1		375,000			2,451
adidas AG1		62,700			2,417
Macquarie Communications Infrastructure Group1,3		2,155,516			1,329
Macquarie Communications Infrastructure Group1		1,675,149			1,033
GOME Electrical Appliances Holding Ltd.1		20,515,000			2,245
H & M Hennes & Mauritz AB, Class B1		48,400			1,906
ProSiebenSAT.1 Media AG, nonvoting preferred1		500,000			1,707
Liberty Media Corp., Liberty Interactive, Series A2		124,800			389
					117,354


HEALTH CARE — 6.02%
Merck & Co., Inc.		842,000			25,597
UCB SA1		500,000			16,327
Bayer AG, non-registered shares1		218,500			12,868
Roche Holding AG1		75,850			11,603
Schering-Plough Corp.		500,000			8,515
Novo Nordisk A/S, Class B1		140,000			7,145
Abbott Laboratories		130,000			6,938
Johnson & Johnson		102,000			6,103
Smith & Nephew PLC1		415,000			2,663
					97,759


ENERGY — 4.24%
China National Offshore Oil Corp.1		20,000,000			19,008
Saipem SpA, Class S1		592,000			9,965
Baker Hughes Inc.		307,700			9,868
Royal Dutch Shell PLC, Class A (ADR)		129,000			6,829
EnCana Corp.		132,000			6,170
Oil and Gas Development Co. Ltd.1		9,939,000			5,679
OAO Gazprom (ADR)1		350,000			5,017
Diamond Offshore Drilling, Inc.		41,000			2,417
Tenaris SA (ADR)		81,000			1,699
Reliance Industries Ltd.1		53,000			1,354
OAO TMK (GDR)1		164,500			641
OAO TMK (GDR)1,5		54,359			212
					68,859


CONSUMER STAPLES — 3.74%
Diageo PLC1		600,000			8,442
Shoppers Drug Mart Corp.		206,500			8,143
Tesco PLC1		1,455,000			7,667
Beiersdorf AG1		125,000			7,455
Coca-Cola Co.		143,000			6,474
C&C Group PLC1		2,000,000			4,060
Altria Group, Inc.		239,800			3,611
Avon Products, Inc.		133,000			3,196
Kraft Foods Inc., Class A		98,000			2,631
L’Oréal SA1		27,500			2,396
Unilever NV, depository receipts1		90,300			2,193
Nestlé SA1		44,000			1,723
SABMiller PLC1		100,000			1,703
Wal-Mart de México, SAB de CV, Series V		408,100			1,094
					60,788


UTILITIES — 2.14%
GDF Suez1		190,890			9,478
E.ON AG1		171,000			6,932
Electricité de France SA1		100,000			5,827
Exelon Corp.		100,000			5,561
Reliant Energy, Inc.2		673,000			3,890
China Resources Power Holdings Co. Ltd.1		1,021,000			1,984
Hongkong Electric Holdings Ltd.1		204,500			1,150
					34,822


Total common stocks (cost: $1,920,857,000)					1,231,548



Preferred stocks — 1.06%

FINANCIALS — 1.06%
SMFG Preferred Capital USD 3 Ltd. 9.50%5,6		11,600,000			10,686
SMFG Preferred Capital USD 2 Ltd. 8.75% noncumulative5		600,000			505
Bank of America Corp., Series K, 8.00% noncumulative6		3,000,000			2,161
Woori Bank 6.208%5,6		4,700,000			1,879
Shinsei Finance (Cayman) Ltd. 6.418% noncumulative5,6		4,322,000			910
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative5,6		3,955,000			826
Shinhan Bank 5.663%6		335,000			176
Shinhan Bank 6.819%6		100,000			51

Total preferred stocks (cost: $24,585,000)					17,194


	Principal amount
Bonds, notes & other debt instruments — 3.98%		(000	)

FINANCIALS — 0.98%
Sovereign Bancorp, Inc. 8.75% 2018	$	8,850			8,131
Zions Bancorporation 5.50% 2015		6,500			4,603
iStar Financial, Inc. 8.625% 2013		6,000			1,861
First Tennessee Bank 5.05% 2015		1,100			717
Agile Property Holdings Ltd. 9.00% 2013		930			513
					15,825


MORTGAGE-BACKED OBLIGATIONS7 — 0.83%
Banc of America Funding Trust, Series 2007-7, Class 2-A-1, 6.00% 2037	$	13,068		$	8,056
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.821% 20371,6		12,922			5,427
					13,483


BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE OF THE U.S. — 0.81%
Brazil (Federal Republic of) 10.00% 20141	BRL 9,200				3,559
Brazil (Federal Republic of) 10.00% 20171		16,500			6,060
CoBank ACB 2.596% 20225,6	$	5,050			3,561
					13,180


TELECOMMUNICATION SERVICES — 0.50%
Sprint Nextel Corp. 1.866% 20106		2,000			1,676
Sprint Capital Corp. 8.75% 2032		9,630			6,513
					8,189


CONSUMER DISCRETIONARY — 0.29%
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011		1,200			1,014
DaimlerChrysler North America Holding Corp. 7.75% 2011		250			226
DaimlerChrysler North America Holding Corp. 7.30% 2012		600			519
DaimlerChrysler North America Holding Corp. 6.50% 2013		2,270			1,773
MGM MIRAGE 8.50% 2010		1,425			1,204
					4,736


ENERGY — 0.23%
Gaz Capital SA 7.343% 2013		200			163
Gaz Capital SA 8.146% 2018		1,570			1,115
Gazprom International SA 7.201% 20207		2,193			1,699
Open Joint Stock Co. Gazprom, Series 2, 8.625% 2034		525			423
Gaz Capital SA 7.288% 2037		600			357
					3,757


INFORMATION TECHNOLOGY — 0.17%
Freescale Semiconductor, Inc. 9.875% 20146,8		10,130			2,380
NXP BV and NXP Funding LLC 7.875% 2014		1,075			425
					2,805


CONSUMER STAPLES — 0.17%
H.J. Heinz Co. 15.59% 20115,6		2,400			2,685


Total bonds, notes & other debt instruments (cost: $83,183,000)					64,660



Short-term securities — 19.39%

Calyon North America Inc. 0.93% due 2/27/2009		31,500			31,453
Freddie Mac 0.75%–0.90% due 1/16–2/23/2009		30,100			30,090
Federal Home Loan Bank 0.32%–0.50% due 2/9–4/9/2009		29,600			29,576
Total Capital Canada Ltd. 1.10% due 1/9/20095		25,500			25,493
Unilever Capital Corp. 0.50% due 4/8/20095		25,000			24,974
Fannie Mae 0.20% due 2/18/2009		20,700			20,694
Park Avenue Receivables Co., LLC 1.40% due 1/5/20095		19,700			19,696
Novartis Finance Corp. 0.25% due 2/19/20095		18,600			18,594
International Bank for Reconstruction and Development 0.25% due 3/18/2009		17,900			17,889
Denmark (Kingdom of) 0.88% due 2/6/2009		13,300			13,288
General Dynamics Corp. 0.15% due 1/15/20095		12,200			12,199
Procter & Gamble International Funding S.C.A. 0.35% due 3/6/20095		10,000			9,996
Shell International Finance BV 2.15% due 2/3/20095		10,000			9,989
Bank of Nova Scotia 1.25% due 2/11/2009		10,000			9,980
Ranger Funding Co. LLC 0.25%–0.45% due 1/7–1/26/20095		9,800			9,799
Caisse d’Amortissement de la Dette Sociale 1.20% due 2/9/2009		7,700			7,683
Thunder Bay Funding, LLC 0.95% due 1/14/20095		7,400			7,397
Alcon Capital Corp. 0.25% due 2/2/20095		7,354			7,352
KfW 0.25% due 1/20/20095		4,500			4,500
Eli Lilly and Co. 1.35% due 1/12/20095		4,200			4,197

Total short-term securities (cost: $314,819,000)					314,839


Total investment securities (cost: $2,343,444,000)					1,628,241
Other assets less liabilities					(4,304	)

Net assets				$	1,623,937

1	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $570,799,000, which represented 35.15% of the net assets of the fund.

2	Security did not produce income during the last 12 months.

3	Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition date(s)	Cost (000)		Value (000)		Percent of net assets

National City Corp.	4/21/2008	$	30,625	$	11,086		.68	%
Macquarie Communications Infrastructure Group	4/23/2007–6/24/2008		10,594		1,329		.08

Total restricted securities		$	41,219	$	12,415		.76	%

4	Represents an affiliated company as defined under the Investment Company Act of 1940.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $175,450,000, which represented 10.80% of the net assets of the fund.

6	Coupon rate may change periodically.

7	Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

8	Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

Key to abbreviations

ADR = American Depositary Receipts

GDR = Global Depositary Receipts

BRL = Brazilian reais

Growth-Income Fund

Investment portfolio

December 31, 2008

Common stocks — 85.70%	Shares			Value (000)

INFORMATION TECHNOLOGY — 21.25%
Oracle Corp.1		28,555,000		$	506,280
Microsoft Corp.		19,400,100			377,138
Hewlett-Packard Co.		9,710,000			352,376
Google Inc., Class A1		1,075,100			330,755
Yahoo! Inc.1		24,060,000			293,532
Intel Corp.		17,400,000			255,084
Cisco Systems, Inc.1		13,240,000			215,812
International Business Machines Corp.		2,500,000			210,400
SAP AG2		3,736,574			134,248
SAP AG (ADR)		920,000			33,322
Corning Inc.		14,000,000			133,420
Nokia Corp.2		7,705,000			119,747
Linear Technology Corp.		3,500,000			77,420
Flextronics International Ltd.1		29,500,000			75,520
Automatic Data Processing, Inc.		1,755,000			69,042
Xilinx, Inc.		3,869,200			68,949
NVIDIA Corp.1		8,300,000			66,981
Taiwan Semiconductor Manufacturing Co. Ltd.2		46,315,214			63,515
Symantec Corp.1		4,600,000			62,192
Paychex, Inc.		1,975,141			51,907
HOYA CORP.2		2,600,400			45,074
Maxim Integrated Products, Inc.		3,700,000			42,254
Texas Instruments Inc.		2,625,000			40,740
Analog Devices, Inc.		1,750,000			33,285
Motorola, Inc.		6,362,500			28,186
eBay Inc.1		2,000,000			27,920
QUALCOMM Inc.		750,000			26,872
KLA-Tencor Corp.		1,200,000			26,148
Affiliated Computer Services, Inc., Class A1		503,400			23,131
Redecard SA, ordinary nominative		1,642,950			18,255
Microchip Technology Inc.		820,000			16,015
EMC Corp.1		1,475,000			15,443
MEMC Electronic Materials, Inc.1		986,800			14,091
Visa Inc., Class A		202,088			10,600
Tyco Electronics Ltd.		578,750			9,382
Western Union Co.		400,000			5,736
Advanced Micro Devices, Inc.1		2,000,000			4,320
Apple Inc.1		10,000			853
					3,885,945


INDUSTRIALS — 12.63%
General Electric Co.		20,120,000			325,944
United Parcel Service, Inc., Class B		4,250,000			234,430
United Technologies Corp.		4,075,000			218,420
Norfolk Southern Corp.		3,830,736			180,236
General Dynamics Corp.		2,357,000			135,740
Avery Dennison Corp.		3,955,000			129,447
3M Co.		2,088,474			120,171
Precision Castparts Corp.		1,654,000			98,380
Southwest Airlines Co.		10,945,000			94,346
Burlington Northern Santa Fe Corp.		1,231,000			93,199
CSX Corp.		2,553,000			82,896
Lockheed Martin Corp.		965,000			81,137
Waste Management, Inc.		2,150,000			71,251
Rockwell Automation		1,900,000			61,256
Union Pacific Corp.		1,255,000			59,989
FANUC LTD2		800,000			56,770
Emerson Electric Co.		1,400,000			51,254
Tyco International Ltd.		2,361,325			51,005
Eaton Corp.		800,000			39,768
Pitney Bowes Inc.		1,552,200			39,550
Ingersoll-Rand Co. Ltd., Class A		1,900,000			32,965
Deere & Co.		550,000			21,076
AMR Corp.1		1,500,000			16,005
Continental Airlines, Inc., Class B1		800,000			14,448
					2,309,683


CONSUMER DISCRETIONARY — 11.40%
Time Warner Inc.		33,500,000			337,010
Lowe’s Companies, Inc.		12,480,477			268,580
Target Corp.		5,559,912			191,984
Best Buy Co., Inc.		4,800,000			134,928
News Corp., Class A		9,515,200			86,493
Mattel, Inc.		4,916,498			78,664
Vivendi SA2		2,300,000			75,069
Kohl’s Corp.1		1,900,000			68,780
Walt Disney Co.		3,000,000			68,070
Omnicom Group Inc.		2,515,000			67,704
Carnival PLC2		2,949,590			64,999
Time Warner Cable Inc., Class A1		2,825,000			60,596
Magna International Inc., Class A		1,988,500			59,516
Carnival Corp., units		2,124,200			51,661
Amazon.com, Inc.1		905,000			46,408
Fiat SpA2		7,000,000			45,753
VF Corp.		800,000			43,816
Staples, Inc.		2,000,000			35,840
D.R. Horton, Inc.		5,000,000			35,350
Abercrombie & Fitch Co., Class A		1,500,000			34,605
Harley-Davidson, Inc.		1,950,000			33,091
Comcast Corp., Class A		1,800,000			30,384
Royal Caribbean Cruises Ltd.		2,170,000			29,837
Toyota Motor Corp.2		900,000			29,395
SEGA SAMMY HOLDINGS INC.2		1,880,000			21,767
McDonald’s Corp.		300,000			18,657
Office Depot, Inc.1		6,000,000			17,880
Gentex Corp.		1,698,100			14,994
Li & Fung Ltd.2		8,490,000			14,649
Home Depot, Inc.		600,000			13,812
Harman International Industries, Inc.		185,000			3,095
					2,083,387


HEALTH CARE — 9.45%
Roche Holding AG2		1,437,460			219,900
Aetna Inc.		5,669,363			161,577
Cardinal Health, Inc.		4,450,000			153,392
Abbott Laboratories		2,603,978			138,974
Merck & Co., Inc.		3,800,000			115,520
Medtronic, Inc.		3,365,000			105,728
UnitedHealth Group Inc.		3,642,000			96,877
Amgen Inc.1		1,396,000			80,619
Schering-Plough Corp.		4,552,300			77,526
Medco Health Solutions, Inc.1		1,800,000			75,438
Eli Lilly and Co.		1,850,000			74,500
Hologic, Inc.1		4,931,300			64,452
Pfizer Inc		3,460,000			61,277
CIGNA Corp.		3,000,000			50,550
WellPoint, Inc.1		1,000,000			42,130
AstraZeneca PLC (ADR)		678,400			27,835
AstraZeneca PLC (Sweden)2		242,000			9,576
Genentech, Inc.1		438,800			36,381
Masimo Corp.1		750,000			22,373
Teva Pharmaceutical Industries Ltd. (ADR)		515,000			21,924
Covidien Ltd.		578,750			20,974
Bristol-Myers Squibb Co.		780,000			18,135
ResMed Inc1		383,808			14,385
Thermo Fisher Scientific Inc.1		390,000			13,287
Johnson & Johnson		200,000			11,966
St. Jude Medical, Inc.1		360,000			11,866
ev3 Inc.1		234,900			1,433
					1,728,595


ENERGY — 7.79%
Schlumberger Ltd.		6,125,000			259,271
Chevron Corp.		2,913,200			215,489
Royal Dutch Shell PLC, Class A (ADR)		2,000,000			105,880
Royal Dutch Shell PLC, Class B (ADR)		777,391			39,981
Royal Dutch Shell PLC, Class B2		139,816			3,559
Marathon Oil Corp.		4,725,000			129,276
Hess Corp.		1,930,000			103,525
Halliburton Co.		5,530,000			100,535
Devon Energy Corp.		1,475,000			96,922
Baker Hughes Inc.		2,975,000			95,408
ConocoPhillips		1,650,000			85,470
Eni SpA2		2,250,000			53,448
EOG Resources, Inc.		700,000			46,606
China National Offshore Oil Corp.2		35,000,000			33,263
Canadian Natural Resources, Ltd.		585,000			23,405
Exxon Mobil Corp.		250,000			19,958
Smith International, Inc.		238,800			5,466
Spectra Energy Corp		332,500			5,234
OAO Gazprom (ADR)2		142,100			2,037
					1,424,733


CONSUMER STAPLES — 7.16%
PepsiCo, Inc.		4,968,419			272,120
Molson Coors Brewing Co., Class B		4,781,900			233,931
Philip Morris International Inc.		5,375,000			233,866
Avon Products, Inc.		5,207,674			125,140
Wal-Mart Stores, Inc.		1,600,000			89,696
Kraft Foods Inc., Class A		3,025,000			81,221
Kellogg Co.		1,378,300			60,438
Walgreen Co.		2,000,000			49,340
Sara Lee Corp.		5,000,000			48,950
L’Oréal SA2		527,382			45,941
Altria Group, Inc.		1,806,800			27,210
Groupe Danone SA2		325,000			19,664
Kimberly-Clark Corp.		280,000			14,767
Archer Daniels Midland Co.		250,000			7,208
					1,309,492


FINANCIALS — 6.07%
JPMorgan Chase & Co.		5,957,900			187,853
Citigroup Inc.		20,000,000			134,200
Bank of New York Mellon Corp.		4,328,405			122,624
Capital One Financial Corp.		3,350,000			106,832
HSBC Holdings PLC (Hong Kong)2		5,600,000			53,760
HSBC Holdings PLC (ADR)		1,086,050			52,858
State Street Corp.		2,300,000			90,459
Arthur J. Gallagher & Co.		2,925,000			75,787
Bank of America Corp.		5,000,000			70,400
American Express Co.		2,500,000			46,375
Banco Santander, SA2		4,687,500			45,352
Marsh & McLennan Companies, Inc.		1,455,000			35,313
American International Group, Inc.		13,866,700			21,771
Allstate Corp.		635,000			20,803
Berkshire Hathaway Inc., Class A1		171			16,519
SLM Corp.1		1,257,000			11,187
Freddie Mac		9,940,000			7,256
XL Capital Ltd., Class A		662,440			2,451
Radian Group Inc.		660,000			2,429
Genworth Financial, Inc., Class A		696,500			1,971
Fannie Mae		2,275,000			1,729
Indiabulls Real Estate Ltd. (GDR)2		387,915			1,071
Washington Mutual, Inc.2,3		12,800,000			—
					1,109,000


TELECOMMUNICATION SERVICES — 4.16%
AT&T Inc.		8,327,100			237,322
Verizon Communications Inc.		6,014,831			203,903
Telephone and Data Systems, Inc.		3,100,700			98,447
Telephone and Data Systems, Inc., Special Common Shares		2,300,900			64,655
Qwest Communications International Inc.		26,710,200			97,225
Sprint Nextel Corp., Series 11		18,674,200			34,174
Embarq Corp.		677,502			24,363
					760,089


UTILITIES — 2.37%
Exelon Corp.		2,735,000			152,093
Dominion Resources, Inc.		2,500,000			89,600
PPL Corp.		1,700,000			52,173
Public Service Enterprise Group Inc.		1,785,000			52,068
FirstEnergy Corp.		930,000			45,179
FPL Group, Inc.		600,000			30,198
Duke Energy Corp.		665,000			9,982
American Electric Power Co., Inc.		67,900			2,260
					433,553


MATERIALS — 2.18%
Air Products and Chemicals, Inc.		2,000,000			100,540
Monsanto Co.		876,300			61,648
Sealed Air Corp.		3,200,000			47,808
Salzgitter AG2		511,743			40,519
United States Steel Corp.		938,820			34,924
Syngenta AG2		175,000			33,692
SSAB Svenskt Stål AB, Class A2		3,276,684			29,092
Potash Corp. of Saskatchewan Inc.		285,000			20,868
Mosaic Co.		407,531			14,101
Dow Chemical Co.		850,000			12,827
MeadWestvaco Corp.		258,200			2,889
					398,908


MISCELLANEOUS — 1.24%
Other common stocks in initial period of acquisition					226,148


Total common stocks (cost: $20,867,667,000)					15,669,533



Rights & warrants — 0.00%

FINANCIALS — 0.00%
Washington Mutual, Inc., warrants, expire 20131,2,3		1,600,000			—


Total rights & warrants (cost: $6,131,000)					—



Convertible securities — 0.29%

FINANCIALS — 0.28%
Citigroup Inc., Series D, 7.00% noncumulative convertible preferred2,3		1,777,000			52,225


MISCELLANEOUS — 0.01%
Other convertible securities in initial period of acquisition					1,300


Total convertible securities (cost: $100,321,000)					53,525


	Principal amount
Bonds, notes & other debt instruments — 0.06%		(000	)

ENERGY — 0.04%
Marathon Oil Corp. 6.00% 2017	$	10,000			8,540


CONSUMER STAPLES — 0.02%
H.J. Heinz Co. 15.59% 20114,5		2,900			3,245


Total bonds, notes & other debt instruments (cost: $11,517,000)					11,785


	Principal amount			Value
Short-term securities — 13.34%		(000	)		(000	)

Freddie Mac 0.18%–2.70% due 1/23–7/7/2009	$	485,830		$	485,389
U.S. Treasury Bills 1.40%–1.95% due 1/8–8/27/2009		339,200			339,149
Fannie Mae 0.20%–2.30% due 2/26–7/14/2009		273,330			272,895
Federal Home Loan Bank 0.44%–2.80% due 1/7–6/16/2009		239,420			239,189
Procter & Gamble International Funding S.C.A. 0.15%–1.80% due 1/28–3/9/20095		96,700			96,636
Procter & Gamble Co. 1.55% due 1/9/20095		45,000			44,984
International Bank for Reconstruction and Development 1.10% due 2/4–2/20/2009		91,100			91,056
Enterprise Funding Co. LLC 0.65%–1.00% due 2/24/20095		45,011			44,912
Ranger Funding Co. LLC 1.45% due 1/9/20095		39,900			39,885
Illinois Tool Works Inc. 1.50%–1.80% due 1/6–1/27/2009		71,000			70,967
Medtronic Inc. 0.30%–1.20% due 1/22–2/18/20095		69,600			69,515
AT&T Inc. 0.95%–1.25% due 1/29–2/25/20095		62,200			62,149
United Parcel Service Inc. 0.30%–0.41% due 4/6–4/8/20095		62,000			61,958
Eli Lilly and Co. 1.35% due 1/12–1/14/20095		53,100			53,071
Paccar Financial Corp. 1.20% due 1/14/2009		47,500			47,478
Jupiter Securitization Co., LLC 0.25% due 1/28/20095		30,300			30,294
Park Avenue Receivables Co., LLC 0.60% due 1/14/20095		14,000			13,997
General Electric Capital Corp., FDIC insured, 0.70% due 2/20/2009		42,200			42,188
Chevron Corp. 1.00%–1.15% due 1/21–3/2/2009		40,000			39,977
John Deere Capital Corp. 2.50% due 1/14/20095		40,000			39,977
Hewlett-Packard Co. 1.30% due 1/6/20095		38,111			38,103
Walt Disney Co. 1.05% due 1/16/2009		27,700			27,687
Merck & Co. Inc. 1.15% due 1/20/2009		26,400			26,383
Johnson & Johnson 0.75% due 2/27/20095		25,000			24,992
Walgreen & Co. 0.25% due 1/30/20095		24,900			24,895
Citigroup Funding Inc., FDIC insured, 0.50% due 2/18/2009		23,600			23,594
3M Co. 1.70% due 1/16/20095		22,200			22,188
Honeywell International Inc. 0.30% due 2/20–3/19/20095		19,200			19,189
Caterpillar Financial Services Corp. 0.12% due 3/2/2009		17,600			17,589
Private Export Funding Corp. 0.15% due 3/2/20095		15,000			14,996
HSBC Finance Corp. 0.05% due 1/2/2009		8,000			8,000
Estée Lauder Companies Inc. 1.05% due 1/16/20095		6,000			5,997

Total short-term securities (cost: $2,436,803,000)					2,439,279


Total investment securities (cost: $23,422,439,000)					18,174,122
Other assets less liabilities					110,816

Net assets				$	18,284,938

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Security did not produce income during the last 12 months.

2	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $1,419,023,000 which represented 7.76% of

the net assets of the fund.

3	Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition date	Cost (000)		Value (000)		Percent of net assets

Citigroup Inc., Series D, 7.00% noncumulative convertible preferred	1/15/2008	$	88,850	$	52,225		.29	%
Washington Mutual, Inc.	4/8/2008		105,869		—		.00
Washington Mutual, Inc., warrants, expire 2013	4/8/2008		6,131		—		.00

Total restricted securities		$	200,850	$	52,225		.29	%

4	Coupon rate may change periodically.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $710,983,000, which represented 3.89% of the net assets of the fund.

Key to abbreviations

ADR = American Depositary Receipts GDR = Global Depositary Receipts

International Growth and Income Fund

Investment portfolio

December 31, 2008

Common stocks — 64.30%	Shares			Value (000)

HEALTH CARE — 10.59%
Bayer AG, non-registered shares1		6,900		$	406
Roche Holding AG1		1,920			294
Orion Oyj, Class B1		16,230			275
Novartis AG1		5,021			250
Sonic Healthcare Ltd.1		23,075			240
Cochlear Ltd.1		5,250			211
					1,676


TELECOMMUNICATION SERVICES — 9.98%
América Móvil, SAB de CV, Series L (ADR)		16,900			524
France Télécom SA1		18,500			519
Telenor ASA1		50,700			341
Advanced Info Service PCL1		84,000			195
					1,579


CONSUMER DISCRETIONARY — 8.06%
Vivendi SA1		6,600			215
Esprit Holdings Ltd.1		35,700			204
Fiat SpA1		28,800			188
Industria de Diseno Textil, SA1		3,150			140
Marks and Spencer Group PLC1		41,200			130
H & M Hennes & Mauritz AB, Class B1		3,000			118
Belle International Holdings Ltd.1		230,000			102
Yue Yuen Industrial (Holdings) Ltd.1		50,500			100
OPAP (Greek Organization of Football Prognostics) SA1		2,740			79
					1,276


ENERGY — 7.50%
China National Offshore Oil Corp.1		460,000			437
Woodside Petroleum Ltd.1		11,255			296
Eni SpA1		11,600			276
OAO Gazprom (ADR)1		12,400			178
					1,187


INDUSTRIALS — 6.88%
Schneider Electric SA1		4,510			338
Sandvik AB1		28,000			179
MAN AG1		2,920			162
Legrand SA1		6,860			132
Geberit AG1		1,000			107
Deutsche Post AG1		5,390			91
AB Volvo, Class B1		14,500			81
					1,090


FINANCIALS — 4.72%
AXA SA1		10,175			227
Banco Santander, SA1		19,200			186
Japan Real Estate Investment Corp.1		16			143
Société Générale1		2,000			102
Unibail-Rodamco, non-registered shares1		600			90
					748


INFORMATION TECHNOLOGY — 3.55%
Taiwan Semiconductor Manufacturing Co. Ltd.1		233,000			319
Konica Minolta Holdings, Inc.1		11,500			89
Nippon Electric Glass Co., Ltd.1		16,000			84
Delta Electronics, Inc.1		36,000			70
					562


MATERIALS — 3.21%
Akzo Nobel NV1		9,600			397
Syngenta AG1		580			111
					508


UTILITIES — 3.02%
GDF Suez1		6,900			343
RWE AG1		1,500			135
					478


CONSUMER STAPLES — 2.21%
Philip Morris International Inc.		4,700			205
Groupe Danone SA1		2,400			145
					350


MISCELLANEOUS — 4.58%
Other common stocks in initial period of acquisition					725


Total common stocks (cost: $9,112,000)					10,179



Rights & warrants — 0.08%

MISCELLANEOUS — 0.08%
Other rights & warrants in initial period of acquisition					13


Total rights & warrants (cost: $11,000)					13


	Principal amount
Bonds, notes & other debt instruments — 1.49%		(000	)

CONSUMER DISCRETIONARY — 0.96%
DaimlerChrysler North America Holding Corp. 7.20% 2009	$	156			151


INFORMATION TECHNOLOGY — 0.53%
NXP BV and NXP Funding LLC 9.50% 2015		440			85


Total bonds, notes & other debt instruments (cost: $224,000)					236


	Principal amount			Value
Short-term securities — 25.73%		(000	)		(000	)

Fannie Mae 0.30% due 3/16/2009	$	394		$	393
Genentech, Inc. 0.25% due 1/16/20092		380			380
UBS Finance (Delaware) LLC 0.30% due 1/7/2009		300			300
Hewlett-Packard Co. 0.80% due 1/5/20092		300			300
Jupiter Securitization Co., LLC 0.30% due 2/3/20092		300			300
Procter & Gamble Co. 0.90% due 2/20/20092		300			300
KfW 0.70% due 1/15/20092		300			300
AT&T Inc. 0.70% due 2/25/20092		300			300
Unilever Capital Corp. 0.65% due 2/23/20092		300			300
Enterprise Funding Co. LLC 1.40% due 1/12/20092		300			300
Microsoft Corp. 0.30% due 3/13/20092		300			300
Electricité de France 0.85% due 2/2/20092		300			300
BASF AG 0.55% due 2/17/20092		300			299

Total short-term securities (cost: $4,072,000)					4,072


Total investment securities (cost: $13,419,000)					14,500
Other assets less liabilities					1,329

Net assets				$	15,829

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,”

	was $9,415,000, which represented 59.48% of the net assets of the fund.
2	Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $3,379,000, which represented 21.35% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

Asset Allocation Fund

Summary investment portfolio, December 31, 2008

Largest individual equity securities	Percent of net assets

Johnson & Johnson		1.97	%
AT&T		1.83
Chevron		1.67
Cisco Systems		1.56
General Electric		1.54
Abbott Laboratories		1.49
IBM		1.40
Hewlett-Packard		1.35
BHP Billiton		1.31
Amgen		1.30

Common stocks - 63.33%	Shares		Value (000)		Percent of net assets

Information technology - 13.67%
Cisco Systems, Inc. (1)		6,810,000	$	111,003		1.56
International Business Machines Corp.		1,180,000		99,309		1.40
Hewlett-Packard Co.		2,650,000		96,168		1.35
Oracle Corp. (1)		4,522,500		80,184		1.13
Nokia Corp. (ADR)		4,500,000		70,200		.99
Microsoft Corp.		3,600,000		69,984		.98
SAP AG (ADR)		1,900,000		68,818		.97
Applied Materials, Inc.		6,600,000		66,858		.94
Paychex, Inc.		2,420,000		63,598		.89
Yahoo! Inc. (1)		4,000,000		48,800		.69
Google Inc., Class A (1)		145,000		44,609		.63
Other securities				151,665		2.14
				971,196		13.67

Health care - 9.23%
Johnson & Johnson		2,340,000		140,002		1.97
Abbott Laboratories		1,990,000		106,206		1.49
Amgen Inc. (1)		1,600,000		92,400		1.30
Wyeth		1,600,000		60,016		.85
Eli Lilly and Co.		1,200,000		48,324		.68
Bristol-Myers Squibb Co.		2,000,000		46,500		.65
Boston Scientific Corp. (1)		6,000,000		46,440		.65
Medtronic, Inc.		1,250,000		39,275		.55
Other securities				77,097		1.09
				656,260		9.23

Financials - 6.92%
Wells Fargo & Co.		2,800,000		82,544		1.16
JPMorgan Chase & Co.		2,559,800		80,710		1.14
Marsh & McLennan Companies, Inc.		2,440,000		59,219		.83
ACE Ltd.		1,020,000		53,978		.76
Progressive Corp.		2,950,000		43,690		.62
Other securities				171,298		2.41
				491,439		6.92

Industrials - 6.32%
General Electric Co.		6,790,000		109,998		1.54
Boeing Co.		1,750,000		74,673		1.05
United Parcel Service, Inc., Class B		820,000		45,231		.64
Other securities				219,506		3.09
				449,408		6.32

Energy - 5.37%
Chevron Corp.		1,600,000		118,352		1.67
Schlumberger Ltd.		1,350,000		57,145		.80
Apache Corp.		640,000		47,699		.67
Other securities				158,498		2.23
				381,694		5.37

Consumer discretionary - 4.77%
Lowe's Companies, Inc.		3,810,000		81,991		1.15
McDonald's Corp.		830,000		51,618		.73
Best Buy Co., Inc.		1,705,350		47,937		.68
Other securities				157,413		2.21
				338,959		4.77

Materials - 3.82%
BHP Billiton Ltd. (2)		4,340,000		93,242		1.31
Newmont Mining Corp.		2,165,000		88,115		1.24
Other securities				89,832		1.27
				271,189		3.82

Consumer staples - 3.59%
Coca-Cola Co.		1,400,000		63,378		.89
PepsiCo, Inc.		1,000,000		54,770		.77
Archer Daniels Midland Co.		1,670,000		48,146		.68
Other securities				89,020		1.25
				255,314		3.59

Telecommunication services - 3.16%
AT&T Inc.		4,570,000		130,245		1.83
Other securities				94,469		1.33
				224,714		3.16

Utilities - 1.48%
Other securities				105,237		1.48

Miscellaneous - 5.00%
Other common stocks in initial period of acquisition				355,147		5.00


Total common stocks (cost: $5,662,449,000)				4,500,557		63.33



Preferred stocks - 0.18%

Financials - 0.18%
Other securities			$	12,688		.18

Total preferred stocks (cost: $24,149,000)				12,688		.18




Rights & warrants - 0.00%

Other - 0.00%
Other securities				-		.00


Total rights & warrants (cost: $117,000)				-		.00



Bonds, notes & other debt instruments - 26.08%	Principal amount (000)		Value (000)		Percent of net assets

Bonds & notes of U.S. government & government agencies - 9.13%
U.S. Treasury:
!3.875% 2010	$	164,000		173,728
!4.875% 2012		40,000		44,780
!6.625% 2027		35,000		52,374
!4.50% 2036		35,000		46,534
!1.625%-9.25% 2009-2038 (2) (3)		152,811		170,930		6.87
Fannie Mae 5.25%-7.25% 2011-2030		68,000		81,261		1.14
Freddie Mac 5.25% 2011		30,000		32,678		.46
Federal Home Loan Bank 5.625% 2016		17,375		18,354		.26
Other securities				28,406		.40
				649,045		9.13

Mortgage-backed obligations (4) - 7.85%
Freddie Mac:
!5.00% 2038		49,563		50,589
!6.00% 2038		45,101		46,520
!5.00%-7.50% 2016-2038 (5)		68,890		70,825		2.36
Fannie Mae 0%-7.00% 2009-2047 (2)		162,774		167,197		2.35
Other securities				222,593		3.14
				557,724		7.85

Consumer discretionary - 1.45%
Other securities				103,337		1.45

Financials - 1.34%
JPMorgan Chase Bank NA 6.00% 2017		3,500		3,536
JPMorgan Chase Capital XXII, Series V, 6.45% 2087 (5)		2,560		2,104		.08
Wells Fargo & Co. 4.375% 2013		1,235		1,210		.02
Other securities				88,149		1.24
				94,999		1.34

Telecommunication services - 0.93%
AT&T Inc. 6.40%-6.70% 2013-2038		9,750		10,422
SBC Communications Inc. 4.125%-5.10% 2009-2014		3,375		3,367
AT&T Corp. 8.00% 2031 (5)		2,000		2,520		.23
Other securities				49,438		.70
				65,747		.93

Utilities - 0.92%
Other securities				65,721		.92

Industrials - 0.88%
General Electric Co. 5.25% 2017		4,500		4,494		.06
Other securities				57,937		.82
				62,431		.88

Health care - 0.79%
Other securities				55,949		.79

Other - 2.79%
Electronic Data Systems Corp. 6.00%-7.45% 2013-2029 (5)		4,635		4,863
Hewlett-Packard Co. 5.50% 2018		3,000		3,033		.11
Cisco Systems, Inc. 5.25% 2011		2,375		2,467		.04
Other securities				187,613		2.64
				197,976		2.79

Total bonds, notes & other debt instruments (cost: $2,118,987,000)				1,852,929		26.08



Short-term securities - 9.92%					Percent of net assets

Federal Home Loan Bank 0.20%-2.10% due 1/16-3/13/2009		94,500		94,460		1.33
Freddie Mac 0.25%-0.45% due 5/28-6/24/2009		65,500		65,371		.92
Pfizer Inc 0.80%-1.40% due 1/30-2/2/2009 (6)		59,200		59,140		.83
U.S. Treasury Bills 1.94%-1.945% due 1/15-2/12/2009		49,200		49,198		.69
Medtronic Inc. 1.15% due 1/14/2009 (6)		44,300		44,264		.62
Coca-Cola Co. 1.15% due 1/22/2009 (6)		30,150		30,129		.42
Hewlett-Packard Co. 0.36% due 2/13/2009 (6)		25,000		24,989		.35
Park Avenue Receivables Co., LLC 1.40% due 1/7/2009 (6)		22,700		22,694		.32
Microsoft Corp. 0.30%-0.50% due 2/6-3/13/2009 (6)		20,500		20,489		.29
Lowe's Cos. Inc. 0.35% due 3/16/2009		14,300		14,265		.20
Other securities				280,264		3.95


Total short-term securities (cost: $705,200,000)				705,263		9.92


Total investment securities (cost: $8,510,902,000)				7,071,437		99.51
Other assets less liabilities				34,827		.49

Net assets			$	7,106,264		100.00	%

"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. One of these securities (with a value of $3,065,000, which represented .04% of the net assets of the fund) may be subject to legal or contractual restrictions on resale.

Investments in affiliates

A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. Further details on such holdings and related transactions during the year ended December 31, 2008, appear below.

	Beginning shares		Additions		Reductions		Ending shares		Dividend income (000)		Value of affiliate at 12/31/08 (000)

Rosetta Resources Inc. (1) (6) (7)		2,970,000		-		2,970,000		-		-		-

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.

(1) Security did not produce income during the last 12 months.

(2) Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in "Other securities," was $323,009,000, which represented 4.55% of the net assets of the fund.

(3) Index-linked bond whose principal amount moves with a government retail price index.

(4) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

(5) Coupon rate may change periodically.

(6) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $571,088,000, which represented 8.04% of the net assets of the fund.

(7)Unaffiliated issuer at 12/31/2008.

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

Asset Allocation Fund

Investment portfolio

December 31, 2008

Common stocks — 63.33%	Shares			Value (000)

INFORMATION TECHNOLOGY — 13.67%
Cisco Systems, Inc.1		6,810,000		$	111,003
International Business Machines Corp.		1,180,000			99,309
Hewlett-Packard Co.		2,650,000			96,168
Oracle Corp.1		4,522,500			80,184
Nokia Corp. (ADR)		4,500,000			70,200
Microsoft Corp.		3,600,000			69,984
SAP AG (ADR)		1,900,000			68,818
Applied Materials, Inc.		6,600,000			66,858
Paychex, Inc.		2,420,000			63,598
Yahoo! Inc.1		4,000,000			48,800
Google Inc., Class A1		145,000			44,609
EMC Corp.1		4,000,000			41,880
Intel Corp.		2,500,000			36,650
Avnet, Inc.1		1,700,000			30,957
Xilinx, Inc.		1,350,000			24,057
Samsung Electronics Co., Ltd.2		50,000			18,121
					971,196


HEALTH CARE — 9.23%
Johnson & Johnson		2,340,000			140,002
Abbott Laboratories		1,990,000			106,206
Amgen Inc.1		1,600,000			92,400
Wyeth		1,600,000			60,016
Eli Lilly and Co.		1,200,000			48,324
Bristol-Myers Squibb Co.		2,000,000			46,500
Boston Scientific Corp.1		6,000,000			46,440
UnitedHealth Group Inc.		1,500,000			39,900
Medtronic, Inc.		1,250,000			39,275
Roche Holding AG2		150,000			22,947
Aetna Inc.		500,000			14,250
					656,260


FINANCIALS — 6.92%
Wells Fargo & Co.		2,800,000			82,544
JPMorgan Chase & Co.		2,559,800			80,710
Marsh & McLennan Companies, Inc.		2,440,000			59,219
ACE Ltd.		1,020,000			53,978
Progressive Corp.		2,950,000			43,690
T. Rowe Price Group, Inc.		1,050,000			37,212
People’s United Financial, Inc.		2,000,000			35,660
Bank of America Corp.		2,350,000			33,088
Moody’s Corp.		1,420,000			28,528
Berkshire Hathaway Inc., Class A1		200			19,320
Citigroup Inc.		2,000,000			13,420
XL Capital Ltd., Class A		1,100,000			4,070
					491,439


INDUSTRIALS — 6.32%
General Electric Co.		6,790,000			109,998
Boeing Co.		1,750,000			74,673
United Parcel Service, Inc., Class B		820,000			45,231
Deere & Co.		1,100,000			42,152
Robert Half International Inc.		2,000,000			41,640
Roper Industries, Inc.		935,000			40,588
IDEX Corp.		1,620,000			39,123
Danaher Corp.		610,000			34,532
ITT Corp.		400,000			18,396
DigitalGlobe Inc.1,2,3		1,225,858			3,065
UAL Corp.1		910			10
					449,408


ENERGY — 5.37%
Chevron Corp.		1,600,000			118,352
Schlumberger Ltd.		1,350,000			57,145
Apache Corp.		640,000			47,699
Suncor Energy Inc.		2,150,000			41,853
Smith International, Inc.		1,600,000			36,624
Petróleo Brasileiro SA — Petrobras, ordinary nominative (ADR)		1,250,000			30,613
Transocean Ltd.1		500,000			23,625
Occidental Petroleum Corp.		300,000			17,997
Uranium One Inc.1		5,300,000			7,786
					381,694


CONSUMER DISCRETIONARY — 4.77%
Lowe’s Companies, Inc.		3,810,000			81,991
McDonald’s Corp.		830,000			51,618
Best Buy Co., Inc.		1,705,350			47,937
Johnson Controls, Inc.		2,400,000			43,584
Carnival Corp., units		1,560,000			37,939
Target Corp.		950,000			32,804
Magna International Inc., Class A		600,000			17,958
Saks Inc.1		3,500,000			15,330
Toyota Motor Corp.2		300,000			9,798
					338,959


MATERIALS — 3.82%
BHP Billiton Ltd.2		4,340,000			93,242
Newmont Mining Corp.		2,165,000			88,115
Alcoa Inc.		3,000,000			33,780
E.I. du Pont de Nemours and Co.		1,000,000			25,300
Rio Tinto PLC2		732,789			16,059
Weyerhaeuser Co.		480,000			14,693
					271,189


CONSUMER STAPLES — 3.59%
Coca-Cola Co.		1,400,000			63,378
PepsiCo, Inc.		1,000,000			54,770
Archer Daniels Midland Co.		1,670,000			48,146
Philip Morris International Inc.		990,000			43,075
Unilever NV (New York registered)		1,730,000			42,471
Origin Enterprises PLC1,2		1,773,300			3,474
					255,314


TELECOMMUNICATION SERVICES — 3.16%
AT&T Inc.		4,570,000			130,245
Vodafone Group PLC2		20,000,000			40,723
Verizon Communications Inc.		1,200,000			40,680
Sprint Nextel Corp., Series 11		7,000,000			12,810
American Tower Corp., Class A1		7,045			206
COLT Telecom Group SA1,2		51,200			50
					224,714


UTILITIES — 1.48%
Entergy Corp.		450,000			37,408
Exelon Corp.		600,000			33,366
Reliant Energy, Inc.1		5,000,000			28,900
KGen Power Corp.1,2		570,516			5,563
					105,237


MISCELLANEOUS — 5.00%
Other common stocks in initial period of acquisition					355,147


Total common stocks (cost: $5,662,449,000)					4,500,557



Preferred stocks — 0.18%

FINANCIALS — 0.18%
Bank of America Corp., Series K, 8.00% noncumulative4		4,000,000			2,881
BNP Paribas 7.195%4,5		4,000,000			2,548
QBE Capital Funding II LP 6.797%4,5		3,250,000			1,839
AXA SA, Series B, 6.379%4,5		4,000,000			1,793
Barclays Bank PLC 7.434%4,5		2,740,000			1,387
SMFG Preferred Capital USD 1 Ltd. 6.078%4,5		1,500,000			1,020
BOI Capital Funding (No. 2) LP 5.571%4,5		4,500,000			990
XL Capital Ltd., Series E, 6.50%4		1,000,000			230

Total preferred stocks (cost: $24,149,000)					12,688



Rights & warrants — 0.00%

TELECOMMUNICATION SERVICES — 0.00%
GT Group Telecom Inc., warrants, expire 20101,2,5		2,250			—


INDUSTRIALS — 0.00%
Atrium Corp., warrants, expire 20181,2,5		1,024			—


Total rights & warrants (cost: $117,000)					—


	Principal amount
Bonds, notes & other debt instruments — 26.08%		(000	)

BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 9.13%
U.S. Treasury 3.625% 2009	$	2,000			2,036
U.S. Treasury 3.875% 2010		164,000			173,728
U.S. Treasury 4.875% 2012		40,000			44,780
U.S. Treasury 4.875% 2012		33,625			37,810
U.S. Treasury 3.625% 2013		37,125			40,811
U.S. Treasury 1.875% 20152,6		22,276			20,956
U.S. Treasury 7.25% 2016		2,000			2,679
U.S. Treasury 9.25% 2016		2,000			2,918
U.S. Treasury 8.875% 2017		3,000			4,467
U.S. Treasury 1.625% 20182,6		23,785			22,513
U.S. Treasury 6.625% 2027		35,000			52,374
U.S. Treasury 5.50% 2028		12,000			16,230
U.S. Treasury 4.50% 2036		35,000			46,534
U.S. Treasury 4.375% 20382		15,000			20,510
Fannie Mae 6.25% 2011		7,625			8,045
Fannie Mae 5.25% 2012		30,000			30,836
Fannie Mae 6.25% 2029		23,375			31,810
Fannie Mae 7.25% 2030		7,000			10,570
Freddie Mac 5.25% 2011		30,000			32,678
Federal Home Loan Bank 5.625% 2016		17,375			18,354
United States Government Agency-Guaranteed (FDIC insured), Regions Bank 3.25% 2011		6,000			6,252
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp., Series L, 3.125% 2012		6,000			6,249
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.875% 2011		6,000			6,204
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012		4,250			4,366
United States Government Agency-Guaranteed (FDIC insured), PNC Funding Corp. 2.30% 2012		2,875			2,906
CoBank ACB 2.596% 20224,5		3,445			2,429
					649,045


MORTGAGE-BACKED OBLIGATIONS7 — 7.85%
Freddie Mac 6.50% 2016		668			696
Freddie Mac 5.00% 2018		1,830			1,889
Freddie Mac 5.00% 2023		3,771			3,881
Freddie Mac 6.00% 2026		16,634			17,197
Freddie Mac, Series T-041, Class 3-A, 7.50% 2032		687			720
Freddie Mac, Series 3233, Class PA, 6.00% 2036		5,305			5,493
Freddie Mac, Series 3312, Class PA, 5.50% 2037		5,428			5,547
Freddie Mac 5.724% 20374		4,473			4,576
Freddie Mac 5.00% 2038		49,563			50,589
Freddie Mac 5.00% 2038		24,421			24,927
Freddie Mac 6.00% 2038		45,101			46,520
Freddie Mac 6.50% 2038		5,673			5,899
Fannie Mae 7.00% 2009		2			2
Fannie Mae 4.89% 2012		10,000			10,489
Fannie Mae 4.00% 2015		4,471			4,432
Fannie Mae 5.50% 2017		1,954			2,017
Fannie Mae 5.00% 2018		5,335			5,505
Fannie Mae 5.50% 2020		9,704			10,032
Fannie Mae 6.00% 2021		438			456
Fannie Mae 6.00% 2021		434			451
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022		3,668			3,718
Fannie Mae 6.00% 2026		3,249			3,359
Fannie Mae 5.50% 2033		8,078			8,313
Fannie Mae 5.50% 2033		4,883			5,022
Fannie Mae 4.50% 2035		17,003			17,265
Fannie Mae, Series 2006-43, Class JO, principal only, 0% 2036		807			676
Fannie Mae 6.00% 2036		17,366			17,912
Fannie Mae, Series 2006-49, Class PA, 6.00% 2036		2,817			2,901
Fannie Mae 6.50% 2036		8,148			8,479
Fannie Mae 5.50% 2037		15,951			16,382
Fannie Mae 6.00% 2037		33,549			34,604
Fannie Mae 6.00% 20372		4,295			4,309
Fannie Mae 6.50% 2037		1,931			1,974
Fannie Mae 4.50% 2038		2,992			3,038
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		676			712
Fannie Mae 7.00% 2047		4,032			4,133
Fannie Mae 7.00% 2047		991			1,016
Wells Fargo Mortgage-backed Securities Trust, Series 2003-13, Class A-1, 4.50% 2018		11,719			10,627
Wells Fargo Mortgage-backed Securities Trust, Series 2003-16, Class II-A-1, 4.50% 2018		3,000			2,721
Wells Fargo Mortgage-backed Securities Trust, Series 2006-1, Class A-3, 5.00% 2021		5,506			4,240
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.665% 20364		5,237			3,679
CS First Boston Mortgage Securities Corp., Series 2005-7, Class III-A-1, 5.00% 2020		1,616			1,259
CS First Boston Mortgage Securities Corp., Series 2001-CKN5, Class A-4, 5.435% 2034		4,604			4,265
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034		1,457			1,015
CS First Boston Mortgage Securities Corp., Series 2001-CP4, Class A-4, 6.18% 2035		3,000			2,910
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 2036		5,000			4,704
Countrywide Alternative Loan Trust, Series 2005-6CB, Class 2-A-1, 5.00% 2020		4,600			3,579
Countrywide Alternative Loan Trust, Series 2005-50CB, Class 3-A-1, 6.00% 2035		3,551			1,799
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.821% 20372,4		4,310			1,810
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 3-A-1, 5.854% 20474		13,928			6,454
Banc of America Commercial Mortgage Inc., Series 2004-5, Class A-3, 4.561% 2041		16,190			13,319
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-3B, 5.317% 20374		12,000			9,939
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.875% 20454		2,625			2,068
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-4, 5.083% 20424		4,000			3,252
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.265% 20444		10,000			8,041
Bear Stearns Commercial Mortgage Securities Inc., Series 2005-PWR9, Class A-2, 4.735% 2042		5,910			5,364
Bear Stearns Commercial Mortgage Securities Inc., Series 2005-PWR9, Class A-3, 4.868% 2042		7,000			5,544
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 5-A-1, 5.892% 20364		12,473			6,310
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.923% 20364		1,885			949
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-2, Class 5-A-1, 6.00% 20364		5,466			2,552
Residential Accredit Loans, Inc., Series 2004-QS6, Class A-1, 5.00% 2019		2,884			2,445
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		6,693			3,858
Residential Accredit Loans, Inc., Series 2006-QA1, Class A-III-1, 6.236% 20364		4,347			2,079
Residential Accredit Loans, Inc., Series 2007-QS9, Class A-33, 6.50% 2037		2,714			1,412
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20375		3,125			2,567
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20372,5		2,125			1,611
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20372,5		2,375			1,425
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20372,5		2,725			1,500
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20372,5		2,950			1,542
Salomon Brothers Commercial Mortgage Trust, Series 2000-C3, Class B, 6.758% 2033		1,000			968
Salomon Brothers Commercial Mortgage Trust, Series 2001-C1, Class A-3, 6.428% 2035		4,654			4,557
Salomon Brothers Commercial Mortgage Trust, Series 2001-C2, Class A-3, 6.499% 2036		2,897			2,743
Commercial Mortgage Trust, Series 2000-C1, Class A-2, 7.416% 2033		2,973			2,976
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038		6,000			5,174
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class III-A-1, 6.25% 2037		9,254			5,002
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class IV-A-1, 6.50% 2037		3,548			1,560
Bear Stearns Asset-backed Securities I Trust, Series 2005-AC3, Class II-A-1, 5.25% 2020		7,246			6,204
Merrill Lynch Mortgage Trust, Series 2002-MW1, Class A-3, 5.403% 2034		3,771			3,514
Merrill Lynch Mortgage Trust, Series 2005-LC1, Class A-2, 5.202% 20444		1,898			1,775
Tower Ventures, LLC, Series 2006-1, Class A-2, 5.45% 20362,5		4,000			3,429
Tower Ventures, LLC, Series 2006-1, Class F, 7.036% 20362,5		1,460			964
GS Mortgage Securities Corp. II, Series 2001-ROCK, Class D, 6.878% 20185		4,000			4,168
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 20355		3,800			2,672
Crown Castle Towers LLC, Series 2006-1, Class F, 6.650% 20362,5		1,800			1,030
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20362,5		700			381
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.334% 20454		5,000			4,061
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A-5, 5.617% 2048		5,000			3,809
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.762% 20364		2,384			1,172
IndyMac INDX Mortgage Loan Trust, Series 2006-AR11, Class 6-A-1, 5.84% 20364		3,053			1,334
IndyMac INDX Mortgage Loan Trust, Series 2006-AR25, Class 3-A-1, 6.253% 20364		2,764			1,301
SBA CMBS Trust, Series 2005-1, Class B, 5.565% 20352,5		4,000			2,880
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20362,5		335			228
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20362,5		335			224
SBA CMBS Trust, Series 2006-1A, Class H, 7.389% 20362,5		335			221
SBA CMBS Trust, Series 2006-1A, Class J, 7.825% 20362,5		335			218
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.563% 20354		6,076			3,423
CHL Mortgage Pass-Through Trust, Series 2006-HYB5, Class 3-A-1B, 5.911% 20364		687			331
Washington Mutual Mortgage, WMALT Series 2005-1, Class 5-A-1, 6.00% 2035		5,842			3,368
GE Capital Commercial Mortgage Corp., Series 2002-1, Class A-3, 6.269% 2035		3,338			3,141
Structured Products Asset Return Certificates Trust, Series 2001-CF1, Class A, 6.36% 20332		2,865			2,726
MASTR Alternative Loan Trust, Series 2004-2, Class 2-A-1, 6.00% 2034		3,548			2,666
Four Times Square Trust, Series 2000-4TS, Class C, 7.86% 20155		2,500			2,600
American Home Mortgage Assets Trust, Series 2007-3, Class II-2A-1, 6.25% 20374		5,461			2,468
Bank of America 5.50% 20125		2,000			2,061
Residential Asset Securitization Trust, Series 2005-A8CB, Class A-11, 6.00% 2035		2,932			1,881
BCAP LLC Trust, Series 2006-AA2, Class A-1, 0.641% 20374		3,751			1,539
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20265		1,684			1,479
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 2020		1,489			1,358
Citigroup Mortgage Loan Trust, Inc., Series 2005-8, Class I-A4A, 5.572% 20352,4		2,275			1,237
Bear Stearns ARM Trust, Series 2003-9, Class III-A-2, 4.955% 20344		1,796			1,192
GMAC Commercial Mortgage Securities, Inc., Series 1999-C3, Class C, 7.786% 2036		1,000			995
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032		807			790
Banc of America Mortgage Securities, Inc., Series 2003-G, Class 2-A-1, 4.842% 20334		852			723
J.P. Morgan Mortgage Trust, Series 2006-A7, Class 2-A-4, 5.793% 20374		1,550			711
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.461% 20274,5		395			395
Citigroup Commercial Mortgage Trust, Series 2004-C2, Class A-1, 3.787% 2041		68			67
Government National Mortgage Assn. 8.50% 2021		35			38
					557,724


CONSUMER DISCRETIONARY — 1.45%
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013		5,650			3,588
Charter Communications Operating, LLC, Term Loan B, 5.47% 20144,7,8		1,980			1,466
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 20145		650			501
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20145		1,075			865
CCH I, LLC and CCH I Capital Corp. 11.00% 2015		4,615			831
Time Warner Inc. 5.875% 2016		6,125			5,499
Comcast Corp. 6.95% 2037		5,000			5,282
MGM MIRAGE 6.75% 2013		1,645			1,110
MGM MIRAGE 13.00% 20135		1,375			1,317
MGM MIRAGE 5.875% 2014		1,750			1,129
MGM MIRAGE 6.625% 2015		925			569
Univision Communications, Inc., Second Lien Term Loan B, 2.961% 20094,7,8		2,748			1,937
Univision Communications Inc. 7.85% 2011		520			276
Univision Communications, Inc., First Lien Term Loan B, 2.711% 20144,7,8		1,410			591
Univision Communications Inc. 9.75% 20155,10		9,085			1,181
Cox Communications, Inc. 7.875% 2009		4,000			3,933
Sun Media Corp. 7.625% 2013		2,000			1,620
Quebecor Media Inc. 7.75% 2016		2,075			1,411
Quebecor Media Inc. 7.75% 2016		1,325			901
Cablevision Systems Corp., Series B, 8.00% 2012		4,050			3,625
Boyd Gaming Corp. 7.75% 2012		1,000			905
Boyd Gaming Corp. 6.75% 2014		1,350			857
Boyd Gaming Corp. 7.125% 2016		2,725			1,621
TL Acquisitions, Inc., Term Loan B, 2.96% 20144,7,8		3,312			2,176
Thomson Learning 0%/13.25% 20155,9		940			277
Thomson Learning 10.50% 20155		2,150			892
CanWest Media Inc., Series B, 8.00% 2012		6,777			3,016
CanWest MediaWorks Inc. 9.25% 20155		500			193
Dollar General Corp. 10.625% 2015		1,750			1,680
Dollar General Corp. 11.875% 20174,10		1,750			1,505
Mohegan Tribal Gaming Authority 8.00% 2012		750			461
Mohegan Tribal Gaming Authority 7.125% 2014		4,750			2,423
Centex Corp. 5.25% 2015		3,285			2,053
Centex Corp. 6.50% 2016		1,090			698
Seneca Gaming Corp. 7.25% 2012		2,100			1,701
Seneca Gaming Corp., Series B, 7.25% 2012		950			770
Time Warner Cable Inc. 6.75% 2018		2,500			2,411
Michaels Stores, Inc., Term Loan B, 2.75% 20134,7,8		985			535
Michaels Stores, Inc. 10.00% 2014		3,575			1,644
Hanesbrands Inc., Series B, 5.698% 20144		3,030			2,151
Toys “R” Us, Inc. 7.625% 2011		4,100			2,029
Pinnacle Entertainment, Inc. 7.50% 2015		3,400			1,989
Allison Transmission Holdings, Inc. 11.00% 20155		750			371
Allison Transmission Holdings, Inc. 11.25% 20154,5,10		3,850			1,540
NTL Cable PLC 8.75% 2014		2,400			1,812
American Media Operations, Inc., Series B, 10.25% 2009		6,325			1,289
American Media Operations, Inc., Series B, 10.25% 20095		125			26
American Media Operations, Inc. 8.875% 2011		1,715			354
American Media Operations, Inc. 8.875% 20115		62			13
Atlantic Broadband Finance, LLC and Atlantic Broadband Finance, Inc. 9.375% 2014		2,300			1,587
AMC Entertainment Inc., Series B, 11.00% 2016		2,250			1,583
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014		1,725			1,492
Tenneco Automotive Inc. 8.625% 2014		3,865			1,488
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012		2,295			1,480
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015		2,250			1,477
Warner Music Group 7.375% 2014		2,500			1,475
Thomson Reuters Corp. 5.95% 2013		1,500			1,398
McGraw-Hill Companies, Inc. 5.375% 2012		1,500			1,366
Neiman Marcus Group, Inc. 9.00% 201510		2,900			1,290
iesy Repository GmbH 10.125% 2015	€	1,000			1,178
Sealy Mattress Co. 8.25% 2014	$	1,900			1,130
News America Inc. 5.30% 2014		1,165			1,074
K. Hovnanian Enterprises, Inc. 8.875% 2012		1,470			434
K. Hovnanian Enterprises, Inc. 7.75% 2013		2,200			495
K. Hovnanian Enterprises, Inc. 6.50% 2014		250			69
Education Management LLC and Education Management Finance Corp. 8.75% 2014		725			555
Education Management LLC and Education Management Finance Corp. 10.25% 2016		605			442
Standard Pacific Corp. 5.125% 2009		1,002			962
DaimlerChrysler North America Holding Corp. 7.75% 2011		1,000			905
Liberty Media Corp. 8.25% 2030		1,375			796
LBI Media, Inc. 8.50% 20172,5		2,230			780
Macy’s Retail Holdings, Inc. 7.875% 2015		1,065			768
Fox Acquisition LLC 13.375% 20165		1,595			686
TRW Automotive Inc. 7.00% 20145		1,250			669
WDAC Intermediate Corp. 8.375% 20145		1,575			457
WDAC Intermediate Corp. 8.50% 2014	€	375			146
Cooper-Standard Automotive Inc. 7.00% 2012	$	375			114
Cooper-Standard Automotive Inc. 8.375% 2014		1,875			337
Meritage Homes Corp. 6.25% 2015		825			441
Radio One, Inc. 6.375% 2013		975			334
Dex Media, Inc., Series B, 8.00% 2013		1,750			332
Local T.V. Finance LLC 9.25% 20155,10		1,170			263
Carmike Cinemas, Inc., Delayed Draw, Term Loan, 5.33% 20124,7,8		342			244
Young Broadcasting Inc. 10.00% 2011		3,367			51
Delphi Corp. 6.50% 201311		985			15
					103,337



FINANCIALS — 1.34%
Citigroup Inc. 6.125% 2017		3,105			3,143
Citigroup Capital XXI 8.30% 20774		5,825			4,503
JPMorgan Chase Bank NA 6.00% 2017		3,500			3,536
JPMorgan Chase Capital XXII, Series V, 6.45% 20874		2,560			2,104
Prudential Financial, Inc., Series D, 5.50% 2016		2,000			1,614
Prudential Holdings, LLC, Series C, 8.695% 20235,7		3,000			2,897
Simon Property Group, LP 5.30% 2013		2,500			1,871
Simon Property Group, LP 5.875% 2017		1,500			1,003
Simon Property Group, LP 6.125% 2018		2,000			1,354
Bank of America Corp. 5.30% 2017		4,000			3,804
UniCredito Italiano SpA 5.584% 20174,5		3,500			3,063
HVB Funding Trust III 9.00% 20315		1,600			463
Lazard Group LLC 7.125% 2015		4,845			3,080
Lazard Group LLC 6.85% 2017		395			252
SLM Corp., Series A, 5.00% 2015		5,000			3,176
CIT Group Inc. 7.625% 2012		3,650			3,084
Developers Diversified Realty Corp. 4.625% 2010		3,000			2,114
Developers Diversified Realty Corp. 5.50% 2015		2,000			841
Goldman Sachs Group, Inc. 6.15% 2018		3,000			2,888
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 4.375% 20105		3,500			2,834
TuranAlem Finance BV 8.50% 2015		4,750			2,066
TuranAlem Finance BV 8.25% 20375		1,750			761
Monumental Global Funding III 4.953% 20144,5		4,000			2,656
HBOS PLC 6.75% 20185		3,000			2,645
Charles Schwab Corp., Series A, 6.375% 2017		2,000			1,854
Schwab Capital Trust I 7.50% 20374		1,500			751
Ford Motor Credit Co. 7.375% 2009		650			571
Ford Motor Credit Co. 8.625% 2010		380			288
Ford Motor Credit Co. 7.375% 2011		1,625			1,236
Ford Motor Credit Co. 7.569% 20124		700			456
Royal Bank of Scotland Group PLC 6.99% (undated)4,5		5,100			2,321
Royal Bank of Scotland Group PLC, Series U, 7.64% (undated)4		400			160
iStar Financial, Inc. 6.00% 2010		1,635			687
iStar Financial, Inc., Series B, 5.125% 2011		815			285
iStar Financial, Inc. 6.50% 2013		920			276
iStar Financial, Inc., Series B, 5.70% 2014		130			40
iStar Financial, Inc. 6.05% 2015		4,000			1,181
American Express Co. 8.15% 2038		2,000			2,300
MetLife Capital Trust X 9.25% 20684,5		3,000			2,097
HSBK (Europe) BV 7.25% 20175		2,295			1,251
HSBK (Europe) BV 7.25% 2017		1,250			681
Hospitality Properties Trust 6.70% 2018		4,015			1,870
Liberty Mutual Group Inc. 6.50% 20355		1,335			767
Liberty Mutual Group Inc. 7.50% 20365		1,750			1,068
E*TRADE Financial Corp. 8.00% 2011		1,575			725
E*TRADE Financial Corp. 7.875% 2015		2,560			934
Kimco Realty Corp. 5.70% 2017		2,495			1,571
Fifth Third Capital Trust IV 6.50% 20674		3,000			1,501
Northern Rock PLC 5.60% (undated)4,5		200			77
Northern Rock PLC 6.594% (undated)4,5		3,200			1,232
Capmark Financial Group Inc. 5.875% 2012		2,600			887
Capmark Financial Group Inc. 6.30% 2017		1,500			413
American General Finance Corp., Series J, 6.50% 2017		3,000			1,237
ZFS Finance (USA) Trust V 6.50% 20674,5		3,000			1,231
Wells Fargo & Co. 4.375% 2013		1,235			1,210
Realogy Corp., Letter of Credit, 5.05% 20134,7,8		167			106
Realogy Corp., Term Loan B, 5.706% 20134,7,8		621			393
Realogy Corp. 10.50% 2014		2,275			404
Realogy Corp. 11.75% 201410		1,826			219
Rouse Co. 5.375% 2013		2,000			640
Rouse Co. 6.75% 20135		1,225			447
CNA Financial Corp. 7.25% 2023		1,550			969
Assurant, Inc. 5.625% 2014		1,150			875
Allstate Corp., Series B, 6.125% 20674		1,445			840
Glen Meadow Pass-Through Trust 6.505% 20674,5		2,000			804
Brandywine Operating Partnership, LP 5.75% 2012		1,000			750
PNC Funding Corp., Series II, 6.113% (undated)4,5		1,800			744
Agile Property Holdings Ltd. 9.00% 2013		980			540
ProLogis 5.625% 2015		525			262
ProLogis 6.625% 2018		200			96
					94,999


TELECOMMUNICATION SERVICES — 0.93%
SBC Communications Inc. 4.125% 2009		2,250			2,260
AT&T Inc. 6.70% 2013		4,000			4,242
SBC Communications Inc. 5.10% 2014		1,125			1,107
AT&T Corp. 8.00% 20314		2,000			2,520
AT&T Inc. 6.40% 2038		5,750			6,180
American Tower Corp. 7.125% 2012		6,015			5,955
American Tower Corp. 7.50% 2012		250			247
American Tower Corp. 7.00% 20172,5		6,425			6,168
Telecom Italia Capital SA, Series B, 5.25% 2013		2,000			1,527
Telecom Italia Capital SA 7.20% 2036		4,000			3,088
Telecom Italia Capital SA 7.721% 2038		2,850			2,346
Centennial Communications Corp. 9.633% 20134		1,000			975
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013		1,475			1,497
Centennial Communications Corp., Centennial Cellular Operating Co. LLC and
Centennial Puerto Rico Operations Corp. 8.125% 20144		3,600			3,672
Verizon Communications Inc. 5.50% 2017		4,125			3,999
Vodafone Group PLC 6.15% 2037		3,500			3,471
Nextel Communications, Inc., Series E, 6.875% 2013		580			247
Nextel Communications, Inc., Series F, 5.95% 2014		5,480			2,304
Sprint Capital Corp. 6.90% 2019		1,080			768
Deutsche Telekom International Finance BV 5.875% 2013		3,000			2,970
Cricket Communications, Inc. 9.375% 2014		2,460			2,226
Windstream Corp. 8.125% 2013		2,225			2,058
Windstream Corp. 8.625% 2016		150			133
ALLTEL Corp., Term Loan B3, 3.939% 20154,7,8		1,521			1,509
ALLTEL Corp., Term Loan B2, 4.371% 20154,7,8		598			591
Millicom International Cellular SA 10.00% 2013		2,010			1,819
MetroPCS Wireless, Inc. 9.25% 2014		1,500			1,350
Hawaiian Telcom Communications, Inc. 8.765% 20134,11		175			10
Hawaiian Telcom Communications, Inc. 9.75% 201311		2,545			204
Hawaiian Telcom Communications, Inc., Term Loan C, 4.75% 20144,7,8		423			165
British Telecommunications PLC 5.95% 2018		160			139
					65,747


UTILITIES — 0.92%
Edison Mission Energy 7.50% 2013		3,725			3,427
Southern California Edison Co., First and Refunding Mortgage Bonds, Series 2005-A, 5.00% 2016		4,000			4,053
Edison Mission Energy 7.75% 2016		1,150			1,029
Midwest Generation, LLC, Series B, 8.56% 20167		3,214			3,069
Edison Mission Energy 7.00% 2017		600			525
Edison Mission Energy 7.20% 2019		1,000			825
Edison Mission Energy 7.625% 2027		2,325			1,813
Intergen Power 9.00% 20175		12,725			10,498
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 5.368% 20144,7,8		1,336			930
Texas Competitive Electric Holdings Co. LLC, Series B, 10.50% 20155		4,685			3,350
Texas Competitive Electric Holdings Co. LLC 10.50% 20155		3,885			2,778
Texas Competitive Electric Holdings Co. LLC 11.25% 20165,10		3,750			1,894
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		4,000			3,881
National Rural Utilities Cooperative Finance Corp., Collateral Trust Bonds, 10.375% 2018		1,750			2,051
NRG Energy, Inc. 7.25% 2014		2,250			2,109
NRG Energy, Inc. 7.375% 2016		2,125			1,982
Veolia Environnement 5.25% 2013		3,650			3,388
Alabama Power Co., Series 2008-B, 5.80% 2013		2,875			2,995
MidAmerican Energy Holdings Co. 6.50% 2037		3,000			2,938
Abu Dhabi National Energy Co. PJSC (TAQA) 5.875% 20165		2,500			2,049
Virginia Electric and Power Co., Series B, 5.95% 2017		1,750			1,765
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series H, 6.25% 2012		1,125			1,073
Sierra Pacific Resources 8.625% 2014		550			499
Pacific Gas and Electric Co., First Mortgage Bonds, 3.60% 2009		1,500			1,496
Public Service Electric and Gas Co., Series E, 5.30% 2018		1,500			1,460
Appalachian Power Co., Series M, 5.55% 2011		1,375			1,363
AES Corp. 8.00% 20205		1,650			1,287
Tri-State Generation and Transmission Assn. Inc., Pass Through Trust, Series 2003-A, 6.04% 20185,7		1,245			1,194
					65,721


INDUSTRIALS — 0.88%
Nielsen Finance LLC, Term Loan B, 4.388% 20134,7,8		1,551			1,055
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		7,575			6,098
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20169		10,550			3,877
General Electric Co. 5.25% 2017		4,500			4,494
Koninklijke Philips Electronics NV 5.75% 2018		4,800			4,430
US Investigations Services, Inc., Term Loan B, 4.275% 20154,7,8		742			540
US Investigations Services, Inc. 10.50% 20155		3,100			2,278
US Investigations Services, Inc. 11.75% 20165		1,735			1,102
Union Pacific Corp. 5.75% 2017		805			765
Union Pacific Corp. 5.70% 2018		3,000			2,893
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013		3,553			3,096
Caterpillar Financial Services Corp., Series F, 4.85% 2012		2,125			2,018
Caterpillar Financial Services Corp., Series F, 6.20% 2013		1,000			1,032
Raytheon Co. 4.85% 2011		3,000			3,033
Burlington Northern Santa Fe Corp. 7.00% 2014		1,945			2,032
BNSF Funding Trust I 6.613% 20554		1,115			704
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 20112,5,7		2,975			2,591
Atlas Copco AB 5.60% 20175		2,750			2,588
Allied Waste North America, Inc., Series B, 7.375% 2014		2,415			2,285
Northwest Airlines, Inc., Term Loan B, 4.96% 20132,4,7,8		862			695
Northwest Airlines, Inc., Term Loan A, 3.21% 20184,7,8		2,131			1,577
Navios Maritime Holdings Inc. 9.50% 2014		3,525			1,981
Ashtead Group PLC 8.625% 20155		1,050			556
Ashtead Capital, Inc. 9.00% 20165		2,150			1,118
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015		525			218
Hawker Beechcraft Acquisition Co., LLC 8.875% 201510		3,865			1,333
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017		350			96
DAE Aviation Holdings, Inc. 11.25% 20155		3,200			1,328
ARAMARK Corp., Term Loan B, 3.334% 20144,7,8		146			122
ARAMARK Corp., Letter of Credit, 4.494% 20144,7,8		9			8
ARAMARK Corp. 8.50% 2015		1,125			1,024
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20197		648			518
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20227		1,030			607
THL Buildco, Inc. 8.50% 2014		4,480			1,053
Norfolk Southern Corp. 5.75% 2018		980			955
Iron Mountain Inc. 6.625% 2016		980			801
RSC Holdings III, LLC, Second Lien Term Loan B, 7.71% 20134,7,8		895			481
Alion Science and Technology Corp. 10.25% 2015		840			383
Atrium Companies, Inc. 15.00% 20125,10		1,992			269
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20197		587			241
United Air Lines, Inc., Series 2001-1, Class A-2, 6.201% 20107		45			42
United Air Lines, Inc., Series 2001-1, Class A-3, 6.602% 20157		103			96
United Air Lines, Inc., Series 1996-A2, 7.87% 20197,11		1,226			18
					62,431


HEALTH CARE — 0.79%
Tenet Healthcare Corp. 6.375% 2011		2,185			1,699
Tenet Healthcare Corp. 7.375% 2013		2,935			2,106
Tenet Healthcare Corp. 9.875% 2014		3,255			2,636
Tenet Healthcare Corp. 9.25% 2015		3,215			2,604
Bausch & Lomb Inc. 9.875% 20155		10,975			8,286
GlaxoSmithKline Capital Inc. 4.85% 2013		6,625			6,652
Cardinal Health, Inc. 5.80% 2016		7,250			6,569
HealthSouth Corp. 10.75% 2016		5,750			5,304
AstraZeneca PLC 5.40% 2012		2,750			2,907
HCA Inc., Term Loan B, 3.709% 20134,7,8		2,597			2,050
HCA Inc. 10.375% 201610		875			685
VWR Funding, Inc. 10.25% 20154,10		4,025			2,556
Biogen Idec Inc. 6.00% 2013		2,500			2,475
Hospira, Inc. 5.55% 2012		2,395			2,271
Team Finance LLC and Health Finance Corp. 11.25% 2013		2,300			1,817
Mylan Inc., Term Loan B, 4.75% 20144,7,8		1,838			1,567
PTS Acquisition Corp. 9.50% 201510		3,460			1,332
Symbion Inc. 11.75% 201510		2,206			1,169
Viant Holdings Inc. 10.125% 20175		1,621			543
Surgical Care Affiliates, Inc. 8.875% 20155,10		800			492
AMR HoldCo, Inc. and EmCare HoldCo, Inc. 10.00% 2015		245			229
					55,949


ASSET-BACKED OBLIGATIONS7 — 0.69%
Advanta Business Card Master Trust, Series 2005-A2, Class A-2, 0.638% 20134		9,860			7,888
Rental Car Finance Corp., Series 2005-1, Class A-2, XLCA insured, 4.59% 20112,5		6,860			5,127
Washington Mutual Master Note Trust, Series 2007-A4A, Class A-4, 5.20% 20145		6,600			4,832
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-4-A, MBIA insured, 5.55% 2014		2,500			1,720
AmeriCredit Automobile Receivables Trust, Series 2007-D-F, Class A-4-A, FSA insured, 5.56% 2014		2,750			1,820
Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 1.221% 20344		4,896			3,384
Drive Auto Receivables Trust, Series 2006-2, Class A-3, MBIA insured, 5.33% 20145		3,250			2,793
Citibank Credit Card Issuance Trust, Series 2008, Class A5, 4.85% 2015		2,875			2,529
Prestige Auto Receivables Trust, Series 2007-1, Class A-3, FSA insured, 5.58% 20145		3,000			2,398
CarMax Auto Owner Trust, Series 2007-2, Class A-3, 5.23% 2011		2,472			2,350
CWABS Asset-backed Certificates Trust, Series 2006-14, Class 2-A-2, 0.621% 20374		2,875			2,121
New Century Home Equity Loan Trust, Series 2006-2, Class A-2-b, 0.631% 20364		4,000			2,007
GE SeaCo Finance SRL, Series 2004-1, Class A, AMBAC insured, 1.261% 20192,4,5		2,667			1,467
RAMP Trust, Series 2003-RS11, Class A-I-7, 4.828% 2033		1,822			1,427
Origen Manufactured Housing Contract Trust, Series 2004-B, Class A-4, 5.46% 2035		1,800			1,313
Securitized Asset-backed Receivables LLC Trust, Series 2006-NC3, Class A-2B, 0.621% 20364		2,065			878
CPS Auto Receivables Trust, Series 2004-B, Class A-2, XLCA insured, 3.56% 20115		305			282
CPS Auto Receivables Trust, Series 2006-A, Class 1-A-4, FSA insured, 5.33% 20125		626			573
First Investors Auto Owner Trust, Series 2005-A, Class A-2, MBIA insured, 4.23% 20125		811			762
GMAC Mortgage Loan Trust, Series 2006-HE3, Class A-5, FGIC insured, 5.809% 20364		2,000			749
GSAA Home Equity Trust, Series 2006-7, Class AF-5A, 6.205% 20464		750			702
MASTR Asset-backed Securities Trust, Series 2006-AB1, Class A-4, 5.719% 20364		750			579
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20374		2,370			556
Residential Funding Mortgage Securities II, Inc., Series 2007-HSA2, Class A-1F, MBIA insured, 8.47% 20374		483			464
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-2, 3.87% 2011		388			388
Impac CMB Grantor Trust, Series 2004-6, Class 1-A-1, 1.271% 20344		312			124
					49,233


ENERGY — 0.59%
Enterprise Products Operating LLC 9.75% 2014		1,375			1,401
Enterprise Products Operating LP 6.875% 2033		4,025			3,093
Enterprise Products Operating LP 8.375% 20664		235			129
Enterprise Products Operating LP 7.034% 20684		9,155			4,308
Kinder Morgan Energy Partners LP 6.00% 2017		6,285			5,465
Williams Companies, Inc. 7.875% 2021		2,125			1,628
Transcontinental Gas Pipe Line Corp. 7.25% 2026		1,575			1,441
Williams Companies, Inc. 8.75% 2032		2,225			1,661
Ras Laffan Liquefied Natural Gas III 5.838% 20272,5,7		5,000			3,425
Gaz Capital SA 8.146% 20185		1,750			1,242
Gaz Capital SA, Series 9, 6.51% 2022		3,625			2,166
Canadian Natural Resources Ltd. 5.70% 2017		3,000			2,621
Enbridge Energy Partners, LP, Series B, 6.50% 2018		3,000			2,473
Husky Energy Inc. 6.80% 2037		2,750			2,298
Petroplus Finance Ltd. 6.75% 20145		1,750			1,120
Petroplus Finance Ltd. 7.00% 20175		1,550			953
Drummond Co., Inc. 7.375% 20165		3,600			1,764
TransCanada PipeLines Ltd. 6.35% 20674		3,230			1,446
TEPPCO Partners LP 7.00% 20674		2,025			1,087
International Coal Group, Inc. 10.25% 2014		1,250			944
Enbridge Inc. 5.60% 2017		925			787
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017		675			534
					41,986


CONSUMER STAPLES — 0.54%
Constellation Brands, Inc. 8.375% 2014		1,275			1,218
Constellation Brands, Inc. 7.25% 2017		7,145			6,788
Stater Bros. Holdings Inc. 8.125% 2012		4,225			3,845
Stater Bros. Holdings Inc. 7.75% 2015		1,250			1,056
British American Tobacco International Finance PLC 9.50% 20185		3,470			3,864
Altria Group, Inc. 9.70% 2018		2,500			2,706
Cott Beverages Inc. 8.00% 2011		4,025			2,475
Kraft Foods Inc. 6.875% 2038		2,375			2,381
Albertson’s, Inc. 7.25% 2013		975			829
Albertson’s, Inc. 8.00% 2031		2,500			1,513
Vitamin Shoppe Industries Inc. 9.649% 20124		2,380			1,690
Duane Reade Inc. 6.496% 20104		1,225			900
Duane Reade Inc. 9.75% 2011		1,445			773
Elizabeth Arden, Inc. 7.75% 2014		2,430			1,592
Delhaize Group 6.50% 2017		1,750			1,591
CVS Caremark Corp. 6.943% 20305,7		2,455			1,547
Dole Food Co., Inc. 7.25% 2010		1,125			790
Dole Food Co., Inc. 8.875% 2011		1,195			753
Yankee Candle Co., Inc., Series B, 8.50% 2015		2,425			1,143
JBS SA 10.50% 2016		1,290			909
					38,363


INFORMATION TECHNOLOGY — 0.53%
Electronic Data Systems Corp., Series B, 6.00% 20134		3,500			3,630
Hewlett-Packard Co. 5.50% 2018		3,000			3,033
Electronic Data Systems Corp. 7.45% 2029		1,135			1,233
First Data Corp., Term Loan B2, 3.211% 20144,7,8		5,926			3,834
Freescale Semiconductor, Inc. 9.875% 20144,10		9,700			2,279
Freescale Semiconductor, Inc. 10.125% 2016		3,525			1,463
Hughes Communications, Inc. 9.50% 2014		4,550			3,720
NXP BV and NXP Funding LLC 8.068% 20134	€	750			261
NXP BV and NXP Funding LLC 7.875% 2014	$	3,475			1,373
NXP BV and NXP Funding LLC 8.625% 2015	€	2,550			657
NXP BV and NXP Funding LLC 9.50% 2015	$	6,665			1,283
Ceridian Corp. 11.25% 20155		6,150			3,283
SunGard Data Systems Inc. 9.125% 2013		3,380			2,941
Cisco Systems, Inc. 5.25% 2011		2,375			2,467
Sanmina-SCI Corp. 6.75% 2013		3,575			1,555
Sanmina-SCI Corp. 8.125% 2016		1,925			760
Serena Software, Inc. 10.375% 2016		2,730			1,399
Sensata Technologies BV 8.00% 20144		3,010			1,370
National Semiconductor Corp. 6.15% 2012		1,175			1,053
					37,594


MATERIALS — 0.28%
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		3,390			2,885
Nalco Co. 7.75% 2011		2,615			2,523
ArcelorMittal 5.375% 2013		3,000			2,265
Building Materials Corp. of America 7.75% 2014		2,950			1,873
Plastipak Holdings, Inc. 8.50% 20155		2,750			1,856
International Paper Co. 7.95% 2018		2,300			1,821
Stora Enso Oyj 7.25% 20365		2,000			1,056
Metals USA Holdings Corp. 10.883% 20124,10		2,225			634
Metals USA, Inc. 11.125% 2015		700			417
Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014		1,681			950
Rockwood Specialties Group, Inc. 7.50% 2014		1,165			903
Georgia Gulf Corp. 9.50% 2014		2,830			863
C10 Capital (SPV) Ltd. 6.722% (undated)4,5		1,550			739
AEP Industries Inc. 7.875% 2013		1,125			641
Jefferson Smurfit Corp. (U.S.) 8.25% 2012		910			159
Jefferson Smurfit Corp. (U.S.) 7.50% 2013		1,450			261
					19,846


BONDS & NOTES OF GOVERNMENTS OUTSIDE THE U.S. — 0.16%
German Government 6.25% 2024	€	6,000			10,954


Total bonds, notes & other debt instruments (cost: $2,118,987,000)					1,852,929



Short-term securities — 9.92%

Federal Home Loan Bank 0.20%–2.10% due 1/16–3/13/2009	$	94,500			94,460
Freddie Mac 0.25%–0.45% due 5/28–6/24/2009		65,500			65,371
Pfizer Inc 0.80%–1.40% due 1/30–2/2/20095		59,200			59,140
U.S. Treasury Bills 1.94%–1.945% due 1/15–2/12/2009		49,200			49,198
Medtronic Inc. 1.15% due 1/14/20095		44,300			44,264
Honeywell International Inc. 2.10% due 1/21/20095		37,200			37,167
Procter & Gamble Co. 0.90% due 2/20/20095		19,300			19,295
Procter & Gamble International Funding S.C.A. 0.35%–1.10% due 1/6–4/3/20095		15,500			15,492
Coca-Cola Co. 1.15% due 1/22/20095		30,150			30,129
Brown-Forman Corp. 0.80% due 2/18/20095		25,000			24,990
Hewlett-Packard Co. 0.36% due 2/13/20095		25,000			24,989
USAA Capital Corp. 1.25% due 2/2/2009		25,000			24,949
Ciesco LLC 0.75% due 3/23/20095		25,000			24,918
Park Avenue Receivables Co., LLC 1.40% due 1/7/20095		22,700			22,694
Emerson Electric Co. 1.03% due 1/13/20095		21,300			21,292
Microsoft Corp. 0.30%–0.50% due 2/6–3/13/20095		20,500			20,489
International Bank for Reconstruction and Development 1.10% due 2/19/2009		14,900			14,896
Eaton Corp. 1.65% due 2/12/20095		14,600			14,570
Lowe’s Cos. Inc. 0.35% due 3/16/2009		14,300			14,265
NetJets Inc. 0.15% due 2/12/20095		13,900			13,898
HSBC Finance Corp. 0.05% due 1/2/2009		12,600			12,600
Walt Disney Co. 0.30% due 4/7/2009		12,400			12,387
Illinois Tool Works Inc. 1.10% due 1/20/2009		10,900			10,893
Private Export Funding Corp. 0.15% due 3/2/20095		10,000			9,997
Estée Lauder Companies Inc. 1.10% due 2/3/20095		9,535			9,525
Eli Lilly and Co. 1.40% due 3/2/20095		7,800			7,797
Merck & Co. Inc. 1.75% due 1/7/2009		5,600			5,598

Total short-term securities (cost: $705,200,000)					705,263


Total investment securities (cost: $8,510,902,000)					7,071,437
Other assets less liabilities					34,827

Net assets				$	7,106,264

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Security did not produce income during the last 12 months.

2	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $323,009,000, which represented 4.55% of the net assets of the fund.

3	Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 4/14/1999–7/31/2003 at a cost of $1,000,000) may be subject to legal or contractual restrictions on resale.

4	Coupon rate may change periodically.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $571,088,000, which represented 8.04% of the net assets of the fund.

6	Index-linked bond whose principal amount moves with a government retail price index.

7	Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

8	Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $22,572,000, which represented .32% of the net assets of the fund.

9	Step bond; coupon rate will increase at a later date.

10	Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

11	Scheduled interest and/or principal payment was not received.

Key to abbreviation

ADR = American Depositary Receipts

Bond Fund

Investment portfolio

December 31, 2008

Bonds, notes & other debt instruments — 89.39%	Principal amount (000)			Value (000)

MORTGAGE-BACKED OBLIGATIONS1 — 29.67%
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010	$	6,125		$	6,526
Fannie Mae, Series 2001-T11, Class B, 5.503% 2011		5,000			5,360
Fannie Mae, Series 2001-T6B, 6.088% 2011		6,750			7,282
Fannie Mae 5.50% 2021		1,374			1,421
Fannie Mae 6.00% 2021		543			565
Fannie Mae 5.50% 2023		28,796			29,724
Fannie Mae 5.50% 2023		15,058			15,544
Fannie Mae 5.50% 2023		5,438			5,613
Fannie Mae, Series 2001-4, Class GA, 10.156% 20252		102			114
Fannie Mae 6.00% 2026		2,886			2,984
Fannie Mae 5.50% 2027		9,045			9,289
Fannie Mae 6.00% 2027		18,372			18,995
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2028		131			138
Fannie Mae 7.50% 2031		22			23
Fannie Mae, Series 2001-20, Class C, 12.049% 20312		51			58
Fannie Mae 5.50% 2033		14,663			15,089
Fannie Mae 6.50% 2034		11,250			11,724
Fannie Mae 5.00% 2035		2,638			2,699
Fannie Mae 5.50% 2035		1,229			1,263
Fannie Mae 5.00% 2036		10,574			10,818
Fannie Mae 5.50% 2036		3,877			3,982
Fannie Mae 6.00% 2036		7,895			8,143
Fannie Mae 5.382% 20372		9,831			10,011
Fannie Mae 5.50% 2037		10,640			10,927
Fannie Mae 5.783% 20372		10,881			11,151
Fannie Mae 6.00% 2037		12,158			12,540
Fannie Mae 6.00% 2037		3,725			3,767
Fannie Mae 6.166% 20372		13,752			14,146
Fannie Mae 6.50% 2037		26,255			27,321
Fannie Mae 6.50% 2037		8,959			9,323
Fannie Mae 6.50% 2037		3,862			3,948
Fannie Mae 6.50% 2037		3,661			3,743
Fannie Mae 6.50% 2037		2,616			2,722
Fannie Mae 7.00% 2037		11,100			11,642
Fannie Mae 7.00% 2037		6,358			6,541
Fannie Mae 7.00% 2037		4,495			4,624
Fannie Mae 7.00% 2037		3,770			3,879
Fannie Mae 7.00% 2037		3,001			3,087
Fannie Mae 4.442% 20382		4,377			4,394
Fannie Mae 4.50% 2038		9,897			10,050
Fannie Mae 4.539% 20382		1,677			1,690
Fannie Mae 5.00% 2038		57,871			59,188
Fannie Mae 5.322% 20382		2,447			2,496
Fannie Mae 5.50% 2038		22,243			22,854
Fannie Mae 5.50% 2038		12,239			12,569
Fannie Mae 5.50% 2038		10,971			11,267
Fannie Mae 6.00% 2038		44,174			45,563
Fannie Mae 6.00% 2038		5,773			5,955
Fannie Mae 6.50% 2038		11,163			11,616
Fannie Mae 6.50% 2038		10,472			10,897
Fannie Mae 6.50% 2038		6,828			7,105
Fannie Mae 6.50% 2038		4,975			5,176
Fannie Mae 6.50% 2038		4,871			5,068
Fannie Mae 6.50% 2038		4,306			4,402
Fannie Mae 7.00% 2038		3,084			3,173
Fannie Mae 7.00% 2038		1,068			1,120
Fannie Mae 5.00% 2035		25,175			25,726
Fannie Mae 6.00% 2039		52,100			53,675
Fannie Mae 6.50% 2039		39,875			41,439
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		101			107
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041		94			98
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042		133			140
Freddie Mac 4.00% 2015		1,319			1,334
Freddie Mac 4.50% 2023		14,813			15,177
Freddie Mac 5.50% 2023		5,199			5,368
Freddie Mac 5.50% 2023		3,124			3,226
Freddie Mac 5.00% 2035		5,101			5,208
Freddie Mac 5.50% 2035		2,436			2,496
Freddie Mac 5.50% 2035		2,385			2,445
Freddie Mac, Series 3061, Class PN, 5.50% 2035		1,643			1,695
Freddie Mac, Series 3146, Class PO, principal only, 0% 20363		2,848			2,205
Freddie Mac, Series 3156, Class PO, principal only, 0% 2036		2,453			2,079
Freddie Mac, Series 3257, Class PA, 5.50% 2036		6,736			6,942
Freddie Mac 6.00% 2036		45,441			46,871
Freddie Mac 4.763% 20372		3,093			3,125
Freddie Mac 5.50% 2037		6,452			6,612
Freddie Mac, Series 3318, Class JT, 5.50% 2037		5,028			5,145
Freddie Mac 5.50% 2037		4,669			4,784
Freddie Mac 5.50% 2037		2,091			2,143
Freddie Mac 5.722% 20372		5,285			5,421
Freddie Mac 5.857% 20372		1,568			1,609
Freddie Mac 6.00% 2037		49,372			50,922
Freddie Mac 6.00% 2037		30,980			31,955
Freddie Mac 6.00% 2037		11,878			12,251
Freddie Mac 6.00% 2037		3,629			3,743
Freddie Mac 6.50% 2037		17,679			18,076
Freddie Mac 6.50% 2037		15,641			16,275
Freddie Mac 6.50% 2037		8,557			8,905
Freddie Mac 6.50% 2037		4,929			5,039
Freddie Mac 7.00% 2037		3,318			3,388
Freddie Mac 7.00% 2037		3,066			3,131
Freddie Mac 7.00% 2037		1,456			1,487
Freddie Mac 7.00% 2037		1,193			1,219
Freddie Mac 4.651% 20382		5,084			5,112
Freddie Mac 4.966% 20382		1,332			1,348
Freddie Mac 5.00% 2038		12,288			12,542
Freddie Mac 5.00% 2038		9,667			9,867
Freddie Mac 5.00% 2038		5,612			5,728
Freddie Mac 5.00% 2038		5,556			5,684
Freddie Mac 5.00% 2038		4,498			4,591
Freddie Mac 5.00% 2038		3,796			3,875
Freddie Mac 5.00% 2038		3,761			3,839
Freddie Mac 5.00% 2038		265			271
Freddie Mac 5.00% 2038		11			11
Freddie Mac 5.50% 2038		37,978			38,917
Freddie Mac 5.50% 2038		18,110			18,558
Freddie Mac 5.50% 2038		11,553			11,839
Freddie Mac 5.50% 2038		9,834			10,077
Freddie Mac 5.50% 2038		6,481			6,642
Freddie Mac 6.00% 2038		93,303			96,237
Freddie Mac 6.00% 2038		1,854			1,912
Freddie Mac 6.50% 2038		20,362			21,189
Freddie Mac 6.50% 2038		14,665			15,261
Freddie Mac 6.50% 2038		5,332			5,549
Freddie Mac 6.50% 2038		2,263			2,355
Freddie Mac 6.50% 2039		3,125			3,249
Government National Mortgage Assn. 6.00% 2038		41,209			42,603
Government National Mortgage Assn. 6.00% 2038		35,947			37,163
Government National Mortgage Assn. 6.50% 2038		24,750			25,824
Government National Mortgage Assn. 6.50% 2038		13,971			14,573
Government National Mortgage Assn. 6.50% 2039		37,000			38,497
CS First Boston Mortgage Securities Corp., Series 2006-2R, Class A-PO, principal only, 0% 20364		2,076			1,583
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 2036		3,000			2,823
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-3, 4.499% 2037		2,000			1,637
CS First Boston Mortgage Securities Corp., Series 2004-C1, Class E, 5.015% 20374		5,000			1,710
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037		1,680			1,602
CS First Boston Mortgage Securities Corp., Series 2005-C1, Class A-3, 4.813% 2038		4,000			3,251
CS First Boston Mortgage Securities Corp., Series 2006-C2, Class A-3, 5.658% 20392		1,225			1,001
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20402		7,000			5,462
Wells Fargo Alternative Loan Trust, Series 2007-PA4, Class III-A-1, 6.077% 20372		17,623			7,662
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class III-A-1, 6.25% 2037		4,627			2,501
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class IV-A-1, 6.50% 2037		9,314			4,096
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class V-A-1, 7.00% 2037		4,795			2,138
Countrywide Alternative Loan Trust, Series 2005-J8, Class 2-A-1, 5.00% 2020		4,048			3,148
Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035		2,006			1,482
Countrywide Alternative Loan Trust, Series 2005-64CB, Class 1-A-7, 5.50% 2035		1,387			1,019
Countrywide Alternative Loan Trust, Series 2005-21CB, Class A-9, 5.50% 2035		1,193			973
Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035		2,330			1,819
Countrywide Alternative Loan Trust, Series 2006-6CB, Class 1-A-1, 5.50% 2036		2,298			1,824
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.821% 20372,3		9,264			3,891
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 3-A-1, 5.854% 20472		3,278			1,519
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 4-A-1, 5.93% 20472		1,342			640
Nykredit 4.00% 2035	DKr57,615				9,940
Nykredit 5.00% 2038		28,605			5,182
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-2, 4.782% 2042	$	3,574			3,358
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-2, 5.242% 2044		5,000			4,441
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045		4,000			3,308
SBA CMBS Trust, Series 2005-1, Class A, 5.369% 20353,4		1,750			1,400
SBA CMBS Trust, Series 2005-1, Class D, 6.219% 20353,4		3,000			1,950
SBA CMBS Trust, Series 2006-1A, Class A, 5.314% 20363,4		3,000			2,400
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20363,4		4,500			3,060
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20363,4		3,000			2,010
Wells Fargo Mortgage-backed Securities Trust, Series 2003-3, Class II-A-1, 5.25% 2033		957			872
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.665% 20362		2,782			1,955
Wells Fargo Mortgage-backed Securities Trust, Series 2007-8, Class II-A-2, 6.00% 2037		7,500			4,182
Wells Fargo Mortgage-backed Securities Trust, Series 2007-10, Class I-A-1, 6.00% 2037		5,728			3,795
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-3B, 5.317% 20372		4,000			3,313
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-LN1, Class H, 5.514% 20372,4		2,000			568
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042		2,343			2,141
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046		3,500			3,304
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20374		2,000			1,643
American Tower Trust I, Series 2007-1A, Class C, 5.615% 20374		2,000			1,342
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20373,4		4,000			2,400
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20373,4		6,500			3,577
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 20354		3,000			2,550
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 20354		6,300			4,429
Crown Castle Towers LLC, Series 2006-1, Class E, 6.065% 20363,4		1,000			593
Crown Castle Towers LLC, Series 2006-1, Class F, 6.650% 20363,4		1,300			744
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20363,4		500			272
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		2,008			1,157
Residential Accredit Loans, Inc., Series 2007-QS9, Class A-33, 6.50% 2037		6,514			3,389
Residential Accredit Loans, Inc., Series 2007-QS7, Class II-A-1, 6.75% 2037		4,295			2,690
Bank of America 5.50% 20124		7,000			7,215
GS Mortgage Securities Corp. II, Series 2001-ROCK, Class A-2, 6.624% 20183,4		5,025			5,144
GS Mortgage Securities Corp. II, Series 1998-C1, Class E, 7.19% 20302		1,250			1,245
GS Mortgage Securities Corp. II, Series 1998-C1, Class D, 15.51% 20302		196			195
Merrill Lynch Mortgage Trust, Series 2005-CIP1, Class A-3-A, 4.949% 20382		2,000			1,579
Merrill Lynch Mortgage Trust, Series 2006-C1, Class A-3, 5.657% 20392		3,160			2,420
Merrill Lynch Mortgage Trust, Series 2004-BPC1, Class A-5, 4.855% 20412		2,445			1,838
Merrill Lynch Mortgage Trust, Series 2005-MCP1, Class AM, 4.805% 20432		1,065			630
CHL Mortgage Pass-Through Trust, Series 2003-50, Class A-1, 5.00% 2018		3,965			3,609
CHL Mortgage Pass-Through Trust, Series 2004-J7, Class 3-A-1, 5.00% 2019		3,065			2,790
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 2020		6,235			5,688
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 2-A-1, 6.50% 2037		7,992			4,315
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 3-A-1, 7.00% 2037		2,194			1,199
Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 4-A, 5.68% 20342		1,622			1,504
Morgan Stanley Mortgage Loan Trust, Series 2006-3AR, Class 2-A-3, 5.777% 20362		4,572			2,114
Morgan Stanley Mortgage Loan Trust, Series 2007-11AR, Class 2-A-1, 6.617% 20372		3,837			1,702
Hilton Hotel Pool Trust, Series 2000-HLTA, Class F, 7.75% 20154		5,000			5,250
Tower Ventures, LLC, Series 2006-1, Class C, 5.707% 20364		500			375
Tower Ventures, LLC, Series 2006-1, Class D, 6.052% 20363,4		6,000			4,200
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.762% 20362		4,859			2,388
IndyMac INDX Mortgage Loan Trust, Series 2006-AR25, Class 3-A-1, 6.253% 20362		4,606			2,169
Swedish Government 4.00% 2012	SKr34,000				4,436
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035	$	956			928
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class A-2, 6.48% 2035		750			733
Bear Stearns Commercial Mortgage Securities Inc., Series 2005-PWR9, Class A-2, 4.735% 2042		3,000			2,723
Structured Products Asset Return Certificates Trust, Series 2001-CF1, Class A, 6.36% 20333		4,068			3,871
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036		1,634			1,606
Banc of America Commercial Mortgage Inc., Series 2005-1, Class A-4, 4.988% 20422		2,550			2,124
Citigroup Mortgage Loan Trust, Inc., Series 2005-8, Class I-A4A, 5.572% 20352,3		6,854			3,727
Lehman Mortgage Trust, Series 2007-6, Class 2-A1, 6.88% 20372		5,073			2,517
Lehman Mortgage Trust, Series 2007-8, Class 3-A1, 7.25% 2037		1,783			1,199
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034		3,599			3,472
ABN AMRO Mortgage Corp., Series 2002-10, Class II-A-1, 5.00% 2018		3,887			3,302
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.338% 20442		1,000			747
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.334% 20452		3,000			2,437
Northern Rock PLC 5.625% 20174		3,000			3,006
CitiMortgage Alternative Loan Trust, Series 2005-A1, Class IIA-1, 5.00% 2020		3,836			2,985
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.923% 20362		1,508			759
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-6, Class 3-A-1, 5.884% 20372		1,504			774
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-12, Class 2-A1, 5.929% 20372		2,905			1,389
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA8, Class I-A-14, 5.50% 2035		1,155			948
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA11, Class I-A-5, 5.75% 2036		2,604			1,758
Thornburg Mortgage Securities Trust, Series 2006-5, Class A-1, 0.591% 20462		3,364			2,676
Bear Stearns ALT-A Trust, Series 2006-2, Class II-4-A-1, 5.903% 20362		5,933			2,652
Washington Mutual Mortgage, WMALT Series 2006-8, Class A-3-B, 5.784% 2036		5,000			2,645
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037		2,940			2,629
Bear Stearns ARM Trust, Series 2003-3, Class III-A-1, 5.131% 20332		519			383
Bear Stearns ARM Trust, Series 2003-9, Class III-A-2, 4.955% 20342		718			477
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.65% 20352		3,000			1,740
Commercial Mortgage Trust, Series 2000-C1, Class E, 8.132% 2033		2,500			2,469
Chase Mortgage Finance Trust, Series 2003-S9, Class A-1, 5.00% 2018		2,688			2,446
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY5, Class 3-A1, 5.826% 20372,3		3,846			2,346
Structured Asset Securities Corp., Series 2003-29, Class 1-A-1, 4.75% 2018		2,388			2,170
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.461% 20272,4		70			70
Citigroup Commercial Mortgage Trust, Series 2006-C4, Class A-3, 5.724% 20492		2,500			1,968
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20264		2,209			1,939
CSAB Mortgage-backed Trust, Series 2007-1, Class 4-A-8, 7.00% 2037		4,002			1,887
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20432		1,650			1,288
Salomon Brothers Commercial Mortgage Trust, Series 2000-C3, Class A-2, 6.592% 2033		1,218			1,197
Merrill Lynch Mortgage Investors, Inc., Series 1999-C1, Class A-2, 7.56% 2031		1,113			1,111
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032		1,086			1,064
Residential Asset Securitization Trust, Series 2004-A6, Class A-1, 5.00% 2019		1,270			988
Chase Manhattan Bank — First Union National Bank, Commercial Mortgage Trust, Series 1999-1, Class B, 7.619% 2031		750			749
LB-UBS Commercial Mortgage Trust, Series 2000-C3, Class A-2, 7.95% 2025		479			481
First Union National Bank Commercial Mortgage Trust, Series 2002-C1, Class A-1, 5.585% 2034		225			222
Morgan Stanley Dean Witter Capital I Trust, Series 2001-TOP5, Class A-3, 6.16% 2035		128			127
DLJ Commercial Mortgage Corp., Series 1999-CG1, Class A-1B, 6.46% 2032		3			3
					1,638,566


BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 14.81%
U.S. Treasury 1.75% 2011		12,060			12,335
U.S. Treasury 4.50% 2011		4,850			5,245
U.S. Treasury 4.50% 2012		30,000			33,168
U.S. Treasury 4.875% 2012		15,400			17,240
U.S. Treasury 0.625% 20133,5		11,275			10,833
U.S. Treasury 2.00% 2013		2,030			2,083
U.S. Treasury 3.125% 2013		10,000			10,794
U.S. Treasury 3.375% 2013		30,000			32,775
U.S. Treasury 4.25% 2013		15,000			17,126
U.S. Treasury 2.00% 20143,5		29,312			27,705
U.S. Treasury 7.25% 2016		26,000			34,824
U.S. Treasury 7.50% 2016		46,000			62,812
U.S. Treasury 9.25% 2016		11,000			16,051
U.S. Treasury 4.625% 2017		6,420			7,595
U.S. Treasury 3.50% 2018		10,000			11,073
U.S. Treasury 3.75% 2018		78,515			88,888
U.S. Treasury 3.875% 2018		14,510			16,550
U.S. Treasury 4.00% 2018		2,865			3,309
U.S. Treasury 8.50% 2020		25,500			38,864
U.S. Treasury 7.875% 2021		16,250			24,160
U.S. Treasury 8.125% 2021		15,750			23,908
U.S. Treasury 6.00% 2026		4,000			5,586
Freddie Mac 3.125% 2010		18,070			18,511
Freddie Mac 5.25% 2011		15,250			16,611
Freddie Mac 5.875% 2011		6,539			6,840
Freddie Mac: 5.75% 2012		40,000			44,666
Freddie Mac 5.75% 2016		23,915			24,776
Freddie Mac 5.00% 2018		17,535			17,123
Fannie Mae 5.50% 2011		5,000			5,424
Fannie Mae 5.25% 2012		33,350			34,279
Fannie Mae 3.25% 2013		30,000			31,215
Fannie Mae 4.625% 2013		20,000			20,387
Fannie Mae 5.375% 2017		15,420			17,977
Federal Home Loan Bank 4.00% 2013		30,000			32,004
Federal Home Loan Bank 5.125% 2016		5,250			5,782
Federal Home Loan Bank 5.625% 2016		8,000			8,451
CoBank ACB 7.875% 20184		9,260			9,370
CoBank ACB 2.596% 20222,4		21,925			15,459
United States Agency for International Development, Republic of Egypt 4.45% 2015		5,000			5,532
Small Business Administration, Series 2001-20J, 5.76% 20211		347			359
					817,690


BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 10.42%
German Government 3.75% 2013	€	6,215			9,179
German Government 4.25% 2014		32,260			49,062
German Government 3.50% 2016		1,665			2,433
German Government, Series 6, 4.00% 2016		2,960			4,446
German Government 3.75% 2017		36,910			54,537
German Government, Series 8, 4.25% 2018		25,360			39,077
German Government 4.75% 2034		5,020			8,082
Japanese Government 1.30% 2011	¥	1,114,000			12,527
Japanese Government 1.40% 2012		1,161,000			13,129
Japanese Government 1.50% 2014		720,000			8,264
Japanese Government 1.70% 2016		4,070,450			47,752
Japanese Government 1.70% 2017		698,050			8,158
Japanese Government 2.30% 2035		637,700			7,741
Japanese Government 2.40% 2038		1,049,850			13,110
Israeli Government 6.00% 20103	ILS29,095				8,054
Israeli Government 6.50% 20163		14,615			4,373
Israeli Government 5.50% 20173		46,960			13,109
Israeli Government 6.00% 20193		45,270			13,022
United Mexican States Government Global 9.875% 2010	$	1,000			1,082
United Mexican States Government Global 6.375% 2013		1,260			1,329
United Mexican States Government, Series MI10, 9.50% 2014	MXN67,400				5,265
United Mexican States Government, Series M10, 8.00% 2015		37,500			2,728
United Mexican States Government, Series M10, 7.25% 2016		82,500			5,739
United Mexican States Government, Series M10, 7.75% 2017		37,000			2,649
United Mexican States Government, Series M20, 10.00% 2024		48,400			4,036
United Mexican States Government Global 6.05% 2040	$	8,500			8,288
United Kingdom 4.75% 2015	£	7,726			12,451
United Kingdom 4.00% 2016		2,670			4,167
United Kingdom 5.00% 2018		1,745			2,938
United Kingdom 8.00% 2021		1,030			2,189
United Kingdom 4.75% 2038		3,995			6,904
Swedish Government 5.00% 2009	SKr56,195				7,177
Swedish Government 6.75% 2014		89,810			14,156
Swedish Government 5.00% 2020		39,290			6,248
Queensland Treasury Corp., Series 11, 6.00% 2011	$	A6,040			4,466
Queensland Treasury Corp., Series 15, 6.00% 2015		23,470			17,789
Queensland Treasury Corp., Series 17, 6.00% 2017		4,610			3,544
Belgium (Kingdom of), Series 49, 4.00% 2017	€	9,930			14,116
Belgium (Kingdom of), Series 40, 5.50% 2017		3,050			4,803
Spanish Government 6.15% 2013		10,620			16,427
Irish Government 4.50% 2018		3,570			5,034
Irish Government 4.40% 2019		7,080			9,739
Singapore (Republic of) 3.125% 2011	$	S7,530			5,480
Singapore (Republic of) 3.75% 2016		7,095			5,607
South Korean Government 5.25% 20103	KRW7,780,000				6,326
South Korean Government 4.25% 20143		3,350,000			2,657
Polish Government 5.25% 2017	PLN25,590				8,572
French Government O.A.T. Eurobond 4.00% 2018	€	5,675			8,308
Kingdom of Denmark 5.00% 2013	DKr39,575			$	8,047
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014	$	5,750			7,201
KfW 1.35% 2014	¥	564,000			6,213
Russian Federation 8.25% 20101	$	1,167			1,213
Russian Federation 8.25% 20101,4		667			693
Russian Federation 7.50% 20301		4,900			4,300
Malaysian Government 3.833% 2011	MYR18,060				5,346
European Investment Bank 6.125% 2017	$	A6,000			4,582
Panama (Republic of) Global 7.125% 2026	$	390			370
Panama (Republic of) Global 9.375% 2029		500			553
Panama (Republic of) Global 6.70% 20361		3,450			3,122
Netherlands Government Eurobond 4.50% 2017	€	2,610			3,902
Colombia (Republic of) Global 7.375% 2017	$	1,335			1,395
Colombia (Republic of) Global 11.75% 2020		1,415			1,903
Turkey (Republic of) 7.00% 2019		3,250			3,153
Corporación Andina de Fomento 5.75% 2017		3,000			2,517
Austria (Republic of) 4.30% 2017	€	1,100			1,600
Argentina (Republic of) 1.564% 20121,2,3	$	2,000			527
Argentina (Republic of) 5.83% 20331,3,5,7	ARS10,601				965
Canadian Government 4.25% 20263,5	$	C1,303			1,376
El Salvador (Republic of) 7.65% 20354	$	580			371
					575,618


FINANCIALS — 9.10%
Countrywide Home Loans, Inc., Series M, 4.125% 2009		2,915			2,881
Countrywide Home Loans, Inc., Series K, 5.625% 2009		4,399			4,380
Countrywide Home Loans, Inc., Series H, 6.25% 2009		826			826
Countrywide Financial Corp., Series A, 4.50% 2010		990			973
Countrywide Financial Corp. 6.25% 2010	$	A1,200			849
Countrywide Financial Corp., Series B, 2.946% 20122	$	11,000			9,515
Countrywide Financial Corp., Series B, 5.80% 2012		18,193			17,745
Bank of America Corp. 5.30% 2017		9,245			8,793
General Motors Acceptance Corp. 5.625% 2009		4,000			3,844
General Motors Acceptance Corp. 7.25% 20113,4		6,623			5,961
General Motors Acceptance Corp. 6.625% 20123,4		3,166			2,533
General Motors Acceptance Corp. 6.875% 20123,4		4,432			3,546
General Motors Acceptance Corp. 7.00% 20123,4		2,779			2,251
General Motors Acceptance Corp 7.50% 20133,4		2,116			2,979
General Motors Acceptance Corp 7.50% 20133,4		661			449
General Motors Acceptance Corp. 4.403% 20142,3,4		3,070			1,965
General Motors Acceptance Corp. 6.75% 20143,4		921			672
JPMorgan Chase & Co. 4.891% 20152		5,300			5,327
JPMorgan Chase Bank NA 6.00% 2017		18,350			18,540
Ford Motor Credit Co. 9.75% 20102		9,250			7,403
Ford Motor Credit Co. 7.25% 2011		2,425			1,773
Ford Motor Credit Co. 7.569% 20122		10,755			7,004
Ford Motor Credit Co. 8.00% 2016		4,190			2,733
American General Finance Corp., Series J, 2.429% 20112		5,000			1,920
American International Group, Inc. 4.00% 2011	€	1,050			861
International Lease Finance Corp., Series R, 5.40% 2012	$	2,500			1,747
International Lease Finance Corp., Series R, 5.625% 2013		6,875			4,595
International Lease Finance Corp., Series R, 5.65% 2014		2,500			1,635
American General Finance Corp., Series J, 6.50% 2017		1,750			722
American General Finance Corp., Series J, 6.90% 2017		8,185			3,547
American General Capital I 6.00% 20672,4		4,020			961
American International Group, Inc., Series A-1, 6.25% 20872		2,500			936
HBOS PLC 6.75% 20184		12,715			11,209
HBOS PLC 6.00% 20334		3,500			2,397
HBOS PLC 5.375% (undated)2,4		5,000			2,443
Citigroup Inc. 4.125% 2010		3,000			2,957
Citigroup Capital XXI 8.30% 20772		16,625			12,851
WT Finance (Australia) Pty Ltd., Westfield Europe Finance PLC, and WEA Finance LLC 3.625% 2012	€	1,595			1,669
Westfield Group 5.40% 20124	$	5,000			3,838
Westfield Group 5.70% 20164		3,130			2,094
Westfield Group 7.125% 20184		11,000			7,815
UniCredito Italiano SpA 5.584% 20172,4		9,480			8,295
UniCredito Italiano SpA 6.00% 20174		6,700			5,596
National Westminster Bank PLC 7.375% 2009		1,500			1,471
Royal Bank of Scotland Group PLC 5.05% 2015		5,000			4,249
Royal Bank of Scotland Group PLC 6.99% (undated)2,4		6,140			2,794
Royal Bank of Scotland Group PLC, Series U, 7.64% (undated)2		10,400			4,147
Resona Bank, Ltd. 3.75% 20152	€	1,015			1,219
Resona Bank, Ltd. 4.125% (undated)2,3		970			662
Resona Bank, Ltd. 5.85% (undated)2,4	$	18,880			10,716
MetLife, Inc. 5.50% 2014		2,044			1,888
MetLife Capital Trust IV 7.875% 20672,4		2,700			1,697
MetLife Capital Trust X 9.25% 20682,4		11,900			8,317
Liberty Mutual Group Inc. 6.50% 20354		435			250
Liberty Mutual Group Inc. 7.50% 20364		4,875			2,974
Liberty Mutual Group Inc., Series A, 7.80% 20874		3,085			1,386
Liberty Mutual Group Inc., Series C, 10.75% 20882,4		11,910			6,559
HSBK (Europe) BV 7.75% 2013		3,565			2,549
HSBK (Europe) BV 7.75% 20134		505			361
HSBK (Europe) BV 7.25% 20174		13,760			7,499
HSBK (Europe) BV 7.25% 2017		1,310			714
CIT Group Inc. 6.875% 2009		2,500			2,401
CIT Group Inc. 3.796% 20112		5,000			4,109
CIT Group Inc. 5.40% 2013		4,000			3,024
CIT Group Inc. 6.10% 20672		4,500			1,391
Santander Issuances, SA Unipersonal 5.805% 20162,4		7,300			6,571
Abbey National PLC 7.95% 2029		1,735			1,515
Santander Perpetual, SA Unipersonal 4.375% (undated)2	€	2,065			2,099
Fifth Third Bancorp 8.25% 2038	$	3,000			2,484
Fifth Third Capital Trust IV 6.50% 20672		11,440			5,724
PLD International Finance LLC 4.375% 2011	€	400			267
ProLogis 5.50% 2012	$	2,500			1,507
ProLogis 5.75% 2016		2,355			1,176
ProLogis 6.625% 2018		10,395			4,979
New York Life Global Funding 3.875% 20094		2,250			2,251
New York Life Global Funding 4.65% 20134		5,700			5,513
HSBC Holdings PLC 6.50% 2037		6,960			7,092
Société Générale 5.75% 20164		7,150			6,560
Simon Property Group, LP 4.875% 2010		1,000			909
Simon Property Group, LP 5.875% 2017		2,500			1,672
Simon Property Group, LP 6.125% 2018		5,830			3,946
CNA Financial Corp. 5.85% 2014		625			457
CNA Financial Corp. 6.50% 2016		5,540			3,929
CNA Financial Corp. 7.25% 2023		3,000			1,876
Hospitality Properties Trust 6.85% 2012		340			220
Hospitality Properties Trust 6.75% 2013		1,500			929
Hospitality Properties Trust 5.125% 2015		560			283
Hospitality Properties Trust 6.30% 2016		1,395			643
Hospitality Properties Trust 5.625% 2017		5,315			2,454
Hospitality Properties Trust 6.70% 2018		3,530			1,644
Standard Chartered Bank 6.40% 20174		7,290			6,073
Capmark Financial Group Inc. 3.038% 20102		1,680			858
Capmark Financial Group Inc. 5.875% 2012		4,000			1,365
Capmark Financial Group Inc. 6.30% 2017		13,185			3,630
SLM Corp., Series A, 5.40% 2011		1,210			916
SLM Corp., Series A, 5.45% 2011		5,906			4,664
Lincoln National Corp. 5.65% 2012		3,250			2,680
Lincoln National Corp. 7.00% 20662		6,630			2,788
TuranAlem Finance BV, Series 5, 6.25% 2011	€	1,270			717
TuranAlem Finance BV 7.75% 20134	$	1,000			405
TuranAlem Finance BV 8.50% 2015		2,750			1,196
TuranAlem Finance BV 8.50% 20154		875			381
TuranAlem Finance BV 8.25% 20374		5,000			2,175
TuranAlem Finance BV, Series 8, 8.25% 2037		1,345			585
Wachovia Bank NA 6.60% 2038		5,000			5,443
Kimco Realty Corp. 6.00% 2012		500			387
Kimco Realty Corp., Series C, 4.82% 2014		2,500			1,781
Kimco Realty Corp. 5.70% 2017		5,000			3,148
Catlin Insurance Ltd. 7.249% (undated)2,4		13,110			5,220
PNC Funding Corp. 3.62% 20142		5,000			4,037
PNC Funding Corp., Series II, 6.113% (undated)2,4		2,500			1,033
ORIX Corp. 5.48% 2011		6,680			5,025
Chubb Corp. 5.75% 2018		2,480			2,385
Chubb Corp. 6.375% 20672		3,505			2,177
Prudential Holdings, LLC, Series C, 8.695% 20231,4		1,250			1,207
Prudential Financial, Inc. 8.875% 20682		5,000			3,235
ERP Operating LP 4.75% 2009		1,000			983
ERP Operating LP 6.625% 2012		2,000			1,644
ERP Operating LP 6.584% 2015		2,500			1,673
Zions Bancorporation 5.65% 2014		5,000			3,756
Zions Bancorporation 5.50% 2015		740			524
Monumental Global Funding 5.50% 20134		2,490			2,351
Monumental Global Funding III 5.25% 20144		2,000			1,919
Korea Development Bank 5.30% 2013		4,500			4,158
Development Bank of Singapore Ltd. 7.875% 20094		4,000			4,073
Principal Life Insurance Co. 6.25% 20124		4,000			3,978
American Express Co. 6.15% 2017		4,000			3,863
Hartford Financial Services Group, Inc. 6.30% 2018		2,160			1,641
Glen Meadow Pass-Through Trust 6.505% 20672,4		5,250			2,112
Charles Schwab Corp., Series A, 6.375% 2017		3,000			2,781
Schwab Capital Trust I 7.50% 20372		1,740			872
Jackson National Life Global 5.375% 20134		3,900			3,528
Capital One Financial Corp. 6.15% 2016		5,000			3,523
Silicon Valley Bank 5.70% 2012		4,000			3,475
Host Marriott, LP, Series M, 7.00% 2012		4,050			3,453
ACE INA Holdings Inc. 5.875% 2014		1,080			1,006
ACE INA Holdings Inc. 5.80% 2018		1,400			1,262
ACE INA Holdings Inc. 6.70% 2036		1,155			1,015
ZFS Finance (USA) Trust II 6.45% 20652,4		5,000			2,338
ZFS Finance (USA) Trust V 6.50% 20672,4		2,000			821
UnumProvident Corp. 5.859% 2009		2,000			1,908
UnumProvident Finance Co. PLC 6.85% 20154		1,500			1,228
Sumitomo Mitsui Banking Corp. 4.375% 20142	€	1,645			2,248
Sumitomo Mitsui Banking Corp. 5.625% (undated)2,4	$	1,050			779
Sovereign Bancorp, Inc. 8.75% 2018		3,250			2,986
Rouse Co. 3.625% 2009		1,140			479
Rouse Co. 7.20% 2012		2,360			814
Rouse Co. 6.75% 20134		4,500			1,643
Kazkommerts International BV 7.00% 20094		500			433
Kazkommerts International BV 7.875% 20144		800			444
Kazkommerts International BV 8.00% 2015		1,300			618
Kazkommerts International BV 8.00% 20154		1,250			594
Kazkommerts International BV, Series 4, 7.50% 2016		2,000			760
Lazard Group LLC 7.125% 2015		4,265			2,712
Lazard Group LLC 6.85% 2017		70			45
Realogy Corp., Letter of Credit, 5.05% 20131,2,8		104			66
Realogy Corp., Term Loan B, 5.706% 20131,2,8		388			245
Realogy Corp. 10.50% 2014		7,280			1,292
Realogy Corp. 11.75% 20147		5,294			635
Realogy Corp. 12.375% 2015		2,500			350
Northern Rock PLC 5.60% (undated)2,4		1,800			693
Northern Rock PLC 6.594% (undated)2,4		4,400			1,694
E*TRADE Financial Corp. 8.00% 2011		3,075			1,415
E*TRADE Financial Corp. 7.375% 2013		1,550			566
E*TRADE Financial Corp. 7.875% 2015		1,050			383
Nationwide Mutual Insurance 5.81% 20242,3,4		3,125			1,549
Nationwide Mutual Insurance Co. 8.25% 20314		750			475
Nationwide Mutual Insurance Co. 7.875% 20334		515			304
Nationwide Financial Services, Inc. 6.75% 20672		5,155			2,315
iStar Financial, Inc. 5.375% 2010		3,500			1,610
iStar Financial, Inc. 6.00% 2010		750			315
iStar Financial, Inc., Series B, 5.125% 2011		1,000			350
AXA SA 6.463% (undated)2,4		5,000			2,187
Protective Life Insurance Co., Series 2007-D, 5.45% 2012		2,250			1,976
Rodamco Europe Finance BV, Series 5, 3.75% 2012	€	1,600			1,869
United Dominion Realty Trust, Inc. 6.50% 2009	$	1,000			967
United Dominion Realty Trust, Inc. 5.00% 2012		1,000			749
Developers Diversified Realty Corp. 3.875% 2009		1,000			977
Developers Diversified Realty Corp. 4.625% 2010		1,000			705
Banco Mercantil del Norte, SA 6.135% 20164		1,530			988
Banco Mercantil del Norte, SA 6.862% 20212,4		900			545
Loews Corp. 6.00% 2035		1,800			1,407
City National Corp. 5.125% 2013		1,500			1,286
Lehman Brothers Holdings Inc., Series G, 3.95% 20099		640			64
Lehman Brothers Holdings Inc., Series H, 2.88% 20092,9		1,665			158
Lehman Brothers Holdings Inc., Series G, 4.25% 20109		220			22
Lehman Brothers Holdings Inc. 7.875% 20109		50			5
Lehman Brothers Holdings Inc., Series I, 6.20% 20149		1,910			191
Lehman Brothers Holdings Inc., Series I, 6.875% 20189		6,760			676
Lehman Brothers Holdings Capital Trust VII 5.857% (undated)2,9		7,250			1
Banco Santander-Chile 5.375% 20144		1,165			1,077
Shinsei Bank, Ltd. 3.75% 20162	€	1,030			594
Shinsei Bank, Ltd. 3.75% 20162		675			389
Chohung Bank 4.50% 20142	$	1,030			891
Chevy Chase Bank, FSB 6.875% 2013		1,000			806
Morgan Stanley 10.09% 2017	BRL3,000				756
Barclays Bank PLC 6.05% 20174	$	400			353
Barclays Bank PLC 5.926% (undated)2,4		1,000			368
Genworth Financial, Inc. 6.15% 20662		6,500			616
Assurant, Inc. 5.625% 2014		765			582
Allstate Corp., Series B, 6.125% 20672		980			570
Assured Guaranty US Holdings Inc., Series A, 6.40% 20662		3,000			450
Advanta Capital Trust I, Series B, 8.99% 2026		500			62
Twin Reefs Asset Trust (XLFA), Series B, 2.825% 20792,4		2,500			28
Downey Financial Corp. 6.50% 2014		4,065			19
					502,649


CONSUMER DISCRETIONARY — 5.40%
Time Warner Cable Inc. 5.40% 2012		5,000			4,672
Time Warner Cable Inc. 8.25% 2014		7,925			8,048
Time Warner Cable Inc. 6.75% 2018		9,000			8,680
Time Warner Cable Inc. 8.75% 2019		1,580			1,721
Charter Communications Holdings, LLC and Charter Communications Holdings Capital Corp. 11.75% 2011		1,225			153
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20124		6,200			5,115
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013		4,425			2,810
Charter Communications Operating, LLC, Term Loan B, 5.47% 20141,2,8		10,049			7,439
Charter Communications Operating, LLC, Term Loan B, 8.50% 20141,2,8		4,963			3,939
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20144		3,000			2,415
CCH I, LLC and CCH I Capital Corp. 11.00% 2015		4,000			720
AOL Time Warner Inc. 6.875% 2012		6,250			6,009
Time Warner Inc. 5.875% 2016		1,510			1,356
AOL Time Warner Inc. 7.625% 2031		10,635			10,480
Time Warner Inc. 6.50% 2036		4,660			4,238
Tele-Communications, Inc. 9.80% 2012		2,000			2,110
Comcast Corp. 5.85% 2015		6,275			5,944
Comcast Corp. 6.30% 2017		3,380			3,296
Comcast Corp. 5.70% 2018		5,425			5,097
Comcast Corp. 6.95% 2037		630			666
Comcast Corp. 6.40% 2038		3,940			3,944
News America Inc. 4.75% 2010		2,000			1,934
News America Holdings Inc. 9.25% 2013		2,500			2,694
News America Holdings Inc. 8.25% 2018		4,885			5,015
News America Inc. 6.65% 2037		5,400			5,362
News America Inc. 6.75% 2038		1,000			992
MGM MIRAGE 6.00% 2009		4,225			4,056
MGM MIRAGE 6.75% 2012		4,000			2,820
MGM MIRAGE 6.75% 2013		1,250			844
MGM MIRAGE 13.00% 20134		3,125			2,992
MGM MIRAGE 5.875% 2014		3,200			2,064
MGM MIRAGE 7.50% 2016		1,000			639
Federated Retail Holdings, Inc. 5.35% 2012		5,056			3,758
Macy’s Retail Holdings, Inc. 7.875% 2015		5,565			4,013
Federated Retail Holdings, Inc. 5.90% 2016		9,115			5,541
Univision Communications, Inc., Second Lien Term Loan B, 2.961% 20091,2,8		559			394
Univision Communications Inc. 7.85% 2011		9,200			4,876
Univision Communications, Inc., First Lien Term Loan B, 2.711% 20141,2,8		5,420			2,270
Univision Communications Inc. 9.75% 20154,7		19,275			2,506
J.C. Penney Co., Inc. 8.00% 2010		6,655			6,462
J.C. Penney Co., Inc. 9.00% 2012		2,485			2,208
J.C. Penney Corp., Inc. 5.75% 2018		1,800			1,197
DaimlerChrysler North America Holding Corp. 8.00% 2010		3,000			2,824
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011		4,200			3,549
DaimlerChrysler North America Holding Corp. 5.875% 2011		1,300			1,134
DaimlerChrysler North America Holding Corp. 7.75% 2011		2,330			2,109
Target Corp. 6.00% 2018		5,500			5,334
Target Corp. 7.00% 2038		3,230			3,002
Mohegan Tribal Gaming Authority 6.375% 2009		5,250			4,961
Mohegan Tribal Gaming Authority 7.125% 2014		3,300			1,683
Thomson Corp. 6.20% 2012		1,035			992
Thomson Reuters Corp. 6.50% 2018		6,150			5,602
Cox Communications, Inc. 7.875% 2009		1,500			1,475
Cox Communications, Inc. 4.625% 2010		1,750			1,694
Cox Communications, Inc. 5.45% 2014		3,500			3,065
K. Hovnanian Enterprises, Inc. 6.00% 2010		3,225			2,628
K. Hovnanian Enterprises, Inc. 6.50% 2014		1,000			275
K. Hovnanian Enterprises, Inc. 6.25% 2015		2,980			790
K. Hovnanian Enterprises, Inc. 6.25% 2016		2,965			801
K. Hovnanian Enterprises, Inc. 7.50% 2016		1,780			454
K. Hovnanian Enterprises, Inc. 8.625% 2017		4,850			1,237
Standard Pacific Corp. 5.125% 2009		2,000			1,920
Standard Pacific Corp. 6.875% 2011		300			223
Standard Pacific Corp. 7.75% 2013		4,500			2,520
Standard Pacific Corp. 6.25% 2014		1,345			726
Standard Pacific Corp. 7.00% 2015		1,340			703
General Motors Corp. 7.20% 2011		3,210			682
General Motors Corp. 7.125% 2013		9,340			1,751
General Motors Corp. 7.25% 2013	€	1,000			286
General Motors Corp. 8.80% 2021	$	19,470			3,310
Michaels Stores, Inc., Term Loan B, 2.75% 20131,2,8		2,216			1,204
Michaels Stores, Inc. 10.00% 2014		8,950			4,117
Michaels Stores, Inc. 0%/13.00% 20166		750			139
Toys “R” Us, Inc. 7.625% 2011		8,290			4,104
Toys “R” Us-Delaware, Inc., Term Loan B, 4.831% 20121,2,8		2,000			970
Allison Transmission Holdings, Inc., Term Loan B, 4.64% 20141,2,8		4,869			2,790
Allison Transmission Holdings, Inc. 11.00% 20154		4,350			2,153
CSC Holdings, Inc., Series B, 8.125% 2009		3,750			3,741
Cablevision Systems Corp., Series B, 8.00% 2012		1,000			895
CanWest Media Inc., Series B, 8.00% 2012		10,153			4,518
Ford Motor Co., Term Loan B, 5.00% 20131,2,8		5,171			2,121
FCE Bank PLC 7.125% 2013	€	3,000			2,153
Ford Motor Co. 6.50% 2018	$	555			136
Ford Motor Co. 8.875% 2022		315			77
NTL Cable PLC 8.75% 2014		3,200			2,416
NTL Cable PLC 8.75% 2014	€	1,000			1,003
NTL Cable PLC 9.75% 2014	£	700			733
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014	$	5,200			3,952
Marriott International, Inc., Series J, 5.625% 2013		5,000			3,803
Beazer Homes USA, Inc. 8.625% 2011		5,000			2,675
Beazer Homes USA, Inc. 8.125% 2016		3,145			959
Edcon (Proprietary) Ltd. 6.579% 20142	€	6,000			3,386
KB Home 5.875% 2015	$	1,630			986
KB Home 6.25% 2015		3,735			2,297
Royal Caribbean Cruises Ltd. 8.00% 2010		1,375			1,182
Royal Caribbean Cruises Ltd. 8.75% 2011		2,675			2,073
D.R. Horton, Inc. 8.00% 2009		2,700			2,693
Seminole Tribe of Florida 5.798% 20131,4		1,350			1,237
Seminole Tribe of Florida 7.804% 20201,4		1,230			1,168
Kabel Deutschland GmbH 10.625% 2014		2,625			2,349
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 8.375% 2013		2,275			2,275
Vidéotron Ltée 6.875% 2014		1,625			1,446
Vidéotron Ltée 6.375% 2015		1,000			790
Staples, Inc. 7.375% 2012		2,000			1,949
Thomson Learning 10.50% 20154		4,500			1,868
Boyd Gaming Corp. 7.75% 2012		1,350			1,222
Boyd Gaming Corp. 6.75% 2014		1,000			635
Meritage Corp. 7.731% 20173,4		4,000			1,594
Cinemark USA, Inc., Term Loan B, 2.95% 20131,2,8		831			608
Cinemark, Inc. 0%/9.75% 20146		1,000			814
Liberty Media Corp. 8.25% 2030		2,375			1,374
MDC Holdings, Inc. 5.50% 2013		1,750			1,371
Goodyear Tire & Rubber Co. 6.318% 20092		1,375			1,258
Dex Media West LLC, Dex Media West Finance Co., Series B, 8.50% 2010		750			458
Dex Media, Inc., Series B, 8.00% 2013		1,250			238
Dex Media, Inc., Series B, 0%/9.00% 20136		1,400			266
Dex Media, Inc., Series B, 0%/9.00% 20136		1,250			237
Quebecor Media Inc. 7.75% 2016		1,575			1,071
Dollar General Corp. 11.875% 20172,7		1,150			989
Dillard Department Stores, Inc. 9.125% 2011		1,400			966
Regal Cinemas Corp., Series B, 9.375% 20123		1,000			928
Neiman Marcus Group, Inc. 9.00% 20157		1,900			845
Viacom Inc. 6.25% 2016		1,000			830
Tenneco Automotive Inc. 8.625% 2014		2,000			770
American Media Operations, Inc. 8.875% 2011		3,030			625
American Media Operations, Inc. 8.875% 20114		110			23
Visteon Corp. 8.25% 2010		283			89
Visteon Corp. 7.00% 2014		2,000			310
Visteon Corp. 12.25% 20164		730			179
Radio One, Inc. 6.375% 2013		1,650			565
Education Management LLC and Education Management Finance Corp. 8.75% 2014		650			497
Sealy Mattress Co. 8.25% 2014		800			476
AMC Entertainment Inc. 8.00% 2014		675			418
William Lyon Homes, Inc. 7.625% 2012		1,500			397
Toll Brothers, Inc. 4.95% 2014		280			211
Delphi Automotive Systems Corp. 6.50% 20099		7,500			150
Delphi Corp. 6.50% 20139		480			7
Delphi Automotive Systems Corp. 6.55% 20069		500			10
Delphi Automotive Systems Corp. 7.125% 20299		1,750			35
Harrah’s Operating Co., Inc. 5.625% 2015		664			116
Harrah’s Operating Co., Inc. 10.0% 20184		134			50
Young Broadcasting Inc. 10.00% 2011		2,716			41
					298,250


TELECOMMUNICATION SERVICES — 4.09%
AT&T Corp. 7.30% 20112		1,850			1,923
AT&T Wireless Services, Inc. 7.875% 2011		1,890			1,958
AT&T Inc. 6.70% 2013		4,000			4,242
SBC Communications Inc. 5.10% 2014		2,700			2,657
SBC Communications Inc. 5.625% 2016		6,750			6,790
AT&T Inc. 5.50% 2018		11,335			11,476
AT&T Inc. 5.60% 2018		2,270			2,315
SBC Communications Inc. 6.45% 2034		2,130			2,236
AT&T Inc. 6.40% 2038		2,300			2,472
Verizon Communications Inc. 7.375% 20134		5,000			5,281
Verizon Communications Inc. 5.50% 2017		8,885			8,613
Verizon Communications Inc. 8.50% 20184		7,250			8,509
Verizon Communications Inc. 8.75% 2018		9,000			10,577
Verizon Global Funding Corp. 7.75% 2030		1,900			2,113
Nextel Communications, Inc., Series E, 6.875% 2013		19,770			8,407
Nextel Communications, Inc., Series F, 5.95% 2014		195			82
Nextel Communications, Inc., Series D, 7.375% 2015		18,580			7,807
Sprint Nextel Corp. 6.00% 2016		11,000			7,766
Sprint Capital Corp. 8.75% 2032		5,350			3,618
Olivetti Finance NV 7.25% 2012	€	905			1,231
Telecom Italia Capital SA 4.95% 2014	$	4,950			3,773
Telecom Italia Capital SA 5.25% 2015		4,000			3,049
Telecom Italia Capital SA 6.999% 2018		7,500			6,094
Telecom Italia SpA 7.75% 2033	€	1,350			1,637
Telicom Italia Capital SA 6.00% 2034	$	1,800			1,245
Telecom Italia Capital SA 7.20% 2036		350			270
Telecom Italia Capital SA 7.721% 2038		6,750			5,557
Qwest Capital Funding, Inc. 7.90% 2010		4,295			3,930
Qwest Capital Funding, Inc. 7.25% 2011		11,475			9,696
Qwest Communications International Inc. 7.25% 2011		4,000			3,500
Qwest Corp. 8.875% 2012		1,250			1,163
Qwest Capital Funding, Inc. 7.625% 2021		350			235
U S WEST Capital Funding, Inc. 6.875% 2028		700			424
American Tower Corp. 7.125% 2012		5,200			5,148
American Tower Corp. 7.50% 2012		4,500			4,455
American Tower Corp. 7.00% 20173,4		2,650			2,544
British Telecommunications PLC 5.15% 2013		3,375			3,218
British Telecommunications PLC 5.95% 2018		6,825			5,947
Cricket Communications, Inc. 9.375% 2014		7,580			6,860
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015		1,700			1,421
Windstream Corp. 8.625% 2016		5,800			5,162
Vodafone Group PLC 6.15% 2037		6,000			5,950
Rogers Wireless Inc. 7.25% 2012		3,825			3,740
Rogers Wireless Inc. 7.50% 2015		1,975			1,958
Centennial Communications Corp. 9.633% 20132		500			488
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013		2,000			2,030
Centennial Communications Corp., Centennial Cellular Operating Co. LLC and
Centennial Puerto Rico Operations Corp. 8.125% 20142		2,700			2,754
Singapore Telecommunications Ltd. 6.375% 20114		5,000			5,257
Telefónica Emisiones, SAU 5.984% 2011		5,000			4,934
France Télécom 7.75% 20112		1,000			1,053
France Télécom 10.00% 20312		2,825			3,557
Embarq Corp. 6.738% 2013		5,000			4,229
Cincinnati Bell Inc. 7.25% 2013		3,750			3,319
ALLTEL Corp., Term Loan B3, 3.939% 20151,2,8		2,145			2,128
ALLTEL Corp., Term Loan B2, 4.371% 20151,2,8		848			837
NTELOS Inc., Term Loan B, 2.72% 20111,2,8		2,407			2,038
Intelsat, Ltd. 6.50% 2013		3,000			1,695
Deutsche Telekom International Finance BV 5.875% 2013		1,400			1,386
Digicel Group Ltd. 8.875% 20154		2,000			1,310
MetroPCS Wireless, Inc. 9.25% 2014		975			877
Level 3 Financing, Inc. 9.25% 2014		1,000			585
Hawaiian Telcom Communications, Inc. 8.765% 20132,9		2,195			126
Hawaiian Telcom Communications, Inc. 9.75% 20139		2,870			230
Hawaiian Telcom Communications, Inc., Series B, 12.50% 20159		1,125			11
					225,893


INDUSTRIALS — 3.55%
Delta Air Lines, Inc., Series 2000-1, Class A-1, 7.379% 20111		315			290
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20121		8,627			7,247
Delta Air Lines, Inc., Series 2000-1, Class B, 7.92% 20121		1,000			665
Delta Air Lines, Inc., Series 2002-1, Class C, 7.779% 20131		238			206
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20141		10,798			7,818
Northwest Airlines, Inc., Term Loan A, 3.21% 20181,2,8		9,067			6,709
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20241		1,568			988
Continental Airlines, Inc., Series 2001-1, Class A-2, 6.503% 20111		1,000			775
Continental Airlines, Inc. 8.75% 2011		2,000			1,185
Continental Airlines, Inc., Series 2000-2, Class A-2, 7.487% 20121		3,570			3,213
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20181		219			153
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20181		1,279			870
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20191		1,768			1,291
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20191		3,083			2,466
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20201		1,162			930
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20211		3,762			2,925
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20221		586			439
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20221		1,325			701
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20221		2,571			2,006
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20221		2,409			1,927
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20121		1,310			930
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20121		1,135			1,009
American Airlines, Inc., Series 2001-2, Class B, 8.608% 20121		1,850			1,281
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20131		8,535			6,881
AMR Corp. 9.00% 2016		1,500			714
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20191		864			354
AMR Corp. 10.20% 2020		1,345			614
AMR Corp. 10.00% 20213		1,200			547
CSX Corp. 6.25% 2015		5,000			4,914
CSX Corp. 7.45% 2038		7,500			7,153
Koninklijke Philips Electronics NV 4.625% 2013		4,300			4,047
Koninklijke Philips Electronics NV 6.875% 2038		7,150			6,807
United Air Lines, Inc., Series 2001-1, Class A-2, 6.201% 20101		185			173
United Air Lines, Inc., Series 2000-2, Class B, 7.811% 20111,9		3,633			4,005
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20121		2,205			2,023
United Air Lines, Inc., Term Loan B, 2.50% 20141,2,8		4,197			1,977
United Air Lines, Inc., Series 2001-1, Class A-1, 6.071% 20141		178			161
United Air Lines, Inc., Series 2001-1, Class A-3, 6.602% 20151		265			247
United Air Lines, 1991 Equipment Trust Certificates, Series A, 10.11% 20061,3,9		230			0
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20241		3,777			2,236
Nielsen Finance LLC, Term Loan B, 4.388% 20131,2,8		2,970			2,019
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		8,800			7,084
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20166		4,200			1,543
Allied Waste North America, Inc., Series B, 6.50% 2010		1,000			965
Allied Waste North America, Inc., Series B, 5.75% 2011		1,000			938
Allied Waste North America, Inc., Series B, 6.125% 2014		2,750			2,491
Allied Waste North America, Inc., Series B, 7.375% 2014		1,000			946
Allied Waste North America, Inc. 7.25% 2015		2,000			1,862
Allied Waste North America, Inc. 6.875% 2017		2,000			1,863
Kansas City Southern Railway Co. 7.50% 2009		4,200			4,232
TFM, SA de CV 9.375% 2012		3,150			2,898
Kansas City Southern Railway Co. 8.00% 2015		2,000			1,590
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B1, 5.80% 20141,2,8		4,316			2,266
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B2, 7.17% 20141,2,8		4,255			2,234
DAE Aviation Holdings, Inc. 11.25% 20154		8,255			3,426
Burlington Northern Santa Fe Corp. 7.00% 2014		6,480			6,770
BNSF Funding Trust I 6.613% 20552		1,680			1,061
Hutchison Whampoa International Ltd. 7.00% 20114		500			517
Hutchison Whampoa International Ltd. 6.50% 20134		6,750			6,632
Canadian National Railway Co. 4.95% 2014		1,430			1,403
Canadian National Railway Co. 5.55% 2018		5,375			5,377
DynCorp International and DIV Capital Corp. 9.50% 20134		5,000			4,406
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013		2,325			2,026
ARAMARK Corp., Term Loan B, 3.334% 20141,2,8		3,083			2,571
ARAMARK Corp., Letter of Credit, 4.494% 20141,2,8		196			163
ARAMARK Corp. 6.693% 20152		200			152
ARAMARK Corp. 8.50% 2015		2,175			1,979
Union Pacific Corp. 5.75% 2017		1,080			1,026
Union Pacific Corp. 5.70% 2018		3,265			3,149
General Electric Capital Corp., Series A, 2.776% 20182		1,000			608
General Electric Capital Corp., Series A, 3.239% 20262		6,400			3,383
B/E Aerospace 8.50% 2018		4,330			3,908
Ashtead Group PLC 8.625% 20154		1,000			530
Ashtead Capital, Inc. 9.00% 20164		5,660			2,943
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 20111,3,4		1,361			1,186
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20131,4		1,543			1,477
John Deere Capital Corp. 5.40% 2011		2,000			2,002
John Deere Capital Corp., Series D, 4.50% 2013		500			479
RBS Global, Inc. and Rexnord LLC 9.50% 2014		3,250			2,437
American Standard Inc. 7.625% 2010		2,300			2,301
Atlas Copco AB 5.60% 20174		2,340			2,202
Atrium Companies, Inc., Term Loan B, 12.50% 20121,2,7,8		3,110			1,944
US Investigations Services, Inc. 11.75% 20164		2,955			1,876
Caterpillar Financial Services Corp., Series F, 6.20% 2013		1,610			1,661
USG Corp. 6.30% 2016		2,000			1,235
Waste Management, Inc. 7.375% 2010		650			659
WMX Technologies, Inc. 7.10% 2026		500			416
THL Buildco, Inc. 8.50% 2014		3,225			758
Volvo Treasury AB 5.00% 2017	€	590			617
Southern Capital Corp. Pass Through Trust, Series 2002-1, Class G, MBIA insured, 5.70% 20231,4	$	404			405
RSC Holdings III, LLC, Second Lien Term Loan B, 7.71% 20131,2,8		696			374
					195,867


UTILITIES — 2.76%
Edison Mission Energy 7.75% 2016		6,000			5,370
Midwest Generation, LLC, Series B, 8.56% 20161		3,823			3,651
Edison Mission Energy 7.00% 2017		4,050			3,544
Edison Mission Energy 7.20% 2019		5,250			4,331
Edison Mission Energy 7.625% 2027		4,500			3,510
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		10,000			9,702
National Rural Utilities Cooperative Finance Corp. 5.45% 2018		5,000			4,447
National Rural Utilities Cooperative Finance Corp., Collateral Trust Bonds, 10.375% 2018		3,500			4,103
Ohio Edison Co. 6.40% 2016		7,750			6,968
Cleveland Electric Illuminating Co. 8.875% 2018		5,000			5,445
Ohio Edison Co. 6.875% 2036		2,300			2,094
Consumers Energy Co., First Mortgage Bonds, Series P, 5.50% 2016		4,000			3,849
Consumers Energy Co. 5.65% 2018		940			904
Consumers Energy Co., First Mortgage Bonds, 6.125% 2019		9,150			9,081
MidAmerican Energy Holdings Co., Series D, 5.00% 2014		2,200			2,083
MidAmerican Energy Co. 5.30% 2018		4,000			3,950
MidAmerican Energy Holdings Co. 5.75% 2018		6,500			6,352
AES Corp. 9.50% 2009		695			693
AES Corp. 9.375% 2010		4,769			4,554
AES Corp. 8.75% 20134		4,358			4,205
AES Red Oak, LLC, Series A, 8.54% 20191		820			726
AES Red Oak, LLC, Series B, 9.20% 20291		2,500			2,163
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 5.368% 20141,2,8		2,970			2,067
Texas Competitive Electric Holdings Co. LLC 10.50% 20154		7,025			5,023
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 20154		6,475			4,630
E.ON International Finance BV 5.80% 20184		9,740			9,123
Veolia Environnement 5.25% 2013		2,070			1,922
Veolia Environnement 6.00% 2018		4,000			3,552
Veolia Environnement 6.125% 2033	€	2,740			3,355
ISA Capital do Brasil SA 7.875% 20124	$	625			594
ISA Capital do Brasil SA 8.80% 20174		6,200			5,471
NRG Energy, Inc. 7.25% 2014		725			680
NRG Energy, Inc. 7.375% 2016		4,675			4,359
Abu Dhabi National Energy Co. PJSC (TAQA) 5.875% 20164		3,920			3,212
Abu Dhabi National Energy Co. PJSC (TAQA) 6.50% 20364		2,000			1,433
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series Q, 5.45% 2013		2,850			2,740
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015		150			144
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016		1,450			1,392
Israel Electric Corp. Ltd. 7.70% 20184		500			477
Israel Electric Corp. Ltd. 7.25% 20194		2,600			2,429
Public Service Electric and Gas Co., Series E, 5.30% 2018		2,460			2,394
National Grid PLC 6.30% 2016		2,315			2,020
ENEL SpA 5.625% 2027	€	1,130			1,350
Scottish Power PLC 5.375% 2015	$	1,230			1,106
Cilcorp Inc. 8.70% 2009		1,000			925
Duke Energy Corp., First and Refunding Mortgage Bonds, 5.30% 2015		100			104
					152,227


ASSET-BACKED OBLIGATIONS1 — 2.53%
Capital One Multi-asset Execution Trust, Series 2004-4, Class C, 1.845% 20122		7,550			6,342
Capital One Multi-asset Execution Trust, Series 2005-1, Class C, 1.595% 20132		13,500			9,355
Capital One Multi-asset Execution Trust, Series 2006-10, Class A, 5.15% 2014		3,320			3,002
Honda Auto Receivables Owner Trust, Series 2006-3, Class A-4, 5.11% 2012		4,750			4,405
Honda Auto Receivables Owner Trust, Series 2006-2, Class A-4, 5.28% 2012		3,500			3,435
Honda Auto Receivables Owner Trust, Series 2007-2, Class A-4, 5.57% 2013		6,750			6,546
Chase Issuance Trust, Series 2005-7, Class A, 4.55% 2013		2,250			2,141
Chase Issuance Trust, Series 2007-A9, Class A, 1.225% 20142		11,500			9,419
AmeriCredit Automobile Receivables Trust, Series 2006-R-M, Class A-2, MBIA insured, 5.42% 2011		5,744			5,325
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-3-A, MBIA insured, 5.42% 2012		4,000			3,676
AmeriCredit Automobile Receivables Trust, Series 2006-B-G, Class A-4, FGIC insured, 5.21% 2013		2,795			2,164
Washington Mutual Master Note Trust, Series 2007-A4A, Class A-4, 5.20% 20144		7,445			5,451
Washington Mutual Master Note Trust, Series 2006-A2A, Class A, 1.245% 20152,4		5,000			3,477
Triad Automobile Receivables Trust, Series 2007-A, Class A-3, FSA insured, 5.28% 2012		9,340			8,756
MBNA Credit Card Master Note Trust, Series 2005-6, Class A, 4.50% 2013		5,250			5,037
MBNA Credit Card Master Note Trust, Series 2002-1, Class C, 6.80% 2014		2,500			1,330
MBNA Credit Card Master Note Trust, Series 2004-1, Class B, 4.45% 2016		2,750			1,599
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-3, FSA insured, 5.17% 2011		2,484			2,479
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-4, FSA insured, 5.18% 2013		3,750			3,224
Providian Master Note Trust, Series 2006-B1A, Class B-1, 5.35% 20134		6,000			4,500
Nissan Auto Lease Trust, Series 2008-A, Class A-3a, 5.14% 2011		5,000			4,478
Discover Card Master Trust I, Series 2007-3, Class B, Subseries 1, 1.325% 20122		4,000			3,842
ARG Funding Corp., Series 2005-2, Class A-4, AMBAC insured, 4.84% 20114		5,000			3,650
CPS Auto Receivables Trust, Series 2005-D, Class A-2, FSA insured, 5.06% 20123,4		1,980			1,721
CPS Auto Receivables Trust, Series 2007-TFC, Class A-2, XLCA insured, 5.25% 20133,4		2,340			1,872
Drive Auto Receivables Trust, Series 2006-1, Class A-4, FSA insured, 5.54% 20134		4,000			3,566
Susquehanna Auto Lease Trust, Series 2007-1, Class A-3, 5.25% 20104		3,494			3,474
Drivetime Auto Owner Trust, Series 2006-B, Class A-3, MBIA insured, 5.227% 20122,4		3,646			3,322
AmeriCredit Prime Automobile Receivables Trust, Series 2007-2-M, Class A-4-A, MBIA insured, 5.35% 2016		5,000			3,243
Capital One Auto Finance Trust, Series 2007-B, Class A3A, MBIA insured, 5.03% 2012		3,397			3,207
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012		3,000			3,005
Citibank Credit Card Issuance Trust, Class 2004-A7, 2.243% 20132		2,700			2,278
Residential Funding Mortgage Securities II, Inc., Series 2007-HSA2, Class A-1F, MBIA insured, 8.47% 20372		1,907			1,832
CWHEQ Home Equity Loan Trust, Series 2007-S1, Class A-6, MBIA insured, 5.693% 20362		3,772			1,627
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 1.335% 20372		2,436			1,624
CenterPoint Energy Transition Bond Company III, LLC, Series 2008, Class A-2, 5.234% 2023		1,500			1,294
Credit-Based Asset Servicing and Securitization LLC, Series 2007-CB4, Class A-2B, 5.723% 20372		1,500			939
Carrington Mortgage Loan Trust, Series 2006-NC5, Class A-5, 0.531% 20372		907			648
Merrill Lynch Mortgage Investors, Inc., Series 2006-RM1, Class A-2B, 5.45% 20372		1,076			627
Vanderbilt Mortgage and Finance, Inc., Series 2001-A, Class B-1, 8.20% 2020		593			568
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029		1,388			501
Securitized Asset-backed Receivables LLC Trust, Series 2006-HE2, Class A-2C, 0.621% 20362,3		1,350			398
Cendant Timeshare Receivables Funding, LLC, Series 2005-1, Class A-1, FGIC insured, 4.67% 20174		343			286
Home Equity Mortgage Trust, Series 2006-6, Class 2A-1, 0.571% 20372		1,783			242
					139,907


ENERGY — 2.15%
TransCanada PipeLines Ltd. 6.50% 2018		10,000			9,828
TransCanada PipeLines Ltd. 6.35% 20672		12,250			5,483
Williams Companies, Inc. 6.375% 20104		1,000			933
Williams Companies, Inc. 7.125% 2011		500			460
Williams Companies, Inc. 8.125% 2012		6,180			5,724
Williams Companies, Inc. 7.875% 2021		6,925			5,307
Williams Companies, Inc. 8.75% 2032		2,400			1,792
Gaz Capital SA 5.875% 2015	€	1,750			1,530
Gaz Capital SA, Series 13, 6.605% 2018		2,750			2,213
Gaz Capital SA 6.51% 20224	$	8,940			5,342
Gaz Capital SA, Series 9, 6.51% 2022		1,750			1,046
Gaz Capital SA 7.288% 20374		2,000			1,190
Rockies Express Pipeline LLC 6.25% 20134		5,000			4,928
Rockies Express Pipeline LLC 6.85% 20184		4,300			3,976
Enterprise Products Operating LLC 5.65% 2013		3,375			3,063
Enterprise Products Operating LP, Series B, 5.00% 2015		1,055			861
Enterprise Products Operating LLC 6.50% 2019		2,380			2,006
Enterprise Products Operating LP 8.375% 20662		3,160			1,740
Enterprise Products Operating LP 7.034% 20682		2,440			1,148
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20091,4		1,364			1,286
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20091		19			18
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20141		675			611
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20141,4		360			326
Ras Laffan Liquefied Natural Gas II 5.298% 20201,4		7,500			5,354
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20141,4		6,215			4,755
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20141		3,429			2,623
Kinder Morgan Energy Partners LP 6.00% 2017		380			330
Kinder Morgan Energy Partners LP 6.50% 2037		900			689
Kinder Morgan Energy Partners LP 6.95% 2038		7,000			5,676
Enbridge Energy Partners, LP, Series B, 6.50% 2018		7,940			6,544
Southern Natural Gas Co. 5.90% 20174		2,510			2,002
El Paso Natural Gas Co. 5.95% 2017		1,500			1,199
Tennessee Gas Pipeline Co. 7.00% 2028		2,000			1,540
Williams Partners L.P. and Williams Partners Finance Corp. 7.50% 2011		2,950			2,538
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017		2,500			1,978
LUKOIL International Finance BV 6.656% 20224		6,100			3,553
Qatar Petroleum 5.579% 20111,4		3,056			2,858
Delek & Avner-Yam Tethys Ltd. 5.326% 20131,4		2,585			2,609
TEPPCO Partners LP 7.00% 20672		4,700			2,523
Petroleum Export Ltd., Class A-3, 5.265% 20111,4		2,509			2,330
Marathon Oil Corp. 5.90% 2018		2,500			2,091
Pemex Project Funding Master Trust 6.625% 2035		2,000			1,695
Sunoco, Inc. 5.75% 2017		2,000			1,665
Premcor Refining Group Inc. 6.75% 2011		1,250			1,272
Drummond Co., Inc. 7.375% 20164		2,545			1,247
Gulfstream Natural Gas 6.19% 20254		1,220			912
					118,794


HEALTH CARE — 1.79%
HealthSouth Corp. 8.323% 20142		8,180			6,585
HealthSouth Corp. 10.75% 2016		6,715			6,195
Schering-Plough Corp. 5.375% 2014	€	1,020			1,329
Schering-Plough Corp. 6.00% 2017	$	9,990			9,906
GlaxoSmithKline Capital Inc. 5.65% 2018		8,970			9,439
Tenet Healthcare Corp. 6.375% 2011		700			544
Tenet Healthcare Corp. 7.375% 2013		650			466
Tenet Healthcare Corp. 9.875% 2014		5,090			4,123
Tenet Healthcare Corp. 9.25% 2015		3,995			3,236
Biogen Idec Inc. 6.00% 2013		7,750			7,672
HCA Inc., Term Loan B, 3.709% 20131,2,8		7,370			5,818
HCA Inc. 9.125% 2014		580			539
HCA Inc. 9.25% 2016		680			626
HCA Inc. 9.625% 20167		680			532
Bayer AG 5.00% (undated)2	€	7,030			7,319
Coventry Health Care, Inc. 6.30% 2014	$	7,800			4,778
AstraZeneca PLC 5.40% 2012		4,500			4,756
VWR Funding, Inc. 10.25% 20152,7		7,320			4,648
UnitedHealth Group Inc. 5.375% 2016		5,000			4,413
WellPoint, Inc. 5.25% 2016		625			554
WellPoint, Inc. 5.875% 2017		3,000			2,735
PTS Acquisition Corp. 9.50% 20157		7,295			2,809
Mylan Inc., Term Loan B, 4.75% 20141,2,8		2,548			2,173
Elan Finance PLC and Elan Finance Corp. 7.75% 2011		750			446
Elan Finance PLC and Elan Finance Corp. 6.328% 20132		2,440			1,159
Surgical Care Affiliates, Inc. 10.00% 20174		2,500			1,312
Boston Scientific Corp. 7.00% 2035		1,600			1,192
Humana Inc. 6.45% 2016		1,500			1,188
Cardinal Health, Inc. 5.80% 2016		1,235			1,119
Viant Holdings Inc. 10.125% 20174		3,240			1,085
					98,696


INFORMATION TECHNOLOGY — 1.34%
NXP BV and NXP Funding LLC 7.503% 20132		8,025			2,698
NXP BV and NXP Funding LLC 8.068% 20132	€	1,100			383
NXP BV and NXP Funding LLC 7.875% 2014	$	15,595			6,160
NXP BV and NXP Funding LLC 8.625% 2015	€	3,900			1,005
NXP BV and NXP Funding LLC 9.50% 2015	$	12,000			2,310
Freescale Semiconductor, Inc., Term Loan B, 3.931% 20131,2,8		1,280			764
Freescale Semiconductor, Inc. 5.871% 20142		2,500			863
Freescale Semiconductor, Inc. 8.875% 2014		8,350			3,716
Freescale Semiconductor, Inc. 9.125% 20142,7		9,550			2,244
Freescale Semiconductor, Inc. 10.125% 2016		3,500			1,453
Jabil Circuit, Inc. 5.875% 2010		3,060			2,815
Jabil Circuit, Inc. 8.25% 2018		8,300			5,312
Celestica Inc. 7.875% 2011		5,775			5,284
Celestica Inc. 7.625% 2013		1,925			1,588
Oracle Corp. 6.50% 2038		5,000			5,524
Western Union Co. 5.93% 2016		6,000			5,135
SunGard Data Systems Inc. 9.125% 2013		5,500			4,785
Sanmina-SCI Corp. 6.75% 2013		500			218
Sanmina-SCI Corp. 4.746% 20142,4		2,000			1,090
Sanmina-SCI Corp. 8.125% 2016		8,025			3,170
First Data Corp., Term Loan B2, 3.211% 20141,2,8		4,938			3,195
First Data Corp. 9.875% 20154		2,000			1,220
National Semiconductor Corp. 6.15% 2012		4,500			4,033
KLA-Tencor Corp. 6.90% 2018		3,750			2,841
Xerox Corp. 7.125% 2010		2,500			2,347
Ceridian Corp. 11.25% 20154		3,900			2,082
Electronic Data Systems Corp., Series B, 6.00% 20132		1,500			1,556
Exodus Communications, Inc. 11.625% 20103,9		376			0
					73,791


MATERIALS — 0.82%
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		1,675			1,425
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		7,725			6,343
International Paper Co. 7.40% 2014		500			410
International Paper Co. 7.95% 2018		7,785			6,162
C5 Capital (SPV) Ltd. 6.196% (undated)2,4		4,900			2,257
C10 Capital (SPV) Ltd. 6.722% (undated)2,4		4,589			2,187
Graphic Packaging International, Inc. 8.50% 2011		3,475			2,919
Rohm and Haas Co. 6.00% 2017		3,000			2,735
Stora Enso Oyj 7.25% 20364		4,950			2,613
Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014		3,433			1,940
Georgia Gulf Corp. 9.50% 2014		6,000			1,830
Jefferson Smurfit Corp. (U.S.) 8.25% 2012		2,000			350
Stone Container Corp. 8.375% 2012		2,250			383
Jefferson Smurfit Corp. (U.S.) 7.50% 2013		2,800			504
Smurfit-Stone Container Enterprises, Inc. 8.00% 2017		2,035			397
NewPage Corp., Series B, 10.00% 2012		3,500			1,558
Rockwood Specialties Group, Inc. 7.625% 2014	€	1,500			1,463
Owens-Brockway Glass Container Inc. 6.75% 2014		1,250			1,367
Plastipak Holdings, Inc. 8.50% 20154	$	2,000			1,350
UPM-Kymmene Corp. 5.625% 20144		2,000			1,297
Georgia-Pacific Corp. 8.125% 2011		500			472
Georgia-Pacific Corp., First Lien Term Loan B, 3.689% 20121,2,8		890			676
JSG Funding PLC 7.75% 2015		2,000			1,100
Domtar Corp. 5.375% 2013		500			313
Domtar Corp. 7.125% 2015		1,200			786
Algoma Steel Inc. 9.875% 20153,4		3,000			1,050
Abitibi-Consolidated Co. of Canada 15.50% 20104		579			171
Abitibi-Consolidated Co. of Canada 5.496% 20112		1,650			140
Abitibi-Consolidated Inc. 7.75% 2011		2,285			217
Abitibi-Consolidated Co. of Canada 6.00% 2013		460			39
Abitibi-Consolidated Co. of Canada 8.375% 2015		3,715			316
Allegheny Technologies, Inc. 8.375% 2011		500			533
					45,303


CONSUMER STAPLES — 0.73%
Kroger Co. 7.50% 2014		1,650			1,736
Kroger Co. 6.40% 2017		4,130			4,172
Altria Group, Inc. 9.70% 2018		5,000			5,413
Tesco PLC 5.50% 20174		5,035			4,675
Tesco PLC 5.50% 2033	£	330			420
SUPERVALU INC., Term Loan B, 2.689% 20121,2,8	$	1,792			1,439
SUPERVALU INC. 7.50% 2012		585			518
Albertson’s, Inc. 7.25% 2013		1,790			1,522
Albertson’s, Inc. 8.00% 2031		2,000			1,210
CVS Caremark Corp. 6.943% 20301,4		7,439			4,688
British American Tobacco International Finance PLC 9.50% 20184		4,137			4,606
Stater Bros. Holdings Inc. 8.125% 2012		2,550			2,321
Stater Bros. Holdings Inc. 7.75% 2015		1,425			1,204
Tyson Foods, Inc. 7.85% 20162		3,355			2,499
Kraft Foods Inc. 6.125% 2018		1,575			1,546
Safeway Inc. 6.25% 2014		1,420			1,429
Diageo Capital PLC 5.75% 2017		1,000			969
					40,367


MUNICIPALS — 0.23%
State of Louisiana, Citizens Property Insurance Corp., Assessment Revenue Bonds,
Series 2006-C-3, CIFG insured, 13.00% 20252		10,000			10,000
State of North Carolina, Eastern Municipal Power Agency., Power System Revenue Refunding Bonds, Federally Taxable,
Series 2003-E, 5.55% 2014		1,625			1,560
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds,
Series 2002-A, Class A, 6.72% 2025		1,294			961
State of Louisiana, Tobacco Settlement Financing. Corp., Tobacco Settlement Asset-backed Bonds,
Series 2001-A, Class A, 6.36% 2025		203			174
					12,695


Total bonds, notes & other debt instruments (cost: $5,606,588,000)					4,936,313


	Shares or			Value
Convertible securities — 0.37%	principal amount				(000	)

FINANCIALS — 0.27%
Bank of America Corp., Series L, 7.25% convertible preferred		20,000		$	13,000
Citigroup Inc., Series J, 7.00% noncumulative convertible preferred depositary shares3,10		60,000			1,763
					14,763


CONSUMER DISCRETIONARY — 0.10%
Beazer Homes USA, Inc. 4.625% convertible notes 2024	$	8,640,000			3,758
Amazon.com, Inc. 6.875% PEACS convertible notes 2010	€	1,518,000			2,099
					5,857


MISCELLANEOUS — 0.00%
Other convertible securities in initial period of acquisition					33


Total convertible securities (cost: $36,787,000)					20,653



Preferred stocks — 2.39%	Shares

FINANCIALS — 2.21%
Bank of America Corp., Series K, 8.00% noncumulative2		12,600,000			9,076
Bank of America Corp., Series M, 8.125% noncumulative2		9,970,000			7,470
SMFG Preferred Capital USD 3 Ltd. 9.50%2,4		11,440,000			10,539
SMFG Preferred Capital USD 1 Ltd. 6.078%2,4		14,083,000			9,571
Mizuho Capital Investment (USD) 1 Ltd. 6.686% noncumulative2,4		18,600,000			12,393
Mizuho Capital Investment (EUR) 1 Ltd. 5.02%2		800,000			751
JPMorgan Chase & Co., Series I, 7.90%2		12,690,000			10,584
Citigroup Inc., Series E, 8.40%2		9,890,000			6,543
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up2,4		6,030,000			4,779
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up2,4		1,550,000			1,265
Chuo Mitsui Trust and Banking Co., Ltd. 5.506%2,4		7,500,000			5,167
PNC Preferred Funding Trust III 8.70%2,4		4,100,000			3,037
PNC Preferred Funding Trust I 6.517%2,4		4,700,000			2,037
BNP Paribas 7.195%2,4		5,800,000			3,695
BNP Paribas Capital Trust 9.003% noncumulative trust2,4		850,000			521
Santander Finance Preferred S.A., Unipersonal, 6.50%		200,000			3,713
Barclays Bank PLC 7.434%2,4		6,650,000			3,366
ILFC E-Capital Trust II 6.25%2,4		6,365,000			2,661
ILFC E-Capital Trust I 5.90%2,4		1,500,000			481
Standard Chartered PLC 6.409%2,4		7,400,000			2,729
MUFG Capital Finance 1 Ltd. 6.346% noncumulative2		3,315,000			2,313
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative2,4		10,800,000			2,255
Société Générale 5.922%2,4		4,500,000			2,106
RBS Capital Trust IV 2.259% noncumulative trust2		4,500,000			1,692
AXA SA, Series B, 6.379%2,4		3,360,000			1,506
Commerzbank Capital Funding Trust I, Class B, 5.012% noncumulative2		3,100,000			1,447
Banco Bilbao Vizcaya Argentaria, SA, 5.919%2		3,600,000			1,435
ING Capital Funding Trust III 8.439% noncumulative2		2,700,000			1,359
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed perpetual capital securities4		65,000			1,278
XL Capital Ltd., Series E, 6.50%2		4,476,000			1,030
XL Capital Ltd., Series C, 6.102%3,4,11		15,600			117
HBOS PLC 6.657%2,4		2,500,000			971
Fannie Mae, Series O, 7.00%2,4		691,553			713
Fannie Mae, Series S, 8.25% noncumulative		104,039			90
QBE Capital Funding II LP 6.797%2,4		1,415,000			801
DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares2,4		750,000			749
Resona Preferred Global Securities (Cayman) Ltd. 7.191%2,4		1,502,000			716
General Motors Corp. 9.00%3,4		4,601			690
Freddie Mac, Series Y, 6.55%		437,381			127
Freddie Mac, Series Z, 8.375%		284,300			126
IndyMac Bancorp, Inc., Series A, 8.50% noncumulative4		520,000			5
					121,904


U.S. GOVERNMENT & GOVERNMENT AGENCIES SECURITIES — 0.07%
CoBank, ACB, Series C, 11.00%4		80,000			4,229


MISCELLANEOUS — 0.11%
Other preferred stocks in initial period of acquisition					5,945


Total preferred stocks (cost: $237,777,000)					132,078



Common stocks — 0.14%

INDUSTRIALS — 0.06%
Delta Air Lines, Inc.11		215,426			2,469
DigitalGlobe Inc.3,10,11		306,464			766
UAL Corp.11		1,580			17
					3,252


CONSUMER DISCRETIONARY — 0.05%
Ford Motor Co.11		747,930			1,713
Time Warner Cable Inc., Class A11		49,869			1,070
Adelphia Recovery Trust, Series ACC-111		2,409,545			24
Adelphia Recovery Trust, Series ACC-6B3,11		500,000			5
					2,812


TELECOMMUNICATION SERVICES — 0.03%
American Tower Corp., Class A11		42,271			1,239
Sprint Nextel Corp., Series 111		33,726			62
Embarq Corp.		1,686			61
XO Holdings, Inc.11		1,134			—
					1,362


INFORMATION TECHNOLOGY — 0.00%
ZiLOG, Inc.11		32,500			94


HEALTH CARE — 0.00%
Clarent Hospital Corp.3,11		16,114			—


Total common stocks (cost: $15,483,000)					7,520



Rights & warrants — 0.00%

TELECOMMUNICATION SERVICES — 0.00%
XO Holdings, Inc., Series A, warrants, expire 201011		2,273			—
XO Holdings, Inc., Series B, warrants, expire 201011		1,704			—
XO Holdings, Inc., Series C, warrants, expire 201011		1,704			—
GT Group Telecom Inc., warrants, expire 20103,4,11		1,000			0

Total rights & warrants (cost: $52,000)					—


	Principal amount			Value
Short-term securities — 11.79%		(000	)		(000	)

Federal Home Loan Bank 0.10–2.50% due 1/28–6/16/2009	$	90,900		$	90,798
AT&T Inc. 0.10%–1.95% due 1/22–1/30/20094		64,200			64,162
Fannie Mae 0.12%–0.84% due 2/4–2/23/2009		55,300			55,281
Jupiter Securitization Co., LLC 0.25%–0.45% due 1/21–2/3/20094		44,200			44,183
Hewlett-Packard Co. 0.29%–1.10% due 1/5–1/30/20094		42,400			42,393
Illinois Tool Works Inc. 2.12% due 3/3/20094		38,750			38,733
Private Export Funding Corp. 0.90%–1.25% due 1/20–4/30/20094		36,600			36,501
Medtronic Inc. 1.15% due 1/9/20094		36,200			36,179
Caterpillar Financial Services Corp. 0.15% due 2/26/2009		33,700			33,685
Pfizer Inc 1.40% due 1/30/20094		32,800			32,767
International Bank for Reconstruction and Development 1.65%–2.15% due 1/6–1/21/2009		28,400			28,388
Honeywell International Inc. 0.70% due 1/15/20094		27,700			27,683
Harvard University 0.90% due 2/11/2009		25,000			24,977
U.S. Treasury Bills 1.93% due 1/15/2009		24,800			24,799
Procter & Gamble International Fundinf S.C.A. 0.45% due 4/2/20094		15,200			15,190
Johnson & Johnson 0.75% due 1/12/20094		15,000			14,996
Eli Lilly and Co. 1.25% due 1/21/20094		14,800			14,790
Merck & Co. Inc. 0.80% due 1/26/2009		10,400			10,394
Enterprise FundingCo. LLC 1.45% due 1/7/20094		8,600			8,598
John Deere Capital Corp. 2.45% due 1/7/20094		6,400			6,398

Total short-term securities (cost: $650,777,000)					650,895


Total investment securities (cost: $6,547,464,000)					5,747,459
Other assets less liabilities					(225,178	)

Net assets				$	5,522,281

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1	Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

2	Coupon rate may change periodically.

3	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $170,518,000, which represented 3.09% of the net assets of the fund.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $940,722,000, which represented 17.04% of the net assets of the fund.

5	Index-linked bond whose principal amount moves with a government retail price index.

6	Step bond; coupon rate will increase at a later date.

7	Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

8	Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $63,438,000, which represented 1.15% of the net assets of the fund.

9	Scheduled interest and/or principal payment was not received.

10	Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition date(s)	Cost (000)		Value (000)		Percent of net assets

Citigroup Inc., Series J, 7.00% noncumulative convertible
preferred depositary shares	1/15/2008	$	3,000	$	1,763		.03	%
DigitalGlobe Inc.	4/14/1999–7/31/2003		250		766		.01

Total restricted securities		$	3,250	$	2,529		.04	%

11	Security did not produce income during the last 12 months.

Key to abbreviations and symbols

ARS = Argentine pesos

A$ = Australian dollars

BRL = Brazilian reais

C$ = Canadian dollars

DKr = Danish kroner

€ = Euros

£ = British pounds

ILS = Israeli shekels

¥ = Japanese yen

KRW = South Korean won

MXN = Mexican pesos

MYR = Malaysian ringgits

PLN = Polish zloty

SKr = Swedish kronor

S$ = Singapore dollars

Global Bond Fund

Investment portfolio

December 31, 2008

Bonds, notes & other debt instruments — 91.27%	Principal amount (000)			Value (000)

EUROS — 29.59%
German Government 4.50% 2009	€	500		US$ 705
German Government 5.25% 2011		3,125			4,645
German Government 4.25% 2012		60			90
German Government 5.00% 2012		4,225			6,408
German Government 3.75% 2013		16,964			25,055
German Government 4.50% 2013		6,000			9,037
German Government 4.25% 2014		2,230			3,392
German Government, Series 6, 4.00% 2016		9,185			13,797
German Government 3.75% 2017		27,615			40,803
German Government, Series 8, 4.25% 2018		29,280			45,117
German Government 6.25% 2024		1,825			3,332
German Government 6.25% 2030		5,200			9,703
German Government 4.75% 2034		3,080			4,959
Netherlands Government Eurobond 4.00% 2011		3,200			4,610
Netherlands Government Eurobond 4.25% 2013		7,110			10,464
Netherlands Government Eurobond 4.50% 2017		5,230			7,819
Netherlands Government Eurobond 7.50% 2023		1,150			2,256
Netherlands Government Eurobond 4.00% 2037		300			436
Belgium (Kingdom of), Series 49, 4.00% 2017		10,640			15,125
Irish Government 4.50% 2018		3,755			5,295
Irish Government 4.40% 2019		3,780			5,199
KfW 4.375% 2013		7,125			10,413
Deutsche Genossenschaftsbank-Hypothekenbank AG 4.50% 20131		2,000			2,913
Deutsche Genossenschaftsbank-Hypothekenbank AG 4.00% 20161		1,000			1,414
Spanish Government 4.20% 2013		640			929
Spanish Government 6.15% 2013		1,694			2,620
Koninklijke KPN NV 6.50% 2016		1,900			2,610
Koninklijke KPN NV 4.75% 2017		750			934
Bayer AG 5.00% (undated)2		2,290			2,384
Royal Bank of Scotland Group PLC 5.25% 2013		1,500			2,096
Royal Bank of Scotland PLC 6.934% 2018		200			272
Merrill Lynch & Co., Inc. 4.625% 2018		2,325			2,072
Schering-Plough Corp. 5.375% 2014		1,400			1,823
TeliaSonera AB 4.75% 2017		1,475			1,791
Dexia Municipal Agency 4.50% 20171		1,250			1,754
Italian Government 3.75% 2011		1,220			1,721
Gaz Capital SA 5.875% 2015		600			525
Gaz Capital SA, Series 13, 6.605% 2018		1,000			805
AT&T Inc. 6.125% 2015		1,000			1,327
Bank of Scotland PLC 5.625% 2013		775			1,094
Governor and Co. of the Bank of Ireland 6.45% 2010		750			1,036
GlaxoSmithKline Capital PLC 5.125% 2012		150			212
GlaxoSmithKline Capital PLC 5.625% 2017		500			696
Commerzbank AG, Series 551, 4.125% 20162		700			863
Bayerische Hypo- und Vereinsbank AG 6.00% 2014		250			331
UniCredito Italiano SpA 3.95% 2016		300			320
UniCredito Italiano SpA 5.75% 2017		100			128
Resona Bank, Ltd. 3.75% 20152		250			300
Resona Bank, Ltd 4.125% (undated)2,3		700			478
France Télécom 7.25% 2013		500			746
NGG Finance PLC 6.125% 2011		150			210
National Grid Transco PLC 4.375% 2020		450			519
Sumitomo Mitsui Banking Corp. 4.375% (undated)2		850			686
Telecom Italia SpA 7.75% 2033		550			667
Croatian Government 5.00% 2014		460			586
Veolia Environnement 4.875% 2013		150			204
Veolia Environnement 6.125% 2033		305			373
PLD International Finance LLC 4.375% 2011		750			501
Austria (Republic of) 4.30% 2017		325			473
ENEL SpA 5.625% 2027		320			382
Shinsei Bank, Ltd. 3.75% 20162		100			58
Shinsei Bank, Ltd. 3.75% 20162		500			288
BNP Paribas 5.25% 20142		250			337
American International Group, Inc. 4.00% 2011		350			287
Abu Dhabi National Energy Co. PJSC (TAQA) 4.375% 2013		250			286
TuranAlem Finance BV, Series 5, 6.25% 2011		460			260
DaimlerChrysler North America Holding Corp. 4.25% 2011		190			255
NXP BV and NXP Funding LLC 8.068% 20132		250			87
NXP BV and NXP Funding LLC 8.625% 2015		450			116
Standard Chartered Bank 5.875% 2017		150			175
Barclays Bank PLC 4.50% 20192		150			174
Metro Finance BV 4.625% 2011		125			173
Santander Issuances, SA Unipersonal 5.435% 20172		100			126
Northern Rock PLC, Series 7, 4.125% 20171,3		100			116
WT Finance (Australia) Pty Ltd., Westfield Europe Finance PLC, and WEA Finance LLC 3.625% 2012		70			73
					270,266


JAPANESE YEN — 7.20%
Japanese Government 1.30% 2011	¥	783,950			8,816
Japanese Government 1.40% 2012		295,000			3,336
Japanese Government 1.50% 2014		231,300			2,655
Japanese Government 0.50% 20153,4		624,536			5,879
Japanese Government 1.70% 2016		1,562,650			18,332
Japanese Government 1.70% 2017		215,000			2,513
Japanese Government 1.20% 20173,4		113,300			1,081
Japanese Government 1.20% 20173,4		1,887,435			17,987
Japanese Government 2.30% 2035		101,400			1,231
Japanese Government 2.40% 2038		313,200			3,911
					65,741


BRITISH POUNDS — 2.87%
United Kingdom 4.75% 2010	£	375			574
United Kingdom 5.00% 2014		2,475			4,020
United Kingdom 4.75% 2015		2,080			3,352
United Kingdom 4.00% 2016		6,535			10,200
United Kingdom 8.75% 2017		590			1,212
United Kingdom 8.00% 2021		275			585
United Kingdom 6.00% 2028		750			1,401
United Kingdom 4.75% 2038		2,675			4,623
Tesco PLC 5.50% 2033		100			127
Allied Irish Banks, PLC 5.625% 20302		125			122
					26,216


DANISH KRONER — 2.45%
Nykredit 6.00% 20381	DKr 9,705			US$ 1,806
Nykredit 5.00% 20381		46,252			8,378
Nykredit 6.00% 20381		13,983			2,621
Nykredit 6.00% 20411		9,951			1,847
Kingdom of Denmark 5.00% 2013		19,985			4,064
Realkredit Danmark, interest only, 6.00% 20381		9,968			1,846
Realkredit Danmark 6.00% 20381		9,937			1,866
					22,428


MEXICAN PESOS — 1.45%
United Mexican States Government, Series MI10, 9.50% 2014	MXN 17,500				1,367
United Mexican States Government, Series M10, 8.00% 2015		17,500			1,273
United Mexican States Government, Series M10, 7.25% 2016		130,000			9,043
United Mexican States Government, Series M10, 7.75% 2017		11,000			788
United Mexican States Government, Series M20, 10.00% 2024		6,800			567
United Mexican States Government, Series M30, 10.00% 2036		2,500			214
					13,252


AUSTRALIAN DOLLARS — 1.42%
Queensland Treasury Corp., Series 15, 6.00% 2015	$	A6,535			4,953
Queensland Treasury Corp., Series 17, 6.00% 2017		2,040			1,568
European Investment Bank 6.125% 2017		4,400			3,360
New South Wales Treasury Corp., Series 14, 5.50% 2014		1,275			936
New South Wales Treasury Corp., Series 17, 5.50% 2017		1,250			928
KfW 6.25% 2012		1,100			816
Countrywide Financial Corp. 6.25% 2010		600			425
					12,986


ISRAELI SHEKELS — 1.22%
Israeli Government 6.00% 20103	ILS 9,290				2,572
Israeli Government 7.50% 20143		500			156
Israeli Government 5.50% 20173		16,899			4,717
Israeli Government 6.00% 20193		12,870			3,702
					11,147


SWEDISH KRONOR — 1.10%
Swedish Government 4.00% 20121	SKr35,250				4,599
Swedish Government 6.75% 2014		22,760			3,587
Stadshypotek AB 6.00% 20121		13,000			1,831
					10,017


SOUTH KOREAN WON — 0.88%
South Korean Government 5.25% 20103	KRW4,100,000				3,334
South Korean Government 5.75% 20103		1,250,000			1,033
South Korean Government 5.75% 20133		250,000			215
South Korean Government 4.25% 20143		4,400,000			3,490
					8,072


EGYPTIAN POUNDS — 0.88%
Egypt (Arab Republic of) Treasury Bill, Series 182, 0% 2009	EGP35,300				6,324
Egypt (Arab Republic of) Treasury Bill 0% 2009		1,050			186
Egypt (Arab Republic of) Treasury Bill 0% 2009		125			22
Egypt (Arab Republic of) Treasury Bill 0% 2009		550			96
Egypt (Arab Republic of) 11.50% 2011		1,125			205
Egypt (Arab Republic of) 8.75% 2012		2,250			340
Egypt (Arab Republic of) 8.85% 2013		5,000			833
					8,006


CANADIAN DOLLARS — 0.54%
Canadian Government 5.50% 2010	$	C 70		US$ 61
Canadian Government 5.25% 2012		250			230
Canadian Government 4.50% 2015		4,340			4,064
Canadian Government 5.75% 2029		500			540
					4,895


NEW TURKISH LIRAS — 0.45%
Turkey (Republic of) 14.00% 2011	TRY 325				205
Turkey (Republic of) 16.00% 2012		5,496			3,540
Turkey (Republic of) 10.00% 20123,4		639			394
					4,139


POLISH ZLOTY — 0.32%
Polish Government 5.25% 2017	PLN8,700				2,914


SINGAPORE DOLLARS — 0.17%
Singapore (Republic of) 3.125% 2011	$	S2,095			1,525


BRAZILIAN REAIS — 0.12%
Brazilian Treasury Bill 6.00% 20153,4	BRL1,780				690
Brazil (Federal Republic of) 10.00% 20173		1,000			367
					1,057


MALAYSIAN RINGGITS — 0.03%
Malaysian Government 3.814% 2017	MYR1,000				300


NORWEGIAN KRONER — 0.02%
Norwegian Government 5.50% 2009	NKr1,000				144


DOMINICAN PESOS — 0.01%
Cervecería Nacional Dominicana, C. por A. 16.00% 20123	DOP6,557				92


ARGENTINE PESOS — 0.00%
Argentina (Republic of) 5.83% 20331,3,4,5	ARS265				24


COLOMBIAN PESOS — 0.00%
Colombia (Republic of) Global 11.75% 2010	COP17,000				8


U.S. DOLLARS — 40.55%
U.S. Treasury 5.75% 2010	US$ 7,750				8,418
U.S. Treasury 4.50% 2011		5,000			5,408
U.S. Treasury 4.875% 2012		9,067			10,150
U.S. Treasury 4.875% 2012		500			562
U.S. Treasury 2.00% 2013		4,575			4,694
U.S. Treasury 3.875% 2013		2,500			2,787
U.S. Treasury 0.625% 20133,4		3,331			3,201
U.S. Treasury 1.875% 20153,4		1,392			1,310
U.S. Treasury 5.125% 2016		22,750			27,554
U.S. Treasury 7.25% 2016		2,600			3,482
U.S. Treasury 7.50% 2016		14,900			20,345
U.S. Treasury 3.75% 2018		2,960			3,351
U.S. Treasury 1.375% 20183,4		1,758			1,641
U.S. Treasury 1.625% 20183,4		259			245
U.S. Treasury 7.875% 2021		5,000			7,434
U.S. Treasury 8.125% 2021		3,500			5,313
U.S. Treasury 5.25% 2029		1,000			1,327
U.S. Treasury 4.75% 2037		340			474
Freddie Mac 3.125% 2010		3,730			3,821
Freddie Mac 5.25% 2011		2,000			2,179
Freddie Mac 5.875% 2011		2,515			2,631
Freddie Mac 5.75% 2016		8,370			8,671
Freddie Mac 5.00% 2018		3,730			3,642
Freddie Mac 5.50% 20231		737			761
Freddie Mac 5.50% 20231		245			253
Freddie Mac, Series 3213, Class OG, principal only, 0% 20361		84			69
Freddie Mac 5.50% 20371		4,048			4,148
Freddie Mac 5.50% 20371		1,805			1,849
Freddie Mac 6.00% 20371		2,674			2,758
Freddie Mac 6.00% 20371		2,482			2,561
Freddie Mac 6.00% 20371		1,142			1,178
Freddie Mac 6.00% 20371		402			415
Freddie Mac 6.00% 20371		242			249
Freddie Mac 6.50% 20371		887			923
Freddie Mac 6.50% 20371		803			836
Freddie Mac 4.763% 20371,2		805			814
Freddie Mac, Series 3292, Class BO, principal only, 0% 20371		656			563
Freddie Mac 5.00% 20381		3,146			3,211
Freddie Mac 5.00% 20381		664			678
Freddie Mac 5.00% 20381		245			250
Freddie Mac 5.50% 20381		6,510			6,671
Freddie Mac 5.50% 20381		8,209			8,412
Freddie Mac 5.50% 20381		982			1,006
Freddie Mac 5.50% 20381		4,641			4,756
Freddie Mac 6.00% 20381		245			253
Freddie Mac 6.50% 20381		6,165			6,415
Freddie Mac 6.50% 20381		2,617			2,723
Freddie Mac 6.50% 20381		2,104			2,189
Freddie Mac 6.50% 20381		1,943			2,022
Freddie Mac 4.651% 20381,2		1,324			1,331
Freddie Mac 4.966% 20381,2		346			350
Freddie Mac 5.009% 20381,2		499			503
Freddie Mac 6.50% 20391		875			910
Fannie Mae 6.25% 2011		750			791
Fannie Mae 5.25% 2012		2,700			2,775
Fannie Mae 5.375% 2017		3,540			4,127
Fannie Mae 6.25% 2029		1,250			1,701
Fannie Mae 5.00% 20351		2,217			2,268
Fannie Mae 6.00% 20361		1,931			1,991
Fannie Mae 6.00% 20361		278			286
Fannie Mae 6.50% 20361		1,874			1,950
Fannie Mae 6.50% 20361		383			392
Fannie Mae, Series 2006-96, Class MO, principal only, 0% 20361		350			311
Fannie Mae 5.50% 20371		230			230
Fannie Mae 5.50% 20371		290			290
Fannie Mae 5.783% 20371,2		3,081			3,157
Fannie Mae 6.00% 20371		1,231			1,270
Fannie Mae 6.50% 20371		218			227
Fannie Mae 4.50% 20381		997			1,013
Fannie Mae 5.00% 20381		2,969			3,036
Fannie Mae 5.00% 20381		2,884			2,949
Fannie Mae 5.00% 20381		1,452			1,485
Fannie Mae 5.50% 20381		1,915			1,967
Fannie Mae 6.00% 20381		1,227			1,267
Fannie Mae 7.00% 20381		87			92
Fannie Mae 5.322% 20381,2		1,233			1,257
Fannie Mae 4.539% 20381,2		436			439
Fannie Mae 4.442% 20381,2		1,137			1,142
Fannie Mae 6.50% 20391		875			909
GlaxoSmithKline Capital Inc. 4.85% 2013		100			100
GlaxoSmithKline Capital Inc. 5.65% 2018		4,220			4,440
HBOS PLC 6.75% 20186		2,595			2,288
HBOS PLC 6.00% 20336		1,100			753
Société Générale 5.75% 20166		3,060			2,807
Jackson National Life Global 5.375% 20136		3,100			2,804
Telecom Italia Capital SA 4.95% 2014		1,650			1,258
Telecom Italia Capital SA 6.999% 2018		500			406
Telicom Italia Capital SA 6.00% 2034		600			415
Telecom Italia Capital SA 7.20% 2036		770			594
American Tower Corp. 7.00% 20173,6		2,700			2,592
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		250			243
National Rural Utilities Cooperative Finance Corp., Collateral Trust Bonds, 10.375% 2018		2,000			2,345
Time Warner Cable Inc. 6.75% 2018		2,080			2,006
Time Warner Cable Inc. 8.75% 2019		500			545
SBC Communications Inc. 5.10% 2014		100			98
SBC Communications Inc. 5.625% 2016		250			251
AT&T Inc. 5.50% 2018		450			456
AT&T Inc. 5.60% 2018		640			653
AT&T Inc. 6.40% 2038		1,000			1,075
JPMorgan Chase Bank NA 6.00% 2017		2,260			2,283
Comcast Corp. 6.30% 2017		670			653
Comcast Corp. 5.70% 2018		770			723
Comcast Corp. 6.95% 2037		820			866
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp., Series L, 3.125% 2012		500			521
Countrywide Financial Corp., Series B, 5.80% 2012		200			195
Bank of America Corp. 5.30% 2017		1,550			1,474
Vodafone Group PLC 5.00% 2015		1,250			1,148
Vodafone Group PLC 5.625% 2017		750			708
Vodafone Group PLC 6.15% 2037		150			149
Constellation Brands, Inc. 8.375% 2014		600			573
Constellation Brands, Inc. 7.25% 2017		1,435			1,363
Government National Mortgage Assn. 6.00% 20381		1,727			1,786
Veolia Environnement 5.25% 2013		1,730			1,606
Veolia Environnement 6.00% 2018		200			178
Canadian National Railway Co. 4.95% 2014		1,630			1,599
Canadian National Railway Co. 5.55% 2018		125			125
Intergen Power 9.00% 20176		2,050			1,691
Verizon Communications Inc. 5.50% 2017		520			504
Verizon Communications Inc. 8.50% 20186		1,000			1,174
British American Tobacco International Finance PLC 9.50% 20186		1,503			1,673
Resona Bank, Ltd. 5.85% (undated)2,6		2,900			1,646
Bausch & Lomb Inc. 9.875% 20156		2,175			1,642
Public Service Electric and Gas Co., Series E, 5.30% 2018		1,620			1,576
E.ON International Finance BV 5.80% 20186		1,490			1,396
E.ON International Finance BV 6.65% 20386		150			140
ORIX Corp. 5.48% 2011		2,015			1,516
DaimlerChrysler North America Holding Corp. 5.875% 2011		400			349
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011		1,350			1,141
Tenet Healthcare Corp. 6.375% 2011		50			39
Tenet Healthcare Corp. 7.375% 2013		165			118
Tenet Healthcare Corp. 9.875% 2014		1,480			1,199
Tenet Healthcare Corp. 9.25% 2015		145			117
Nielsen Finance LLC, Term Loan B, 4.388% 20131,2,7		49			33
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		975			785
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20168		1,780			654
Enterprise Products Operating LLC 9.75% 2014		225			229
Enterprise Products Operating LLC 6.50% 2019		840			708
Enterprise Products Operating LP 8.375% 20662		250			138
Enterprise Products Operating LP 7.034% 20682		830			391
Wells Fargo Mortgage-backed Securities Trust, Series 2007-8, Class II-A-2, 6.00% 20371		2,500			1,394
Edison Mission Energy 7.50% 2013		25			23
Edison Mission Energy 7.75% 2016		50			45
Midwest Generation, LLC, Series B, 8.56% 20161		79			76
Edison Mission Energy 7.20% 2019		1,325			1,093
Edison Mission Energy 7.625% 2027		125			97
Structured Products Asset Return Certificates Trust, Series 2001-CF1, Class A, 6.36% 20331,3		1,394			1,327
France Télécom 8.50% 20312		1,050			1,322
Merrill Lynch Mortgage Trust, Series 2006-C1, Class A-3, 5.657% 20391,2		80			61
Merrill Lynch Mortgage Trust, Series 2004-BPC1, Class A-5, 4.855% 20411,2		1,165			876
Merrill Lynch Mortgage Trust, Series 2005-MCP1, Class AM, 4.805% 20431,2		520			307
Turkey (Republic of) 6.75% 2018		250			239
Turkey (Republic of) 7.00% 2019		1,000			970
Standard Chartered Bank 6.40% 20176		400			333
Standard Chartered Bank 8.00% 20316		1,000			867
Colombia (Republic of) Global 7.375% 2017		485			507
Colombia (Republic of) Global 11.75% 2020		515			693
Kroger Co. 7.50% 2014		1,000			1,052
Kroger Co. 6.40% 2017		130			131
AmeriCredit Automobile Receivables Trust, Series 2006-R-M, Class A-2, MBIA insured, 5.42% 20111		507			470
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-3-A, MBIA insured, 5.42% 20121		750			689
HSBK (Europe) BV 7.75% 2013		485			347
HSBK (Europe) BV 7.25% 20176		305			166
HSBK (Europe) BV 7.25% 2017		1,165			635
Korea Development Bank 5.30% 2013		1,150			1,063
MetLife Capital Trust IV 7.875% 20672,6		900			566
MetLife Capital Trust X 9.25% 20682,6		700			489
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 5.368% 20141,2,7		124			86
Texas Competitive Electric Holdings Co. LLC 10.50% 20156		410			293
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 20156		415			297
Texas Competitive Electric Holdings Co. LLC 11.25% 20165,6		750			379
Citigroup Inc. 6.125% 2017		250			253
Citigroup Capital XXI 8.30% 20772		975			754
Hospitality Properties Trust 6.85% 2012		60			39
Hospitality Properties Trust 5.625% 2017		225			104
Hospitality Properties Trust 6.70% 2018		1,835			855
Union Pacific Corp. 5.70% 2018		400			386
Union Pacific Corp. 6.15% 2037		650			604
United Mexican States Government Global 6.05% 2040		1,000			975
CCH II, LLC and CCH II Capital Corp. 10.25% 2010		700			325
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20126		650			536
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013		15			10
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20146		25			20
CCH I, LLC and CCH I Capital Corp. 11.00% 2015		405			73
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 20361		200			188
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-3, 4.499% 20371		100			82
CS First Boston Mortgage Securities Corp., Series 2005-C1, Class A-3, 4.813% 20381		200			163
CS First Boston Mortgage Securities Corp., Series 2006-C2, Class A-3, 5.658% 20391,2		600			490
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20371,6		550			452
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20371,3,6		715			429
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20371,3,6		25			14
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20371,3,6		40			21
Deutsche Telekom International Finance BV 5.875% 2013		910			901
Stater Bros. Holdings Inc. 8.125% 2012		375			341
Stater Bros. Holdings Inc. 7.75% 2015		625			528
Target Corp. 6.00% 2018		500			485
Target Corp. 7.00% 2038		400			372
Centennial Communications Corp. 9.633% 20132		40			39
Centennial Communications Corp. 10.00% 2013		775			806
Citibank Credit Card Issuance Trust, Class 2004-A7, 2.243% 20131,2		1,000			844
Enbridge Energy Partners, LP, Series B, 6.50% 2018		1,020			841
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 20371		940			841
Chase Issuance Trust, Series 2007-A9, Class A, 1.225% 20141,2		1,000			819
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 20361		608			597
Banc of America Commercial Mortgage Inc., Series 2005-1, Class A-4, 4.988% 20421,2		250			208
Drivetime Auto Owner Trust, Series 2006-B, Class A-3, MBIA insured, 5.227% 20121,2,6		810			738
Capital One Multi-asset Execution Trust, Series 2005-1, Class C, 1.595% 20131,2		1,000			693
NXP BV and NXP Funding LLC 7.875% 2014		1,600			632
NXP BV and NXP Funding LLC 9.50% 2015		300			58
Time Warner Inc. 5.875% 2016		100			90
AOL Time Warner Inc. 7.625% 2031		145			143
Time Warner Inc. 6.50% 2036		490			446
Triad Automobile Receivables Trust, Series 2007-A, Class A-3, FSA insured, 5.28% 20121		720			675
Nextel Communications, Inc., Series E, 6.875% 2013		460			196
Nextel Communications, Inc., Series F, 5.95% 2014		1,000			420
Sprint Capital Corp. 6.90% 2019		75			53
Univision Communications, Inc., Second Lien Term Loan B, 2.961% 20091,2,7		539			380
Univision Communications Inc. 7.85% 2011		265			140
Univision Communications, Inc., First Lien Term Loan B, 2.711% 20141,2,7		70			29
Univision Communications Inc. 9.75% 20155,6		835			109
United States Government Agency-Guaranteed (FDIC insured), Regions Bank 3.25% 2011		625			651
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20146		160			112
Westfield Group 5.70% 20166		250			167
Westfield Group 7.125% 20186		500			355
Chubb Corp. 5.75% 2018		500			481
Chubb Corp. 6.375% 20672		245			152
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20431,2		805			629
ARAMARK Corp., Term Loan B, 3.334% 20141,2,7		1			1
ARAMARK Corp., Letter of Credit, 4.494% 20141,2,7		—			—
ARAMARK Corp. 8.50% 2015		680			619
Norfolk Southern Corp. 7.05% 2037		590			619
Mandalay Resort Group 6.375% 2011		25			18
MGM MIRAGE 13.00% 20136		100			96
MGM MIRAGE 6.75% 2013		25			17
MGM MIRAGE 5.875% 2014		750			484
Burlington Northern Santa Fe Corp. 6.15% 2037		660			610
Royal Bank of Scotland Group PLC 6.99% (undated)2,6		900			409
Royal Bank of Scotland Group PLC, Series U, 7.64% (undated)2		500			199
Capital One Auto Finance Trust, Series 2007-B, Class A3A, MBIA insured, 5.03% 20121		637			601
Mohegan Tribal Gaming Authority 7.125% 2014		1,175			599
Boyd Gaming Corp. 7.75% 2012		260			235
Boyd Gaming Corp. 6.75% 2014		525			333
Boyd Gaming Corp. 7.125% 2016		50			30
Thomson Reuters Corp. 5.95% 2013		250			233
Thomson Reuters Corp. 6.50% 2018		400			364
Biogen Idec Inc. 6.00% 2013		600			594
CanWest Media Inc., Series B, 8.00% 2012		1,260			561
CanWest MediaWorks Inc. 9.25% 20156		75			29
CSX Corp. 7.45% 2038		610			582
DynCorp International and DIV Capital Corp. 9.50% 20136		310			273
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013		325			283
Ford Motor Credit Co. 7.375% 2009		25			22
Ford Motor Credit Co. 9.75% 20102		275			220
Ford Motor Credit Co. 7.375% 2011		275			209
Ford Motor Credit Co. 7.569% 20122		125			81
Ford Motor Co., Term Loan B, 5.00% 20131,2,7		49			20
Kraft Foods Inc. 6.125% 2018		550			540
Freescale Semiconductor, Inc., Term Loan B, 3.931% 20131,2,7		25			15
Freescale Semiconductor, Inc. 9.125% 20142,5		1,425			335
Freescale Semiconductor, Inc. 10.125% 2016		450			187
Abbey National PLC 7.95% 2029		610			533
Corporación Andina de Fomento 5.75% 2017		625			524
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012		500			514
AstraZeneca PLC 5.40% 2012		480			507
Gaz Capital SA 6.51% 20226		590			353
Gaz Capital SA, Series 9, 6.51% 2022		250			149
Ceridian Corp. 11.25% 20156		925			494
Quebecor Media Inc. 7.75% 2016		625			425
Quebecor Media Inc. 7.75% 2016		95			65
Citigroup Commercial Mortgage Trust, Series 2006-C4, Class A-3, 5.724% 20491,2		600			472
Allison Transmission Holdings, Inc. 11.25% 20152,5,6		50			20
Allison Transmission Holdings, Inc. 11.00% 20156		900			445
Hanesbrands Inc., Series B, 5.698% 20142		640			454
TransDigm Inc. 7.75% 2014		550			454
Qwest Capital Funding, Inc. 7.25% 2011		25			21
Qwest Communications International Inc. 7.25% 2011		475			416
U S WEST Communications, Inc. 6.875% 2033		10			6
MBNA Credit Card Master Note Trust, Series 2004-1, Class B, 4.45% 20161		750			436
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		510			434
Charles Schwab Corp., Series A, 6.375% 2017		125			116
Schwab Capital Trust I 7.50% 20372		630			316
Dollar General Corp. 11.875% 20172,5		500			430
Seneca Gaming Corp., Series B, 7.25% 2012		525			425
TL Acquisitions, Inc., Term Loan B, 2.96% 20141,2,7		198			130
Thomson Learning 10.50% 20156		685			284
Thomson Learning 0%/13.25% 20156,8		30			9
TuranAlem Finance BV, Series 8, 8.25% 2037		960			418
Iron Mountain Inc. 6.625% 2016		500			409
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.821% 20371,2,3		854			359
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 4-A-1, 5.93% 20471,2		92			44
Albertson’s, Inc. 7.25% 2013		400			340
Albertson’s, Inc. 8.00% 2031		100			60
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-3B, 5.317% 20371,2		200			166
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 20421		138			126
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.875% 20451,2		125			98
CSAB Mortgage-backed Trust, Series 2007-1, Class 4-A-8, 7.00% 20371		826			390
NTL Cable PLC 8.75% 2014		500			377
Schering-Plough Corp. 6.00% 2017		380			377
Atlas Copco AB 5.60% 20176		400			376
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.338% 20441,2		500			373
ALLTEL Corp., Term Loan B2, 4.371% 20151,2,7		100			98
ALLTEL Corp., Term Loan B3, 3.939% 20151,2,7		274			272
Hughes Communications, Inc. 9.50% 2014		450			368
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014		425			368
ACE INA Holdings Inc. 5.80% 2018		400			361
AES Corp. 7.75% 2015		375			317
AES Corp. 8.00% 20206		50			39
US Investigations Services, Inc. 10.50% 20156		200			147
US Investigations Services, Inc., Term Loan B, 4.275% 20151,2,7		247			180
US Investigations Services, Inc. 11.75% 20166		45			29
CVS Caremark Corp. 6.943% 20301,6		550			347
CenterPoint Energy Transition Bond Company III, LLC, Series 2008, Class A-2, 5.234% 20231		400			345
Cott Beverages Inc. 8.00% 2011		550			338
Navios Maritime Holdings Inc. 9.50% 2014		600			337
Surgical Care Affiliates, Inc. 8.875% 20155,6		300			184
Surgical Care Affiliates, Inc. 10.00% 20176		275			144
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20141,6		214			164
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20141		214			164
Elizabeth Arden, Inc. 7.75% 2014		500			327
Commercial Mortgage Trust, Series 2000-C1, Class A-2, 7.416% 20331		197			197
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 20381		150			129
Toys “R” Us, Inc. 7.625% 2011		650			322
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 2-A-1, 6.50% 20371		358			193
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 3-A-1, 7.00% 20371		229			125
Williams Companies, Inc. 8.125% 2012		50			46
Williams Companies, Inc. 7.875% 2021		250			192
Williams Companies, Inc. 8.75% 2032		100			75
Argentina (Republic of) 1.564% 20121,2,3		1,125			296
Argentina (Republic of) GDP-Linked 2035		435			11
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20201		56			45
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20211		82			64
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20221		71			55
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20221		172			138
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 20201		321			293
MetroPCS Wireless, Inc. 9.25% 2014		325			292
Sunoco, Inc. 5.75% 2017		350			291
Atlantic Broadband Finance, LLC and Atlantic Broadband Finance, Inc. 9.375% 2014		405			279
SunGard Data Systems Inc. 3.75% 2009		250			249
SunGard Data Systems Inc. 9.125% 2013		26			23
First Data Corp., Term Loan B2, 3.211% 20141,2,7		420			272
C10 Capital (SPV) Ltd. 6.722% (undated)2,6		550			262
iStar Financial, Inc. 6.00% 2010		500			210
iStar Financial, Inc. 6.05% 2015		175			52
TransCanada PipeLines Ltd. 6.35% 20672		570			255
TEPPCO Partners LP 7.00% 20672		470			252
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20121		15			14
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20241		400			237
Petroplus Finance Ltd. 6.75% 20146		100			64
Petroplus Finance Ltd. 7.00% 20176		300			185
Consumers Energy Co., First Mortgage Bonds, 6.125% 2019		250			248
Structured Asset Securities Corp., Series 2003-29, Class 1-A-1, 4.75% 20181		272			247
HVB Funding Trust I 8.741% 20316		850			246
LUKOIL International Finance BV 6.356% 2017		300			185
LUKOIL International Finance BV 6.656% 20226		100			58
Capmark Financial Group Inc. 5.875% 2012		670			229
Capmark Financial Group Inc. 6.30% 2017		50			14
Goldman Sachs Group, Inc. 6.15% 2018		250			241
British Telecommunications PLC 5.95% 2018		275			240
Ashtead Group PLC 8.625% 20156		200			106
Ashtead Capital, Inc. 9.00% 20166		250			130
Merrill Lynch Mortgage Investors, Inc., Series 2006-A1, Class II-A-1, 6.106% 20361,2		338			162
Merrill Lynch Mortgage Investors, Inc., Series 2006-RM1, Class A-2B, 5.45% 20371,2		127			74
PTS Acquisition Corp. 9.50% 20155		595			229
Meritage Corp. 7.00% 2014		375			216
Meritage Homes Corp. 6.25% 2015		25			13
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.923% 20361,2		347			175
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-6, Class 3-A-1, 5.884% 20371,2		102			52
Cricket Communications, Inc. 9.375% 2014		250			226
Sealy Mattress Co. 8.25% 2014		375			223
National Grid PLC 6.30% 2016		250			218
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015		325			213
Lincoln National Corp. 7.00% 20662		485			204
International Paper Co. 7.95% 2018		250			198
Warner Music Group 7.375% 2014		335			198
ArcelorMittal 5.375% 2013		250			189
Abu Dhabi National Energy Co. PJSC (TAQA) 5.875% 20166		230			188
Allied Waste North America, Inc., Series B, 5.75% 2011		200			188
Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014		327			185
HSBC Holdings PLC 6.50% 2037		180			183
Lehman Brothers Holdings Inc., Series I, 6.875% 20189		1,830			183
Lehman Brothers Holdings Capital Trust VII 5.857% (undated)2,9		2,750			—
Washington Mutual Master Note Trust, Series 2007-A4A, Class A-4, 5.20% 20141,6		250			183
Wells Fargo & Co. 5.625% 2017		175			183
Fifth Third Bancorp 8.25% 2038		130			108
Fifth Third Capital Trust IV 6.50% 20672		150			75
SLM Corp., Series A, 5.40% 2011		240			182
Liberty Mutual Group Inc. 6.50% 20356		30			17
Liberty Mutual Group Inc. 7.50% 20366		120			73
Liberty Mutual Group Inc., Series A, 7.80% 20876		200			90
Cablevision Systems Corp., Series B, 8.00% 2012		200			179
American Media Operations, Inc., Series B, 10.25% 20096		57			12
American Media Operations, Inc., Series B, 10.25% 2009		814			166
Sanmina-SCI Corp. 6.75% 2013		180			78
Sanmina-SCI Corp. 8.125% 2016		250			99
Barclays Bank PLC 6.05% 20176		200			177
Home Equity Mortgage Trust, Series 2006-2, Class 1A-1, 5.367% 20361,2		281			93
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20371,2		356			83
Hawker Beechcraft Acquisition Co., LLC 8.875% 20155		340			117
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015		125			52
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017		25			7
American Express Co. 8.15% 2038		150			173
Smithfield Foods, Inc. 7.75% 2017		300			173
Scottish Power PLC 5.375% 2015		185			166
Rouse Co. 5.375% 2013		500			160
HCA Inc., Term Loan B, 3.709% 20131,2,7		202			159
Nationwide Mutual Insurance Co. 8.25% 20316		250			158
Credit-Based Asset Servicing and Securitization LLC, Series 2007-CB4, Class A-2B, 5.723% 20371,2		250			157
Simon Property Group, LP 6.125% 2018		230			156
General Electric Co. 5.00% 2013		150			152
AMC Entertainment Inc. 8.00% 2014		25			16
AMC Entertainment Inc., Series B, 11.00% 2016		175			123
Chohung Bank 4.50% 20142,6		160			138
NRG Energy, Inc. 7.25% 2014		145			136
LBI Media, Inc. 8.50% 20173,6		380			133
Alabama Power Co., Series 2008-B, 5.80% 2013		125			130
Enbridge Inc. 5.60% 2017		150			128
Tenneco Automotive Inc. 8.625% 2014		330			127
United States Government Agency-Guaranteed (FDIC insured), PNC Funding Corp. 2.30% 2012		125			126
Sensata Technologies BV 8.00% 20142		270			123
Coventry Health Care, Inc. 6.30% 2014		200			123
Symbion Inc. 11.75% 20155		231			122
Kinder Morgan Energy Partners LP 6.00% 2017		140			122
Georgia Gulf Corp. 9.50% 2014		380			116
E*TRADE Financial Corp. 8.00% 2011		250			115
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR18, Class 1-A1, 5.339% 20371,2		201			115
Duane Reade Inc. 9.75% 2011		210			112
Nalco Co. 7.75% 2011		75			72
Nalco Co. 8.875% 2013		25			21
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 0%/9.00% 20148		25			18
Walgreen Co. 4.875% 2013		100			103
Development Bank of Singapore Ltd. 7.125% 20116		100			103
Nationwide Financial Services, Inc. 6.75% 20672		220			99
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-2, 4.98% 20131		100			98
Cox Communications, Inc. 4.625% 2010		100			97
Stora Enso Oyj 7.25% 20366		180			95
Fox Acquisition LLC 13.375% 20166		215			92
Delhaize Group 6.50% 2017		100			91
J.P. Morgan Mortgage Trust, Series 2006-A7, Class 2-A-4, 5.793% 20371,2		195			89
Pinnacle Entertainment, Inc. 7.50% 2015		150			88
Canadian Natural Resources Ltd. 5.70% 2017		100			87
Allstate Corp., Series B, 6.125% 20672		150			87
Lehman Mortgage Trust, Series 2007-8, Class 3-A1, 7.25% 20371		129			87
Williams Partners L.P. and Williams Partners Finance Corp. 7.50% 2011		100			86
Michaels Stores, Inc. 10.00% 2014		185			85
Carrington Mortgage Loan Trust, Series 2006-NC5, Class A-5, 0.531% 20371,2		117			84
Mylan Inc., Term Loan B, 4.75% 20141,2,7		98			84
Southern Natural Gas Co. 5.90% 20176		100			80
American General Finance Corp., Series J, 6.90% 2017		175			76
Metals USA Holdings Corp. 10.883% 20122,5		50			14
Metals USA, Inc. 11.125% 2015		100			60
Neiman Marcus Group, Inc. 9.00% 20155		160			71
Gaylord Entertainment Co. 8.00% 2013		100			70
HealthSouth Corp. 10.75% 2016		75			69
AEP Industries Inc. 7.875% 2013		120			68
Residential Funding Mortgage Securities II, Inc., Series 2007-HSA2, Class A-1F, MBIA insured, 8.47% 20371,2		70			67
Serena Software, Inc. 10.375% 2016		125			64
Drummond Co., Inc. 7.375% 20166		125			61
Federated Retail Holdings, Inc. 5.35% 2012		45			33
Macy’s Retail Holdings, Inc. 7.875% 2015		30			22
Federated Retail Holdings, Inc. 5.90% 2016		10			6
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20131		75			60
Radio One, Inc. 6.375% 2013		175			60
TRW Automotive Inc. 7.00% 20146		100			54
Securitized Asset-backed Receivables LLC Trust, Series 2006-HE2, Class A-2C, 0.621% 20361,2,3		175			52
Citigroup Mortgage Loan Trust, Inc., Series 2005-8, Class I-A4A, 5.572% 20351,2,3		95			52
Catlin Insurance Ltd. 7.249% (undated)2,6		120			48
VWR Funding, Inc. 10.25% 20152,5		75			48
Windstream Corp. 8.625% 2016		50			45
Northern Rock PLC 6.594% (undated)2,6		100			39
Education Management LLC and Education Management Finance Corp. 8.75% 2014		50			38
DAE Aviation Holdings, Inc. 11.25% 20156		90			37
Realogy Corp., Term Loan B, 5.706% 20131,2,7		19			12
Realogy Corp., Letter of Credit, 5.05% 20131,2,7		5			3
Realogy Corp. 10.50% 2014		100			18
Realogy Corp. 11.75% 20145		26			3
Lafarge 6.50% 2016		50			34
K. Hovnanian Enterprises, Inc. 8.875% 2012		20			6
K. Hovnanian Enterprises, Inc. 7.75% 2013		25			6
K. Hovnanian Enterprises, Inc. 6.50% 2014		50			14
K. Hovnanian Enterprises, Inc. 6.25% 2016		25			7
Residential Accredit Loans, Inc., Series 2003-QS16, Class A-1, 5.00% 20181		32			32
Cooper-Standard Automotive Inc. 7.00% 2012		25			8
Cooper-Standard Automotive Inc. 8.375% 2014		125			23
Tyson Foods, Inc. 7.85% 20162		40			30
THL Buildco, Inc. 8.50% 2014		125			29
Standard Pacific Corp. 5.125% 2009		25			24
Esterline Technologies Corp. 6.625% 2017		25			21
Yankee Candle Co., Inc., Series B, 8.50% 2015		45			21
Liberty Media Corp. 8.25% 2030		35			20
Crown Castle Towers LLC, Series 2006-1, Class F, 6.650% 20361,3,6		35			20
Team Finance LLC and Health Finance Corp. 11.25% 2013		25			20
Banco Mercantil del Norte, SA 6.135% 20162,6		30			19
Goodyear Tire & Rubber Co. 8.625% 2011		23			19
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014		25			19
Bank of America, NA and First Union National Bank Commercial Mortgage Trust, Series 2001-3, Class A-1, 4.89% 20371		18			17
Building Materials Corp. of America 7.75% 2014		25			16
Toll Brothers, Inc. 4.95% 2014		15			11
Toll Brothers, Inc. 5.15% 2015		5			4
Alion Science and Technology Corp. 10.25% 2015		30			14
Local T.V. Finance LLC 9.25% 20155,6		60			14
Northwest Airlines, Inc., Term Loan B, 4.96% 20131,2,3,7		8			6
Northwest Airlines, Inc., Term Loan A, 3.21% 20181,2,7		9			7
Universal Hospital Services, Inc. 5.943% 20152		20			12
Hawaiian Telcom Communications, Inc. 9.75% 20139		25			2
Hawaiian Telcom Communications, Inc., Term Loan C, 4.75% 20141,2,7		14			6
Dole Food Co., Inc. 8.875% 2011		10			6
Jefferson Smurfit Corp. (U.S.) 8.25% 2012		20			4
Jefferson Smurfit Corp. (U.S.) 7.50% 2013		10			2
Viant Holdings Inc. 10.125% 20176		15			5
Young Broadcasting Inc. 10.00% 2011		150			2
Atrium Companies, Inc. 15.00% 20125,6		11			1
					370,395


Total bonds, notes & other debt instruments (cost: $857,591,000)					833,624



Preferred stocks — 0.84%	Shares

U.S. DOLLARS — 0.64%
SMFG Preferred Capital USD 3 Ltd. 9.50%2,6		3,125,000			2,879
SMFG Preferred Capital USD 1 Ltd. 6.078%2,6		485,000			330
Bank of America Corp., Series M, 8.125% noncumulative2		1,610,000			1,206
JPMorgan Chase & Co., Series I, 7.90%2		750,000			625
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up2,6		250,000			204
Standard Chartered PLC 6.409%2,6		500,000			184
Banco Bilbao Vizcaya Argentaria, SA, 5.919%2		270,000			108
AXA SA, Series B, 6.379%2,6		230,000			103
Resona Preferred Global Securities (Cayman) Ltd. 7.191%2,6		185,000			88
Barclays Bank PLC 7.434%2,6		100,000			51
XL Capital Ltd., Series E, 6.50%2		155,000			36
Mizuho Capital Investment (USD) 1 Ltd. 6.686% noncumulative2,6		42,000			28
Fannie Mae, Series S, 8.25% noncumulative		7,550			6
Fannie Mae, Series O, 7.00%2,6		1,750			2
Freddie Mac, Series Z, 8.375%		8,200			4
					5,854


EUROS — 0.18%
Commerzbank Capital Funding Trust I, Class B, 5.012% noncumulative2		1,750,000			817
MUFG Capital Finance 2 Ltd. 4.85% noncumulative2		500,000			416
HVB Funding Trust VIII 7.055%2		750,000			413
					1,646


BRITISH POUNDS — 0.02%
SMFG Preferred Capital GBP 1 Ltd. 6.164%2		100,000			92
Commerzbank Capital Funding Trust II, Class B, 5.905% noncumulative2		100,000			68
					160


Total preferred stocks (cost: $12,171,000)					7,660



Rights & warrants — 0.00%

U.S. DOLLARS — 0.00%
Atrium Corp., warrants, expire 20183,6,10		5			0


Total rights & warrants (cost: $0)					0


	Principal amount
Short-term securities — 6.33%		(000	)

Calyon North America Inc. 0.93% due 2/27/2009	US$11,700				11,683
United Parcel Service Inc. 0.50% due 2/20/20096		9,500			9,497
Danske Corp. 0.55% due 1/6/20096		8,300			8,299
Société Générale North America, Inc. 0.11% due 1/2/2009		8,000			8,000
Hewlett-Packard Co. 0.40% due 3/4/20096		7,600			7,595
Enterprise Funding Co. LLC 0.30% due 1/13/20096		5,000			5,000
Siemens Capital Co. LLC 0.65% due 1/7/20096		4,400			4,399
Park Avenue Receivables Co., LLC 0.25% due 1/23/20096		3,300			3,300

Total short-term securities (cost: $57,768,000)					57,773


Total investment securities (cost: $927,530,000)					899,057
Other assets less liabilities					14,261

Net assets				US$913,318

1	Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

2	Coupon rate may change periodically.

3	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $58,025,000, which represented 6.35% of the net assets of the fund.

4	Index-linked bond whose principal amount moves with a government retail price index.

5	Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $75,638,000, which represented 8.28% of the net assets of the fund.

7	Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $1,793,000, which represented .20% of the net assets of the fund.

8	Step bond; coupon rate will increase at a later date.

9	Scheduled interest and/or principal payment was not received.

10	Security did not produce income during the last 12 months.

High-Income Bond Fund

Investment portfolio

December 31, 2008

Bonds, notes & other debt instruments — 64.16%	Principal amount (000)			Value (000)

CONSUMER DISCRETIONARY — 14.46%
CCH II, LLC and CCH II Capital Corp. 10.25% 2010	$	1,167		$	543
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20121		2,875			2,372
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013		5,908			3,752
Charter Communications Operating, LLC, Term Loan B, 5.47% 20142,3,4		5,643			4,178
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 20141		2,800			2,156
Charter Communications Operating, LLC, Term Loan B, 8.50% 20142,3,4		2,729			2,166
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20141		3,050			2,455
CCH I, LLC and CCH I Capital Corp. 11.00% 2015		5,515			993
MGM MIRAGE 6.00% 2009		900			864
MGM MIRAGE 6.75% 2012		1,050			740
MGM MIRAGE 6.75% 2013		3,130			2,113
MGM MIRAGE 13.00% 20131		2,700			2,585
MGM MIRAGE 5.875% 2014		3,000			1,935
MGM MIRAGE 6.625% 2015		1,550			953
Univision Communications, Inc., Second Lien Term Loan B, 2.961% 20092,3,4		1,245			878
Univision Communications Inc. 7.85% 2011		4,370			2,316
Univision Communications, Inc., First Lien Term Loan B, 2.711% 20142,3,4		4,350			1,822
Univision Communications Inc. 9.75% 20151,5		16,770			2,180
CSC Holdings, Inc., Series B, 8.125% 2009		5,650			5,636
Cablevision Systems Corp., Series B, 8.00% 2012		1,715			1,535
Sun Media Corp. 7.625% 2013		1,500			1,215
Quebecor Media Inc. 7.75% 2016		5,500			3,740
Quebecor Media Inc. 7.75% 2016		2,850			1,938
NTL Cable PLC 8.75% 2014		2,990			2,257
NTL Cable PLC 8.75% 2014	€	500			502
NTL Cable PLC 9.75% 2014	£	300			314
NTL Cable PLC 9.125% 2016	$	2,625			1,956
Cinemark USA, Inc., Term Loan B, 2.95% 20132,3,4		3,104			2,272
Cinemark, Inc. 0%/9.75% 20146		3,175			2,584
Michaels Stores, Inc., Term Loan B, 2.75% 20132,3,4		2,217			1,204
Michaels Stores, Inc. 10.00% 2014		7,575			3,485
Michaels Stores, Inc. 0%/13.00% 20166		575			106
K. Hovnanian Enterprises, Inc. 6.00% 2010		3,000			2,445
K. Hovnanian Enterprises, Inc. 8.875% 2012		1,030			304
K. Hovnanian Enterprises, Inc. 6.375% 2014		1,075			296
K. Hovnanian Enterprises, Inc. 6.50% 2014		2,450			674
K. Hovnanian Enterprises, Inc. 6.25% 2015		920			244
K. Hovnanian Enterprises, Inc. 6.25% 2016		1,575			425
K. Hovnanian Enterprises, Inc. 7.50% 2016		865			221
CanWest Media Inc., Series B, 8.00% 2012		9,376			4,172
CanWest MediaWorks Inc. 9.25% 20151		750			289
Boyd Gaming Corp. 7.75% 2012		1,300			1,177
Boyd Gaming Corp. 6.75% 2014		3,450			2,191
Boyd Gaming Corp. 7.125% 2016		1,725			1,026
TL Acquisitions, Inc., Term Loan B, 2.96% 20142,3,4		2,417			1,588
Thomson Learning 0%/13.25% 20151,6		2,120			625
Thomson Learning 10.50% 20151		5,150			2,137
Toys “R” Us, Inc. 7.625% 2011		6,840			3,386
Toys “R” Us-Delaware, Inc., Term Loan B, 4.831% 20122,3,4		1,244			603
Allison Transmission Holdings, Inc. 11.00% 20151		1,500			743
Allison Transmission Holdings, Inc. 11.25% 20151,2,5		8,050			3,220
Mohegan Tribal Gaming Authority 6.375% 2009		1,695			1,602
Mohegan Tribal Gaming Authority 8.00% 2012		250			154
Mohegan Tribal Gaming Authority 6.125% 2013		250			159
Mohegan Tribal Gaming Authority 7.125% 2014		3,825			1,951
Pinnacle Entertainment, Inc. 7.50% 2015		5,500			3,218
Kabel Deutschland GmbH 10.625% 2014		3,350			2,998
Standard Pacific Corp. 5.125% 2009		1,675			1,608
Standard Pacific Corp. 6.875% 2011		300			223
Standard Pacific Corp. 6.25% 2014		660			356
Standard Pacific Corp. 7.00% 2015		1,215			638
Viacom Inc. 5.75% 2011		3,000			2,726
Tenneco Automotive Inc., Series B, 10.25% 2013		772			482
Tenneco Automotive Inc. 8.625% 2014		3,535			1,361
Tenneco Inc. 8.125% 2015		1,750			814
Sealy Mattress Co. 8.25% 2014		3,950			2,350
Ford Capital BV 9.50% 2010		200			88
Ford Motor Co., Term Loan B, 5.00% 20132,3,4		1,729			709
FCE Bank PLC 7.125% 2013	€	1,000			718
Ford Motor Co. 6.50% 2018	$	2,640			647
Ford Motor Co. 8.875% 2022		610			149
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014		2,975			2,261
Dollar General Corp. 10.625% 2015		1,000			960
Dollar General Corp. 11.875% 20172,5		1,450			1,247
iesy Repository GmbH 10.125% 2015	€	500			589
iesy Repository GmbH 10.375% 20151	$	2,000			1,577
General Motors Corp. 7.20% 2011		985			209
General Motors Corp. 7.125% 2013		2,375			445
General Motors Corp. 7.25% 2013	€	400			114
General Motors Corp. 8.80% 2021	$	8,032			1,365
Meritage Corp. 7.00% 2014		1,400			805
Meritage Homes Corp. 6.25% 2015		1,125			602
Meritage Corp. 7.731% 20171,7		1,500			598
Gray Television Inc., Series D, 12.00%/15.00% (undated)6,7,8		5,500			1,856
Atlantic Broadband Finance, LLC and Atlantic Broadband Finance, Inc. 9.375% 2014		2,675			1,846
Education Management LLC and Education Management Finance Corp. 8.75% 2014		1,675			1,281
Education Management LLC and Education Management Finance Corp. 10.25% 2016		695			507
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012		2,750			1,774
Hanesbrands Inc., Series B, 5.698% 20142		2,470			1,754
Seneca Gaming Corp., Series B, 7.25% 2012		2,125			1,721
American Media Operations, Inc., Series B, 10.25% 2009		4,375			891
American Media Operations, Inc., Series B, 10.25% 20091		159			32
American Media Operations, Inc. 8.875% 2011		3,480			718
American Media Operations, Inc. 8.875% 20111		127			26
Gaylord Entertainment Co. 8.00% 2013		1,475			1,025
Gaylord Entertainment Co. 6.75% 2014		900			562
AMC Entertainment Inc. 8.00% 2014		500			310
AMC Entertainment Inc., Series B, 11.00% 2016		1,750			1,232
KB Home 5.875% 2015		685			414
KB Home 6.25% 2015		1,810			1,113
LBI Media, Inc. 8.50% 20171,7		4,210			1,473
Edcon (Proprietary) Ltd. 6.579% 20142	€	2,500			1,411
Neiman Marcus Group, Inc. 9.00% 20155	$	3,095			1,377
Beazer Homes USA, Inc. 8.125% 2016		4,350			1,327
Vidéotron Ltée 6.875% 2014		1,120			997
Vidéotron Ltée 6.375% 2015		380			300
Dex Media West LLC, Dex Media West Finance Co., Series B, 8.50% 2010		800			488
Dex Media, Inc., Series B, 8.00% 2013		2,575			489
Dex Media, Inc., Series B, 9.00% 2013		250			47
Dex Media, Inc., Series B, 9.00% 2013		250			48
R.H. Donnelley Corp., Series A-3, 8.875% 2016		1,250			194
Warner Music Group 7.375% 2014		2,000			1,180
J.C. Penney Co., Inc. 8.00% 2010		750			728
J.C. Penney Co., Inc. 9.00% 2012		495			440
Liberty Media Corp. 8.25% 2030		2,000			1,157
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014		1,300			1,125
D.R. Horton, Inc. 8.00% 2009		875			873
D.R. Horton, Inc. 6.875% 2013		200			163
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 8.375% 2013		1,021			1,021
Local T.V. Finance LLC 9.25% 20151,5		4,485			1,009
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015		1,500			984
Royal Caribbean Cruises Ltd. 8.00% 2010		875			753
Royal Caribbean Cruises Ltd. 8.75% 2011		275			213
Regal Cinemas Corp., Series B, 9.375% 20127		1,000			928
Bon-Ton Department Stores, Inc. 10.25% 2014		5,650			706
Fox Acquisition LLC 13.375% 20161		1,610			692
Goodyear Tire & Rubber Co. 6.318% 20092		675			618
TRW Automotive Inc. 7.00% 20141		1,000			535
WDAC Intermediate Corp. 8.375% 20141		1,350			392
WDAC Intermediate Corp. 8.50% 2014	€	250			98
Burlington Coat Factory Warehouse Corp. 11.125% 2014	$	1,450			442
Radio One, Inc. 6.375% 2013		1,225			420
Visteon Corp. 8.25% 2010		377			119
Visteon Corp. 12.25% 20161		973			238
Cooper-Standard Automotive Inc. 7.00% 2012		250			76
Cooper-Standard Automotive Inc. 8.375% 2014		1,275			230
Dillard Department Stores, Inc. 9.125% 2011		350			242
Carmike Cinemas, Inc., Delayed Draw, Term Loan, 5.33% 20122,3,4		234			167
Idearc Inc. 8.00% 2016		1,500			120
Young Broadcasting Inc. 10.00% 2011		7,467			112
Delphi Automotive Systems Corp. 6.50% 20099		3,500			70
Delphi Corp. 6.50% 20139		555			8
Delphi Automotive Systems Corp. 6.55% 20069		250			5
Delphi Automotive Systems Corp. 7.125% 20299		750			15
KAC Acquisition Corp. 8.00% 20261,5,7		91			91
Harrah’s Operating Co., Inc. 5.625% 2015		266			47
Harrah’s Operating Co., Inc. 10.00% 20181		53			20
					164,484


TELECOMMUNICATION SERVICES — 8.63%
American Tower Corp. 7.125% 2012		6,740			6,673
American Tower Corp. 7.50% 2012		1,925			1,906
American Tower Corp. 7.00% 20171,7		6,850			6,576
Nextel Communications, Inc., Series E, 6.875% 2013		1,205			512
Nextel Communications, Inc., Series F, 5.95% 2014		2,770			1,164
Nextel Communications, Inc., Series D, 7.375% 2015		5,280			2,219
Sprint Nextel Corp. 6.00% 2016		7,000			4,942
Sprint Capital Corp. 6.90% 2019		3,150			2,240
Sprint Capital Corp. 8.75% 2032		1,645			1,112
Centennial Communications Corp. 9.633% 20132		2,950			2,876
Centennial Communications Corp. 10.00% 2013		3,750			3,900
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013		1,695			1,720
Centennial Communications Corp., Centennial Cellular Operating Co. LLC and
Centennial Puerto Rico Operations Corp. 8.125% 20142		3,450			3,519
Qwest Capital Funding, Inc. 7.90% 2010		2,160			1,976
Qwest Capital Funding, Inc. 7.25% 2011		6,275			5,302
Qwest Communications International Inc. 7.25% 2011		600			525
Qwest Communications International Inc., Series B, 7.50% 2014		2,500			1,800
U S WEST Capital Funding, Inc. 6.875% 2028		1,200			726
Windstream Corp. 8.125% 2013		2,075			1,919
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015		1,775			1,483
Windstream Corp. 8.625% 2016		3,875			3,449
Windstream Corp. 7.00% 2019		2,650			2,054
MetroPCS Wireless, Inc. 9.25% 2014		9,175			8,258
Cricket Communications, Inc. 9.375% 2014		8,105			7,335
AT&T Inc. 6.70% 2013		1,500			1,591
AT&T Inc. 6.40% 2038		3,250			3,493
Rogers Wireless Inc. 7.25% 2012		600			587
Rogers Wireless Inc. 7.50% 2015		2,675			2,652
Cincinnati Bell Inc. 7.25% 2013		3,200			2,832
Telecom Italia Capital SA 7.721% 2038		3,000			2,470
ALLTEL Corp., Term Loan B3, 3.939% 20152,3,4		1,621			1,608
ALLTEL Corp., Term Loan B2, 4.371% 20152,3,4		673			665
Digicel Group Ltd. 8.875% 20151		2,250			1,474
Citizens Communications Co. 7.875% 2027		2,375			1,389
Hawaiian Telcom Communications, Inc. 8.765% 20132,9		1,725			99
Hawaiian Telcom Communications, Inc. 9.75% 20139		3,135			251
Hawaiian Telcom Communications, Inc., Term Loan C, 4.75% 20142,3,4		2,240			876
Hawaiian Telcom Communications, Inc., Series B, 12.50% 20159		425			4
Millicom International Cellular SA 10.00% 2013		1,320			1,195
Intelsat, Ltd. 6.50% 2013		2,000			1,130
NTELOS Inc., Term Loan B, 2.72% 20112,3,4		963			815
Orascom Telecom 7.875% 20141		1,500			803
					98,120


INDUSTRIALS — 8.43%
Nielsen Finance LLC, Term Loan B, 4.388% 20132,3,4		2,483			1,688
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		10,375			8,352
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20166		15,715			5,775
Allied Waste North America, Inc., Series B, 6.50% 2010		1,000			965
Allied Waste North America, Inc., Series B, 5.75% 2011		1,000			938
Allied Waste North America, Inc., Series B, 6.125% 2014		1,250			1,132
Allied Waste North America, Inc., Series B, 7.375% 2014		2,600			2,460
Allied Waste North America, Inc. 7.25% 2015		100			93
Allied Waste North America, Inc. 6.875% 2017		3,700			3,446
Delta Air Lines, Inc., First Lien Term Loan A, 3.899% 20122,3,4		1,980			1,327
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20123		2,500			2,100
Northwest Airlines, Inc., Term Loan B, 4.96% 20132,3,4,7		1,976			1,592
Delta Air Lines, Inc., Second Lien Term Loan B, 5.149% 20142,3,4		2,955			1,475
Northwest Airlines, Inc., Term Loan A, 3.21% 20182,3,4		3,391			2,509
Continental Airlines, Inc. 8.75% 2011		1,250			741
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20183		438			306
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20193		663			531
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20193		1,362			844
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20203		708			566
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20203		2,486			1,392
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20223		1,581			1,186
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20223		942			735
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20223		841			496
American Airlines, Inc., Series 1999-1, Class B, 7.324% 20113		1,855			1,707
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20123		2,000			1,420
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20133		1,440			1,161
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20193		3,152			1,292
AMR Corp. 10.00% 20217		1,000			456
DynCorp International and DIV Capital Corp. 9.50% 20131		3,780			3,331
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013		2,486			2,166
US Investigations Services, Inc., Term Loan B, 4.275% 20152,3,4		1,482			1,079
US Investigations Services, Inc. 10.50% 20151		2,925			2,150
US Investigations Services, Inc. 11.75% 20161		2,500			1,588
ARAMARK Corp., Term Loan B, 3.334% 20142,3,4		644			537
ARAMARK Corp., Letter of Credit, 4.494% 20142,3,4		41			34
ARAMARK Corp. 6.693% 20152		600			456
ARAMARK Corp. 8.50% 2015		3,375			3,071
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B1, 5.80% 20142,3,4		863			453
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B2, 7.17% 20142,3,4		851			447
DAE Aviation Holdings, Inc. 11.25% 20151		6,845			2,841
Ashtead Group PLC 8.625% 20151		2,050			1,087
Ashtead Capital, Inc. 9.00% 20161		4,400			2,288
Kansas City Southern Railway Co. 7.50% 2009		1,615			1,627
TFM, SA de CV 9.375% 2012		1,825			1,679
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015		725			301
Hawker Beechcraft Acquisition Co., LLC 8.875% 20155		8,110			2,798
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017		250			69
DRS Technologies, Inc. 6.875% 2013		1,200			1,195
DRS Technologies, Inc. 6.625% 2016		1,500			1,508
DRS Technologies, Inc. 7.625% 2018		200			201
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20123		897			823
United Air Lines, Inc., Term Loan B, 2.50% 20142,3,4		2,411			1,136
United Air Lines, Inc., Series 2001-1, Class A-1, 6.071% 20143		266			241
United Air Lines, Inc., Series 2001-1, Class A-3, 6.602% 20153		463			433
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20211,3		452			245
Alion Science and Technology Corp. 10.25% 2015		5,190			2,368
RBS Global, Inc. and Rexnord LLC 9.50% 2014		2,575			1,931
RBS Global, Inc. and Rexnord LLC 8.875% 2016		500			295
NTK Holdings Inc. 0%/10.75% 20143,6		5,250			1,155
THL Buildco, Inc. 8.50% 2014		3,935			925
TransDigm Inc. 7.75% 2014		1,900			1,568
B/E Aerospace 8.50% 2018		1,730			1,561
United Rentals (North America), Inc., Series B, 6.50% 2012		1,750			1,391
Atrium Companies, Inc., Term Loan B, 12.50% 20122,3,4,5		1,333			833
Atrium Companies, Inc. 15.00% 20121,5		1,345			182
RSC Holdings III, LLC, Second Lien Term Loan B, 7.71% 20132,3,4		1,753			942
Navios Maritime Holdings Inc. 9.50% 2014		1,600			899
FTI Consulting, Inc. 7.625% 2013		1,000			871
H&E Equipment Services, Inc. 8.375% 2016		685			366
Quebecor World Inc. 8.75% 20161,9		1,000			84
					95,840


UTILITIES — 6.31%
Edison Mission Energy 7.50% 2013		4,700			4,324
Edison Mission Energy 7.75% 2016		2,200			1,969
Midwest Generation, LLC, Series B, 8.56% 20163		3,777			3,607
Edison Mission Energy 7.00% 2017		7,525			6,584
Edison Mission Energy 7.20% 2019		5,725			4,723
Edison Mission Energy 7.625% 2027		3,925			3,062
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 5.368% 20142,3,4		2,128			1,481
Texas Competitive Electric Holdings Co. LLC, Series B, 10.50% 20151		8,665			6,195
Texas Competitive Electric Holdings Co. LLC 10.50% 20151		7,665			5,480
Texas Competitive Electric Holdings Co. LLC 11.25% 20161,5		2,250			1,136
Intergen Power 9.00% 20171		9,775			8,064
AES Corp. 9.50% 2009		357			356
AES Corp. 9.375% 2010		1,497			1,430
AES Corp. 8.75% 20131		3,061			2,954
AES Gener SA 7.50% 2014		500			496
AES Corp. 7.75% 2015		500			423
AES Red Oak, LLC, Series A, 8.54% 20193		410			363
AES Corp. 8.00% 20201		1,000			780
NRG Energy, Inc. 7.25% 2014		2,125			1,992
NRG Energy, Inc. 7.375% 2016		4,775			4,453
ISA Capital do Brasil SA 7.875% 20121		2,225			2,114
ISA Capital do Brasil SA 8.80% 20171		700			618
E.ON International Finance BV 5.80% 20181		2,540			2,379
Cilcorp Inc. 8.70% 2009		2,000			1,850
Sierra Pacific Resources 8.625% 2014		875			793
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015		275			265
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016		500			480
Pacific Gas and Electric Co. 8.25% 2018		1,000			1,204
National Rural Utilities Cooperative Finance Corp., Collateral Trust Bonds, 10.375% 2018		1,000			1,172
FPL Energy National Wind Portfolio, LLC 6.125% 20191,3		1,179			1,026
					71,773


FINANCIALS — 6.04%
Countrywide Home Loans, Inc., Series K, 5.625% 2009		1,775			1,767
Countrywide Financial Corp., Series A, 4.50% 2010		255			251
Countrywide Financial Corp., Series B, 2.946% 20122		4,000			3,460
Countrywide Financial Corp., Series B, 5.80% 2012		7,592			7,405
Ford Motor Credit Co. 3.225% 20091,2		2,630			2,512
Ford Motor Credit Co. 5.80% 2009		1,000			997
Ford Motor Credit Co. 7.375% 2009		475			417
Ford Motor Credit Co. 8.625% 2010		215			163
Ford Motor Credit Co. 9.75% 20102		750			600
Ford Motor Credit Co. 7.375% 2011		975			742
Ford Motor Credit Co. 9.875% 2011		2,000			1,476
Ford Motor Credit Co. 7.569% 20122		3,725			2,426
General Motors Acceptance Corp. 7.50% 20131,7		477			324
General Motors Acceptance Corp. 7.25% 20111,7		1,549			1,394
General Motors Acceptance Corp. 6.625% 20121,7		316			253
General Motors Acceptance Corp. 6.875% 20121,7		189			151
General Motors Acceptance Corp. 7.00% 20121,7		2,038			1,651
General Motors Acceptance Corp. 4.403% 20142,7		1,013			648
General Motors Acceptance Corp. 6.75% 20141,7		153			112
General Motors Acceptance Corp. 8.00% 20181,7		469			227
Citigroup Capital XXI 8.30% 20772		5,625			4,348
TuranAlem Finance BV 7.875% 2010		1,500			923
TuranAlem Finance BV 7.75% 20131		2,000			810
TuranAlem Finance BV 8.50% 2015		500			218
TuranAlem Finance BV 8.50% 20151		260			113
TuranAlem Finance BV 8.25% 20371		3,710			1,614
CIT Group Inc. 7.625% 2012		3,600			3,042
SLM Corp., Series A, 3.835% 20142		1,200			811
SLM Corp., Series A, 8.45% 2018		2,500			1,979
HSBK (Europe) BV 7.75% 2013		1,690			1,208
HSBK (Europe) BV 7.75% 20131		270			193
HSBK (Europe) BV 7.25% 20171		2,400			1,308
Realogy Corp., Letter of Credit, 5.05% 20132,3,4		253			160
Realogy Corp., Term Loan B, 5.706% 20132,3,4		931			589
Realogy Corp. 10.50% 2014		9,375			1,664
Realogy Corp. 11.75% 20145		1,165			140
Realogy Corp. 12.375% 2015		1,000			140
E*TRADE Financial Corp. 8.00% 2011		1,725			794
E*TRADE Financial Corp. 7.375% 2013		175			64
E*TRADE Financial Corp. 7.875% 2015		3,935			1,436
MetLife Capital Trust X 9.25% 20681,2		3,000			2,097
HSBC Finance Corp. 5.00% 2015		2,265			2,013
Liberty Mutual Group Inc., Series A, 7.80% 20871		545			245
Liberty Mutual Group Inc., Series C, 10.75% 20881,2		2,955			1,627
Rouse Co. 3.625% 2009		615			258
Rouse Co. 7.20% 2012		1,495			516
Rouse Co. 5.375% 2013		1,250			400
Rouse Co. 6.75% 20131		1,575			575
JPMorgan Chase Bank NA 6.00% 2017		1,500			1,516
Northern Rock PLC 5.60% (undated)1,2		600			231
Northern Rock PLC 6.594% (undated)1,2		3,050			1,174
Host Marriott, LP, Series M, 7.00% 2012		1,470			1,253
Host Marriott, LP, Series K, 7.125% 2013		125			101
Catlin Insurance Ltd. 7.249% (undated)1,2		2,500			995
iStar Financial, Inc. 6.00% 2010		1,055			443
iStar Financial, Inc., Series B, 5.125% 2011		545			191
iStar Financial, Inc. 6.50% 2013		1,070			321
iStar Financial, Inc., Series B, 5.70% 2014		80			25
Kazkommerts International BV 8.50% 2013		500			293
Kazkommerts International BV 8.00% 2015		600			285
Kazkommerts International BV, Series 4, 7.50% 2016		1,000			380
International Lease Finance Corp., Series R, 5.65% 2014		1,300			850
Capmark Financial Group Inc. 5.875% 2012		2,300			785
Lazard Group LLC 7.125% 2015		1,165			741
UnumProvident Finance Co. PLC 6.85% 20151		800			655
HBOS PLC 6.75% 20181		700			617
Morgan Stanley 10.09% 2017	BRL2,000				504
Schwab Capital Trust I 7.50% 20372	$	1,000			501
Chevy Chase Bank, FSB 6.875% 2013		500			403
Agile Property Holdings Ltd. 9.00% 2013		410			226
Downey Financial Corp. 6.50% 2014		1,130			5
					68,756


HEALTH CARE — 4.71%
HCA Inc., Term Loan B, 3.709% 20132,3,4		6,529			5,154
HCA Inc. 9.125% 2014		2,495			2,320
HCA Inc. 9.25% 2016		265			244
HCA Inc. 10.375% 20165		2,890			2,261
HealthSouth Corp. 8.323% 20142		1,640			1,320
HealthSouth Corp. 10.75% 2016		8,005			7,385
Tenet Healthcare Corp. 6.375% 2011		1,770			1,376
Tenet Healthcare Corp. 7.375% 2013		2,750			1,973
Tenet Healthcare Corp. 9.875% 2014		5,100			4,131
Tenet Healthcare Corp. 9.25% 2015		1,355			1,098
Bausch & Lomb Inc. 9.875% 20151		9,780			7,384
Elan Finance PLC and Elan Finance Corp. 7.75% 2011		1,500			893
Elan Finance PLC and Elan Finance Corp. 6.328% 20132		4,520			2,147
Elan Finance PLC and Elan Finance Corp. 8.875% 2013		2,700			1,418
VWR Funding, Inc. 10.25% 20152,5		6,210			3,943
Surgical Care Affiliates, Inc. 8.875% 20151,5		1,950			1,199
Surgical Care Affiliates, Inc. 10.00% 20171		1,825			958
PTS Acquisition Corp. 9.50% 20155		5,345			2,058
Mylan Inc., Term Loan B, 4.75% 20142,3,4		2,323			1,981
Warner Chilcott Corp. 8.75% 2015		1,463			1,309
Team Finance LLC and Health Finance Corp. 11.25% 2013		1,485			1,173
Symbion Inc. 11.75% 20155		1,416			751
Viant Holdings Inc. 10.125% 20171		1,842			617
Boston Scientific Corp. 7.00% 2035		400			298
AMR HoldCo, Inc. and EmCare HoldCo, Inc. 10.00% 2015		215			201
					53,592


INFORMATION TECHNOLOGY — 4.65%
NXP BV and NXP Funding LLC 7.503% 20132		3,075			1,034
NXP BV and NXP Funding LLC 8.068% 20132	€	1,050			366
NXP BV and NXP Funding LLC 7.875% 2014	$	8,905			3,517
NXP BV and NXP Funding LLC 8.625% 2015	€	3,250			838
NXP BV and NXP Funding LLC 9.50% 2015	$	12,145			2,338
Freescale Semiconductor, Inc., Term Loan B, 3.931% 20132,3,4		1,305			779
Freescale Semiconductor, Inc. 8.875% 2014		3,325			1,480
Freescale Semiconductor, Inc. 9.875% 20142,5		15,275			3,590
Freescale Semiconductor, Inc. 10.125% 2016		3,425			1,421
SunGard Data Systems Inc. 9.125% 2013		6,984			6,076
First Data Corp., Term Loan B2, 3.211% 20142,3,4		7,900			5,111
First Data Corp. 9.875% 20151		500			305
Hughes Communications, Inc. 9.50% 2014		6,150			5,028
Sanmina-SCI Corp. 6.75% 2013		3,950			1,718
Sanmina-SCI Corp. 4.746% 20141,2		1,000			545
Sanmina-SCI Corp. 8.125% 2016		5,400			2,133
Ceridian Corp. 11.25% 20151		6,400			3,416
Serena Software, Inc. 10.375% 2016		5,975			3,062
Celestica Inc. 7.875% 2011		2,275			2,081
Celestica Inc. 7.625% 2013		275			227
Jabil Circuit, Inc. 5.875% 2010		875			805
Jabil Circuit, Inc. 8.25% 2018		2,270			1,453
Sensata Technologies BV 8.00% 20142		4,870			2,216
Xerox Corp. 7.125% 2010		1,250			1,174
Xerox Corp. 7.625% 2013		1,000			835
Electronic Data Systems Corp., Series B, 6.00% 20132		1,000			1,037
Nortel Networks Ltd. 9.003% 20112		1,250			319
					52,904


MATERIALS — 3.34%
Nalco Co. 7.75% 2011		4,340			4,188
Nalco Co. 8.875% 2013		500			425
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 0%/9.00% 20146		1,900			1,377
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		3,820			3,251
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		2,240			1,839
Building Materials Corp. of America 7.75% 2014		5,000			3,175
Plastipak Holdings, Inc. 8.50% 20151		4,585			3,095
Georgia Gulf Corp. 9.50% 2014		7,885			2,405
Rockwood Specialties Group, Inc. 7.50% 2014		1,500			1,162
Rockwood Specialties Group, Inc. 7.625% 2014	€	700			683
Owens-Illinois, Inc. 7.50% 2010	$	1,275			1,269
Owens-Brockway Glass Container Inc. 6.75% 2014	€	375			410
Associated Materials Inc. 9.75% 2012	$	1,200			951
AMH Holdings, Inc. 0%/11.25% 20146		1,000			560
Graphic Packaging International, Inc. 8.50% 2011		1,625			1,365
Algoma Steel Inc., Term Loan B, 4.42% 20132,3,4,7		705			388
Algoma Steel Inc. 9.875% 20151,7		2,500			875
Jefferson Smurfit Corp. (U.S.) 8.25% 2012		525			92
Jefferson Smurfit Corp. (U.S.) 7.50% 2013		3,650			657
Smurfit-Stone Container Enterprises, Inc. 8.00% 2017		2,370			462
International Paper Co. 7.95% 2018		1,475			1,168
Vale Overseas Ltd. 6.25% 2017		1,000			945
FMG Finance Pty Ltd. 10.625% 20161		1,500			878
Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014		1,507			851
Allegheny Technologies, Inc. 8.375% 2011		750			799
Metals USA Holdings Corp. 10.883% 20122,5		1,550			442
Metals USA, Inc. 11.125% 2015		500			298
Domtar Corp. 7.125% 2015		845			553
JSG Funding PLC 7.75% 2015		1,000			550
C10 Capital (SPV) Ltd. 6.722% (undated)1,2		1,125			536
MacDermid 9.50% 20171		1,000			525
Abitibi-Consolidated Inc. 8.55% 2010		680			71
Abitibi-Consolidated Co. of Canada 15.50% 20101		291			86
Abitibi-Consolidated Co. of Canada 5.496% 20112		475			40
Abitibi-Consolidated Inc. 7.75% 2011		660			63
Abitibi-Consolidated Co. of Canada 6.00% 2013		460			39
Abitibi-Consolidated Co. of Canada 8.375% 2015		1,715			146
AEP Industries Inc. 7.875% 2013		765			436
Momentive Performance Materials Inc. 9.75% 2014		1,000			430
Georgia-Pacific Corp., First Lien Term Loan B, 3.689% 20122,3,4		521			396
Witco Corp. 6.875% 2026		505			144
					38,025


ENERGY — 2.95%
Williams Companies, Inc. 5.883% 20101,2		1,500			1,323
Williams Companies, Inc. 6.375% 20101		1,000			933
Williams Companies, Inc. 8.125% 2012		1,900			1,760
Williams Companies, Inc. 7.875% 2021		250			192
Transcontinental Gas Pipe Line Corp. 7.25% 2026		975			892
Williams Companies, Inc. 8.75% 2032		3,300			2,464
Enterprise Products Operating LLC 9.75% 2014		775			790
Enterprise Products Operating LP 8.375% 20662		2,610			1,437
Enterprise Products Operating LP 7.034% 20682		8,780			4,132
Williams Partners L.P. and Williams Partners Finance Corp. 7.50% 2011		3,825			3,291
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017		2,525			1,998
Petroplus Finance Ltd. 6.75% 20141		2,900			1,856
Petroplus Finance Ltd. 7.00% 20171		3,000			1,845
Drummond Co., Inc. 7.375% 20161		5,070			2,484
Gaz Capital SA 7.288% 20371		4,000			2,380
TEPPCO Partners LP 7.00% 20672		3,805			2,042
Enbridge Inc. 5.60% 2017		1,875			1,594
Premcor Refining Group Inc. 6.75% 2011		1,150			1,170
Forest Oil Corp. 7.25% 2019		1,000			735
Newfield Exploration Co. 7.625% 2011		250			236
					33,554


CONSUMER STAPLES — 2.62%
Constellation Brands, Inc. 8.375% 2014		1,250			1,194
Constellation Brands, Inc. 7.25% 2017		4,770			4,531
Stater Bros. Holdings Inc. 8.125% 2012		5,175			4,709
Stater Bros. Holdings Inc. 7.75% 2015		900			760
Dole Food Co., Inc. 7.25% 2010		1,275			896
Dole Food Co., Inc. 8.875% 2011		4,358			2,746
SUPERVALU INC., Term Loan B, 2.689% 20122,3,4		896			720
SUPERVALU INC. 7.50% 2012		340			301
Albertson’s, Inc. 7.25% 2013		460			391
Albertson’s, Inc. 8.00% 2031		3,575			2,163
Vitamin Shoppe Industries Inc. 9.649% 20122		3,030			2,151
Smithfield Foods, Inc. 7.75% 2017		3,525			2,027
Altria Group, Inc. 9.70% 2018		1,500			1,624
Cott Beverages Inc. 8.00% 2011		2,550			1,568
H.J. Heinz Co. 15.59% 20111,2		1,200			1,343
Duane Reade Inc. 6.496% 20102		750			551
Duane Reade Inc. 9.75% 2011		1,015			543
Yankee Candle Co., Inc., Series B, 8.50% 2015		1,725			813
JBS SA 10.50% 2016		1,100			775
					29,806


MORTGAGE-BACKED OBLIGATIONS3 — 1.31%
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20371,7		1,750			963
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20371,7		6,050			3,162
Tower Ventures, LLC, Series 2006-1, Class F, 7.036% 20361,7		5,970			3,940
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20361,7		235			160
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20361,7		2,235			1,497
SBA CMBS Trust, Series 2006-1A, Class H, 7.389% 20361,7		1,235			815
SBA CMBS Trust, Series 2006-1A, Class J, 7.825% 20361,7		1,235			803
Crown Castle Towers LLC, Series 2006-1, Class F, 6.650% 20361,7		4,600			2,632
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20361,7		700			381
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.821% 20372,7		1,314			552
					14,905


BONDS & NOTES OF GOVERNMENTS OUTSIDE THE U.S. — 0.46%
Panama (Republic of) Global 7.125% 2026		310			294
Panama (Republic of) Global 9.375% 2029		130			144
Panama (Republic of) Global 6.70% 20363		1,522			1,377
Brazilian Treasury Bill 6.00% 20457,10	BRL4				1,287
Colombia (Republic of) Global 10.75% 2013	$	500			585
Colombia (Republic of) Global 12.00% 2015	COP780,000				383
Egypt (Arab Republic of) Treasury Bill 0% 2009	EGP2,625				463
Egypt (Arab Republic of) 11.50% 2011		125			23
Argentina (Republic of) 5.83% 20333,5,7,10	ARS4,416,992				402
Argentina (Republic of) GDP-Linked 2035		5,935			71
Turkey (Republic of) 12.375% 2009	$	250			257
					5,286


BONDS & NOTES OF U.S. GOVERNMENT — 0.25%
U.S. Treasury 6.00% 2026		2,000			2,793


Total bonds, notes & other debt instruments (cost: $1,133,086,000)					729,838


	Shares or
Convertible securities — 0.72%	principal amount

CONSUMER DISCRETIONARY — 0.44%
Amazon.com, Inc. 6.875% PEACS convertible notes 2010	€	2,593,000			3,586
Beazer Homes USA, Inc. 4.625% convertible notes 2024	$	3,360,000			1,462
					5,048



				Value
Convertible securities	Shares				(000	)

FINANCIALS — 0.08%
Citigroup Inc., Series J, 7.00% noncumulative convertible preferred depositary shares7,8		30,000		$	882


MISCELLANEOUS — 0.20%
Other convertible securities in initial period of acquisition					2,259


Total convertible securities (cost: $9,861,000)					8,189



Preferred stocks — 1.01%

FINANCIALS — 1.01%
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed perpetual capital securities1		160,000			3,145
Bank of America Corp., Series M, 8.125% noncumulative2		1,500,000			1,124
Bank of America Corp., Series K, 8.00% noncumulative2		1,000,000			720
Mizuho Capital Investment (USD) 1 Ltd. 6.686% noncumulative1,2		2,500,000			1,666
SMFG Preferred Capital USD 3 Ltd. 9.50%1,2		665,000			613
SMFG Preferred Capital USD 1 Ltd. 6.078%1,2		500,000			340
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative1,2		4,200,000			877
ILFC E-Capital Trust II 6.25%1,2		2,000,000			836
JPMorgan Chase & Co., Series I, 7.90%2		1,000,000			834
Citigroup Inc., Series E, 8.40%2		1,000,000			661
PNC Preferred Funding Trust I 6.517%1,2		1,000,000			433
General Motors Corp. 9.00%1,2,7,11		1,157			174
Fannie Mae, Series O, 7.00%1,2		86,522			89
Freddie Mac, Series Z, 8.375%		60,000			27
IndyMac Bancorp, Inc., Series A, 8.50% noncumulative1		246,000			2


Total preferred stocks (cost: $26,364,000)					11,541



Common stocks — 1.16%

INDUSTRIALS — 0.96%
DigitalGlobe Inc.7,8,11		3,677,578			9,194
Delta Air Lines, Inc.11		150,806			1,728
					10,922


CONSUMER DISCRETIONARY — 0.11%
Ford Motor Co.11		342,877			785
Time Warner Cable Inc., Class A11		17,294			371
Adelphia Recovery Trust, Series Arahova11		388,601			52
Adelphia Recovery Trust, Series ACC-6B7,11		1,000,000			10
Adelphia Recovery Trust, Series ACC-111		449,306			5
Radio One, Inc., Class D, nonvoting11		34,000			8
Radio One, Inc., Class A11		17,000			8
ACME Communications, Inc.11		13,100			5
Mobile Travel Guide, Inc.7,8,11		7,285			1
					1,245


TELECOMMUNICATION SERVICES — 0.05%
Sprint Nextel Corp., Series 111		127,382			233
Embarq Corp.		6,369			229
American Tower Corp., Class A11		3,522			103
XO Holdings, Inc.11		651			—
					565


INFORMATION TECHNOLOGY — 0.04%
ZiLOG, Inc.11		153,000			444
HSW International, Inc.7,8,11		22,356			6
					450


HEALTH CARE — 0.00%
Clarent Hospital Corp.7,11		80,522			1


Total common stocks (cost: $15,405,000)					13,183



Rights & warrants — 0.00%

TELECOMMUNICATION SERVICES — 0.00%
XO Holdings, Inc., Series A, warrants, expire 201011		1,305			—
XO Holdings, Inc., Series B, warrants, expire 201011		978			—
XO Holdings, Inc., Series C, warrants, expire 201011		978			—
GT Group Telecom Inc., warrants, expire 20101,7,11		4,000			—
					—


INDUSTRIALS — 0.00%
Atrium Corp., warrants, expire 20181,7,11		691			—


Total rights & warrants (cost: $208,000)					—


	Principal amount
Short-term securities — 30.41%		(000	)

Federal Home Loan Bank 0.10%–2.40% due 1/14–4/24/2009	$	62,100			62,071
Fannie Mae 0.12%–0.50% due 2/3–5/20/2009		60,400			60,332
International Bank for Reconstruction and Development 0.22%–1.65% due 1/6–3/16/2009		45,500			45,480
Illinois Tool Works Inc. 1.85% due 1/7/2009		15,500			15,496
Illinois Tool Works Inc. 0.94% due 3/16/20091		13,000			12,993
Hewlett-Packard Co. 0.29%–1.10% due 1/6–1/30/20091		26,600			26,594
AT&T Inc. 0.20%–0.85% due 1/30–2/11/20091		25,800			25,790
Procter & Gamble International Funding S.C.A. 0.45% due 4/2/20091		19,600			19,587
John Deere Capital Corp. 2.45% due 1/7/20091		17,400			17,395
Merck & Co. Inc. 0.80% due 1/26/2009		15,600			15,591
Jupiter Securitization Co., LLC 0.45% due 1/26/20091		12,347			12,343
Honeywell International Inc. 0.60% due 3/18/20091		9,900			9,892
Walgreen & Co. 0.25% due 1/27/20091		6,500			6,499
Medtronic Inc. 1.15% due 1/9/20091		6,100			6,097
Walt Disney Co. 1.70% due 1/26/2009		4,800			4,795
Emerson Electric Co. 0.40% due 3/30/20091		4,300			4,297
Freddie Mac 0.77% due 5/5/2009		700			699

Total short-term securities (cost: $345,910,000)					345,951


Total investment securities (cost: $1,530,834,000)					1,108,702
Other assets less liabilities					28,900

Net assets				$	1,137,602

Key to abbreviations and symbols

ARS = Argentine pesos

BRL = Brazilian reais

COP = Colombian pesos

EGP = Egyptian pounds

€ = Euros

£ = British pounds

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $294,316,000, which represented 25.87% of the net assets of the fund.

2	Coupon rate may change periodically.

3	Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

4	Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $50,362,000, which represented 4.43% of the net assets of the fund.

5	Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

6	Step bond; coupon rate will increase at a later date.

7	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $46,455,000, which represented 4.08% of the net assets of the fund.

8	Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.

	Acquisition date(s)	Cost (000)		Value (000)		Percent of net assets

DigitalGlobe Inc.	4/14/1999–7/31/2003	$	3,000	$	9,194		.81	%
Gray Television Inc., Series D, 12.00%/15.00% (undated)	6/26/2008–7/15/2008		5,225		1,856		.16
Citigroup Inc., Series J, 7.00% noncumulative
convertible preferred depositary shares	1/15/2008		1,500		882		.08
HSW International, Inc.	12/17/2007		69		6		—
Mobile Travel Guide, Inc.	12/17/2007		2		1		—

Total restricted securities		$	9,796	$	11,939		1.05	%

9	Scheduled interest and/or principal payment was not received.

10	Index-linked bond whose principal amount moves with a government retail price index.

11	Security did not produce income during the last 12 months.

U.S. Government/AAA-Rated Securities Fund

Investment portfolio

December 31, 2008

Bonds, notes & other debt instruments — 95.42%	Principal amount (000)		Value (000)

MORTGAGE-BACKED OBLIGATIONS — 59.68%
Federal agency mortgage-backed obligations1 — 56.00%
Freddie Mac 7.00% 2015	$	36	$	38
Freddie Mac 8.50% 2018		—		—
Freddie Mac 11.00% 2018		26		29
Freddie Mac 4.50% 2019		5,540		5,692
Freddie Mac 4.50% 2023		10,125		10,374
Freddie Mac 5.00% 2023		6,195		6,376
Freddie Mac 5.00% 2023		3,986		4,102
Freddie Mac 5.00% 2023		716		737
Freddie Mac 5.00% 2023		617		635
Freddie Mac 5.00% 2023		317		326
Freddie Mac 5.50% 2023		29,838		30,809
Freddie Mac 5.50% 2023		4,663		4,815
Freddie Mac 6.00% 2023		6,329		6,589
Freddie Mac 6.00% 2026		5,941		6,142
Freddie Mac 6.00% 2027		11,690		12,086
Freddie Mac 9.00% 2030		164		179
Freddie Mac 4.635% 20352		2,918		2,947
Freddie Mac 5.875% 20362		14,341		14,722
Freddie Mac 6.00% 2036		4,528		4,670
Freddie Mac 6.00% 2036		2,525		2,604
Freddie Mac 4.763% 20372		1,171		1,183
Freddie Mac 5.461% 20372		2,592		2,646
Freddie Mac 5.50% 2037		8,618		8,831
Freddie Mac 5.50% 2037		4,535		4,647
Freddie Mac 5.50% 2037		2,916		2,988
Freddie Mac 5.50% 2037		2,785		2,854
Freddie Mac 5.50% 2037		673		690
Freddie Mac 5.668% 20372		1,693		1,724
Freddie Mac 5.979% 20372		1,079		1,105
Freddie Mac 6.00% 2037		4,251		4,386
Freddie Mac 6.00% 2037		3,002		3,097
Freddie Mac 6.00% 2037		2,806		2,894
Freddie Mac 6.00% 2037		2,722		2,808
Freddie Mac 6.00% 2037		2,489		2,568
Freddie Mac 6.00% 2037		1,732		1,787
Freddie Mac 6.057% 20372		899		923
Freddie Mac 6.258% 20372		1,844		1,890
Freddie Mac 6.366% 20372		1,325		1,362
Freddie Mac 6.50% 2037		7,852		8,171
Freddie Mac 6.50% 2037		3,510		3,653
Freddie Mac 4.651% 20382		1,926		1,937
Freddie Mac 4.816% 20382		4,977		5,015
Freddie Mac 4.966% 20382		504		510
Freddie Mac 5.00% 2038		14,085		14,376
Freddie Mac 5.00% 2038		4,947		5,049
Freddie Mac 5.00% 2038		2,988		3,050
Freddie Mac 5.50% 2038		22,385		22,938
Freddie Mac 5.50% 2038		11,857		12,150
Freddie Mac 5.50% 2038		6,927		7,098
Freddie Mac 5.50% 2038		4,989		5,115
Freddie Mac 5.50% 2038		4,942		5,064
Freddie Mac 5.50% 2038		4,935		5,057
Freddie Mac 5.50% 2038		3,451		3,536
Freddie Mac 5.50% 2038		2,990		3,064
Freddie Mac 5.50% 2038		2,970		3,043
Freddie Mac 5.545% 20382		1,862		1,902
Freddie Mac 6.00% 2038		20,577		21,224
Freddie Mac 6.00% 2038		12,468		12,874
Freddie Mac 6.00% 2038		2,878		2,968
Freddie Mac 6.50% 2038		16,664		17,340
Freddie Mac 6.50% 2038		8,451		8,794
Freddie Mac 6.50% 2038		8,315		8,653
Freddie Mac 6.50% 2038		8,028		8,354
Freddie Mac 6.50% 2039		6,875		7,148
Freddie Mac, Series 2356, Class GD, 6.00% 2016		1,524		1,574
Freddie Mac, Series 1567, Class A, 1.65% 20232		330		318
Freddie Mac, Series 3061, Class PN, 5.50% 2035		548		565
Freddie Mac, Series 3213, Class OG, principal only, 0% 2036		1,686		1,370
Freddie Mac, Series 3171, Class MO, principal only, 0% 2036		1,623		1,358
Freddie Mac, Series 3257, Class PA, 5.50% 2036		1,728		1,781
Freddie Mac, Series 3233, Class PA, 6.00% 2036		1,632		1,690
Freddie Mac, Series 3312, Class PA, 5.50% 2037		7,237		7,397
Fannie Mae 12.00% 2015		45		50
Fannie Mae 5.50% 2017		1,934		1,997
Fannie Mae 9.00% 2018		17		19
Fannie Mae 10.00% 2018		75		84
Fannie Mae 4.50% 2020		6,928		7,116
Fannie Mae 4.50% 2020		2,625		2,696
Fannie Mae 6.00% 2021		3,517		3,661
Fannie Mae 6.00% 2021		284		295
Fannie Mae 6.00% 2021		97		101
Fannie Mae 5.50% 2024		10,000		10,302
Fannie Mae 6.00% 2027		6,310		6,523
Fannie Mae 6.50% 2027		2,406		2,504
Fannie Mae 8.50% 2027		71		77
Fannie Mae 8.50% 2027		53		57
Fannie Mae 5.00% 2028		4,873		4,984
Fannie Mae 6.50% 2028		4,947		5,148
Fannie Mae 7.50% 2029		21		22
Fannie Mae 7.50% 2031		157		165
Fannie Mae 7.50% 2031		56		58
Fannie Mae 7.50% 2031		20		21
Fannie Mae 7.50% 2031		9		10
Fannie Mae 5.50% 2033		14,349		14,765
Fannie Mae 5.50% 2033		3,355		3,452
Fannie Mae 5.50% 2034		1,852		1,903
Fannie Mae 6.50% 2034		8,250		8,598
Fannie Mae 4.459% 20352		1,653		1,667
Fannie Mae 4.50% 2035		10,270		10,428
Fannie Mae 5.00% 2035		2,808		2,873
Fannie Mae 5.50% 2035		11,060		11,368
Fannie Mae 5.50% 2035		1,606		1,651
Fannie Mae 6.50% 2035		1,001		1,045
Fannie Mae 5.00% 2036		2,796		2,860
Fannie Mae 5.50% 2036		3,325		3,415
Fannie Mae 5.514% 20362		2,463		2,521
Fannie Mae 6.00% 2036		1,800		1,857
Fannie Mae 6.50% 2036		3,442		3,520
Fannie Mae 5.00% 2037		4,937		5,049
Fannie Mae 5.365% 20372		3,875		3,955
Fannie Mae 5.50% 2037		2,512		2,517
Fannie Mae 5.50% 2037		1,722		1,726
Fannie Mae 5.632% 20372		1,146		1,171
Fannie Mae 5.844% 20372		1,713		1,759
Fannie Mae 6.00% 2037		3,625		3,739
Fannie Mae 6.00% 20373		1,348		1,353
Fannie Mae 6.008% 20372		1,143		1,176
Fannie Mae 6.334% 20372		4,638		4,782
Fannie Mae 6.50% 2037		6,268		6,518
Fannie Mae 6.50% 2037		4,912		5,022
Fannie Mae 6.50% 2037		4,505		4,606
Fannie Mae 6.50% 2037		2,750		2,862
Fannie Mae 6.50% 2037		2,598		2,705
Fannie Mae 6.50% 2037		1,638		1,675
Fannie Mae 7.00% 2037		6,936		7,136
Fannie Mae 7.00% 2037		4,112		4,231
Fannie Mae 7.00% 2037		1,678		1,727
Fannie Mae 7.00% 2037		1,576		1,653
Fannie Mae 7.00% 2037		1,415		1,456
Fannie Mae 7.00% 20373		1,414		1,435
Fannie Mae 7.00% 2037		1,226		1,286
Fannie Mae 4.442% 20382		1,657		1,663
Fannie Mae 4.539% 20382		632		637
Fannie Mae 5.00% 2038		4,972		5,085
Fannie Mae 5.214% 20382		2,915		2,968
Fannie Mae 5.442% 20382		4,896		5,004
Fannie Mae 5.50% 2038		4,996		5,131
Fannie Mae 6.00% 2038		10,625		10,970
Fannie Mae 6.00% 2038		2,917		2,951
Fannie Mae 6.50% 2038		9,896		10,297
Fannie Mae 6.50% 2038		8,186		8,518
Fannie Mae 6.50% 2038		5,472		5,694
Fannie Mae 6.50% 2038		3,996		4,159
Fannie Mae 6.50% 2039		31,375		32,606
Fannie Mae 6.499% 20472		4,819		4,969
Fannie Mae, Series 2003-T1, Class B, 4.491% 2012		6,750		7,118
Fannie Mae, Series 2001-4, Class GB, 10.208% 20182		305		341
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022		1,468		1,488
Fannie Mae, Series 2001-4, Class GA, 10.156% 20252		110		124
Fannie Mae, Series 2001-4, Class NA, 11.873% 20252		267		295
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2028		492		519
Fannie Mae, Series 2002-W7, Class A-5, 7.50% 2029		386		407
Fannie Mae, Series 2001-20, Class C, 12.049% 20312		170		192
Fannie Mae, Series 2005-29, Class AK, 4.50% 2035		1,434		1,430
Fannie Mae, Series 2006-56, Class OG, principal only, 0% 2036		1,606		1,370
Fannie Mae, Series 2006-96, Class MO, principal only, 0% 2036		1,168		1,036
Fannie Mae, Series 2007-33, Class HE, 5.50% 2037		4,154		4,251
Fannie Mae, Series 2007-40, Class PT, 5.50% 2037		1,785		1,853
Fannie Mae, Series 2007-24, Class P, 6.00% 2037		1,758		1,817
Fannie Mae, Series 1999-T2, Class A-1, 7.50% 20392		397		417
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		389		409
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041		375		391
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042		66		70
Government National Mortgage Assn. 9.50% 20093		23		23
Government National Mortgage Assn. 9.50% 2020		55		62
Government National Mortgage Assn. 8.50% 2021		80		88
Government National Mortgage Assn. 8.50% 2023		142		156
Government National Mortgage Assn. 6.00% 2037		4,036		4,173
Government National Mortgage Assn. 5.00% 2038		33,950		34,787
Government National Mortgage Assn. 5.50% 2038		20,970		21,613
Government National Mortgage Assn. 5.50% 2038		9,982		10,289
Government National Mortgage Assn. 5.50% 2038		8,991		9,284
Government National Mortgage Assn. 5.50% 2038		7,991		8,252
Government National Mortgage Assn. 5.50% 2038		5,241		5,401
Government National Mortgage Assn. 5.50% 2038		4,126		4,260
Government National Mortgage Assn. 5.50% 2038		851		877
Government National Mortgage Assn. 6.00% 2038		39,672		40,905
Government National Mortgage Assn. 6.00% 2038		24,454		25,281
Government National Mortgage Assn. 6.00% 2038		24,192		25,011
Government National Mortgage Assn. 6.00% 2038		7,621		7,886
Government National Mortgage Assn. 6.00% 2038		6,855		7,027
Government National Mortgage Assn. 6.00% 2038		4,990		5,164
Government National Mortgage Assn. 6.50% 2038		21,607		22,538
Government National Mortgage Assn. 6.50% 2038		11,000		11,477
Government National Mortgage Assn. 6.50% 2038		10,353		10,799
Government National Mortgage Assn. 6.50% 2038		9,480		9,889
Government National Mortgage Assn. 6.50% 2038		2,845		2,968
Government National Mortgage Assn. 6.50% 2039		16,500		17,168
Government National Mortgage Assn. 6.172% 20583		317		324
Government National Mortgage Assn. 6.22% 20583		3,598		3,680
Government National Mortgage Assn., Series 2003, 6.116% 20583		1,644		1,681
				978,986


Commercial mortgage-backed securities1 — 2.20%
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-C2, Class A-1, 4.326% 2034		663		614
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-CIBC10, Class A-3, 4.184% 2037		1,000		969
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039		509		467
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-PM1, Class A-2, 4.262% 2040		620		608
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042		922		843
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP3, Class A-4A, 4.936% 20422		1,000		789
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-CIBC14, Class A-4, 5.481% 20442		1,500		1,138
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-5, 5.224% 20372		5,000		4,007
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20372		1,000		906
Wachovia Bank Commercial Mortgage Trust, Series 2004-C12, Class M-AD, 5.262% 20412,4		2,650		2,286
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-2, 4.782% 2042		1,117		1,049
Wachovia Bank Commercial Mortgage Trust, Series 2005-C20, Class A-7, 5.118% 20422		500		399
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045		1,000		827
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20374		4,500		3,696
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 2036		1,000		941
CS First Boston Mortgage Securities Corp., Series 2005-C5, Class A-AB, 5.10% 20382		1,000		858
CS First Boston Mortgage Securities Corp., Series 2006-C1, Class A-AB, 5.552% 20392		500		397
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20402		1,000		780
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-M, 5.23% 20402		565		330
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036		2,382		2,340
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010		2,000		2,131
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 20354		2,000		1,700
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034		1,200		1,157
GMAC Commercial Mortgage Securities, Inc., Series 2005-C1, Class A-M, 4.754% 2043		500		387
Tower Ventures, LLC, Series 2006-1, Class A1-FX, 5.361% 20364		1,650		1,468
Salomon Brothers Commercial Mortgage Trust, Series 2001-C1, Class A-3, 6.428% 2035		1,443		1,413
LB-UBS Commercial Mortgage Trust, Series 2001-C7, Class A-3, 5.642% 2025		185		181
LB-UBS Commercial Mortgage Trust, Series 2000-C3, Class A-2, 7.95% 2025		479		481
LB-UBS Commercial Mortgage Trust, Series 2002-C4, Class A-2, 4.023% 2026		388		382
GE Commercial Mortgage Corp., Series 2005-C2, Class A-4, 4.978% 20432		500		402
GE Commercial Mortgage Corp., Series 2006-C1, Class A-AB, 5.338% 20442		600		502
Bear Stearns Commercial Mortgage Securities Trust, Series 2006-PWR13, Class A-4, 5.54% 2041		1,100		838
COBALT CMBS Commerical Mortgage Trust, Series 2006-C1, Class A-2, 5.174% 2048		1,000		807
ML-CFC Commercial Mortgage Trust, Series 2006-4, Class A-3, 5.172% 20492		1,000		734
SBA CMBS Trust, Series 2005-1, Class A, 5.369% 20353,4		600		480
Merrill Lynch Mortgage Trust, Series 2005-LC1, Class AM, 5.265% 20442		500		297
First Union National Bank Commercial Mortgage Trust, Series 2002-C1, Class A-1, 5.585% 2034		276		272
Commercial Mortgage Trust, Series 2004-LNB2, Class A-2, 3.60% 2039		191		190
Morgan Stanley Dean Witter Capital I Trust, Series 2001-TOP5, Class A-3, 6.16% 2035		154		153
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class A-1, 6.08% 2035		141		139
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 2033		86		84
Citigroup Commercial Mortgage Trust, Series 2004-C2, Class A-1, 3.787% 2041		54		54
Chase Commercial Mortgage Securities Corp., Series 2000-2, Class A-1, 7.543% 2032		48		48
DLJ Commercial Mortgage Corp., Series 1999-CG1, Class A-1B, 6.46% 2032		3		3
				38,547


Collateralized mortgage-backed obligations (privately originated)1 — 1.48%
Structured Asset Securities Corp., Series 2003-29, Class 1-A-1, 4.75% 2018		3,035		2,757
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.461% 20272,4		411		410
Structured Asset Securities Corp., Series 1998-RF1, Class A, 8.641% 20272,4		647		647
Structured Asset Securities Corp., Series 1999-RF1, Class A, 7.805% 20282,4		335		354
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-2, Class 5-A-1, 6.00% 20362		1,879		877
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-6, Class 3-A-1, 5.884% 20372		1,846		949
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-8, Class 2-A3, 5.979% 20372		4,281		2,143
Countrywide Alternative Loan Trust, Series 2005-J8, Class 2-A-1, 5.00% 2020		1,294		1,007
Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035		669		494
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 4-A-1, 5.93% 20472		2,517		1,200
CS First Boston Mortgage Securities Corp., Series 2003-29, Class V-A-1, 7.00% 2033		100		90
CS First Boston Mortgage Securities Corp., Series 2006-2R, Class A-PO, principal only, 0% 20364		2,533		1,931
Residential Accredit Loans, Inc., Series 2003-QS16, Class A-1, 5.00% 2018		1,267		1,264
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		558		322
Chase Mortgage Finance Trust, Series 2003-S10, Class A-1, 4.75% 2018		1,742		1,582
Citigroup Mortgage Loan Trust, Inc., Series 2003-1, Class I-A1, 4.75% 2018		1,267		1,151
Citigroup Mortgage Loan Trust, Inc., Series 2003-UST1, Class A-3, 5.00% 2018		393		358
CHL Mortgage Pass-Through Trust, Series 2003-50, Class A-1, 5.00% 2018		1,602		1,458
Residential Asset Securitization Trust, Series 2004-A6, Class A-1, 5.00% 2019		1,536		1,195
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.65% 20352		2,000		1,160
GSR Mortgage Loan Trust, Series 2004-10F, Class 1-A-5, 4.50% 2019		1,166		1,057
Wells Fargo Mortgage-backed Securities Trust, Series 2006-1, Class A-3, 5.00% 2021		1,204		928
Citicorp Mortgage Securities, Inc., Series 2003-10, Class A-1, 4.50% 2018		863		782
Ocwen Residential MBS Corp., Series 1998-R1, Class AWAC, 1.329% 20402,4		1,013		755
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR18, Class 1-A1, 5.339% 20372		1,022		585
Banc of America Alternative Loan Trust, Series 2005-6, Class 2-CB-2, 6.00% 2035		638		368
				25,824



Total mortgage-backed obligations				1,043,357



U.S. TREASURY BONDS & NOTES — 26.59%
U.S. Treasury 2.00% 2010		2,000		2,051
U.S. Treasury 1.125% 2011		29,250		29,380
U.S. Treasury 3.00% 20123,5		3,615		3,542
U.S. Treasury 0.625% 20133,5		11,018		10,587
U.S. Treasury 1.875% 20133,5		3,539		3,333
U.S. Treasury 3.125% 2013		54,175		58,429
U.S. Treasury 3.375% 2013		12,000		13,110
U.S. Treasury 3.625% 2013		10,000		10,993
U.S. Treasury 2.00% 20143,5		5,747		5,425
U.S. Treasury 4.25% 2014		6,500		7,474
U.S. Treasury 4.25% 2015		10,000		11,617
U.S. Treasury 9.875% 2015		3,000		4,471
U.S. Treasury 11.25% 2015		13,000		19,751
U.S. Treasury 5.125% 2016		19,975		24,193
U.S. Treasury 7.25% 2016		13,000		17,412
U.S. Treasury 7.50% 2016		12,750		17,410
U.S. Treasury 4.625% 2017		39,250		46,433
U.S. Treasury 8.875% 2017		28,190		41,975
U.S. Treasury 3.75% 2018		5,750		6,510
U.S. Treasury 4.00% 2018		2,000		2,310
U.S. Treasury 8.125% 2019		12,195		18,030
U.S. Treasury 8.50% 2020		11,350		17,298
U.S. Treasury 7.875% 2021		13,250		19,700
U.S. Treasury 8.125% 2021		12,000		18,216
U.S. Treasury 7.125% 2023		11,500		16,697
U.S. Treasury 6.25% 2030		5,000		7,524
U.S. Treasury 4.50% 2036		20,600		27,388
U.S. Treasury Principal Strip 0% 2019		5,000		3,690
				464,949


FEDERAL AGENCY BONDS & NOTES — 6.11%
Federal Home Loan Bank 2.50% 2009		1,000		1,010
Federal Home Loan Bank 2.56% 2009		3,000		3,029
Federal Home Loan Bank 3.375% 2010		3,000		3,112
Federal Home Loan Bank 5.375% 2016		13,250		15,004
Federal Home Loan Bank 5.375% 2016		2,025		2,262
Federal Home Loan Bank 5.00% 2017		1,000		1,103
Federal Home Loan Bank 4.75% 2018		2,325		2,532
Fannie Mae 3.625% 2011		5,000		5,261
Fannie Mae 6.125% 2012		3,000		3,399
Fannie Mae 3.625% 2013		4,250		4,496
Fannie Mae 5.375% 2017		7,330		8,545
Small Business Administration, Series SBIC-PS 2006-10A, Participating Securities, 5.408% 2016		4,167		4,229
Small Business Administration, Series 2001-20K, 5.34% 20211		686		703
Small Business Administration, Series 2001-20J, 5.76% 20211		521		539
Small Business Administration, Series 2001-20F, 6.44% 20211		1,430		1,502
Small Business Administration, Series 2003-20B, 4.84% 20231		2,273		2,301
Freddie Mac 2.875% 2010		3,000		3,092
Freddie Mac 5.50% 2016		5,000		5,821
United States Government Agency-Guaranteed (FDIC insured), KeyBank NA 3.20% 2012		5,750		5,772
Federal Agricultural Mortgage Corp. 4.875% 20114		2,000		2,132
Federal Agricultural Mortgage Corp. 5.50% 20114		2,000		2,148
Federal Agricultural Mortgage Corp. 5.125% 20174		1,250		1,426
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 3.00% 2011		4,750		4,918
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012		4,100		4,212
United States Agency for International Development, Republic of Egypt 4.45% 2015		1,000		1,106
United States Agency for International Development, State of Israel, Class 1-A, 5.50% 2023		2,000		2,446
United States Government Agency-Guaranteed (FDIC insured), John Deere Capital Corp. 2.875% 2012		3,000		3,088
United States Government Agency-Guaranteed (FDIC insured), Goldman Sachs Group, Inc. 3.25% 2012		2,750		2,879
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp., Series L, 3.125% 2012		2,750		2,864
United States Government Agency-Guaranteed (FDIC insured), JPMorgan Chase & Co. 3.125% 2011		2,750		2,859
United States Government Agency-Guaranteed (FDIC insured), PNC Funding Corp. 2.30% 2012		2,500		2,527
United States Government-Guaranteed Ship Financing Obligations, Rowan Companies, Inc. (Title XI) 5.88% 20121		475		495
				106,812


ASSET-BACKED OBLIGATIONS1 — 2.88%
CPS Auto Receivables Trust, Series 2006-C, Class A-4, XLCA insured, 5.14% 20134		6,125		5,046
CPS Auto Receivables Trust, Series 2007-B, Class A-4, FSA insured, 5.60% 20144		1,650		1,323
CPS Auto Receivables Trust, Series 2007-C, Class A-4, FSA insured, 5.92% 20144		1,000		667
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012		1,000		1,002
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-2, 5.03% 2014		5,695		5,728
CarMax Auto Owner Trust, Series 2007-2, Class A-4, 5.27% 2012		5,000		4,631
West Penn Funding LLC, Transition Bonds, Series 2005-A, Class A-1, 4.46% 20104		2,974		2,957
Drive Auto Receivables Trust, Series 2006-1, Class A-4, FSA insured, 5.54% 20134		3,000		2,675
Long Beach Acceptance Auto Receivables Trust, Series 2005-B, Class A-4, FSA insured, 4.522% 2012		2,052		2,035
PSE&G Transition Funding II LLC, Series 2005-1, Class A-2, 4.34% 2014		2,022		1,990
Countryplace Manufactured Housing Contract, Series 2005-1, Class A-3, AMBAC insured, 4.80% 20353,4		2,650		1,929
Massachusetts RRB Special Purpose Trust, Series 2005-1, Class A-4, 4.40% 2015		1,850		1,760
John Deere Owner Trust, Series 2008, Class A-4, 4.89% 2015		2,000		1,705
FPL Recovery Funding LLC, Series 2007-A, Class A-1, 5.053% 2013		1,668		1,685
Prestige Auto Receivables Trust, Series 2007-1, Class A-3, FSA insured, 5.58% 20144		2,000		1,598
Spirit Master Funding LLC, Net-Lease Mortgage Notes, Series 2005-1, Class A-1, AMBAC insured, 5.05% 20233,4		2,105		1,495
MBNA Credit Card Master Note Trust, Series 2005-6, Class A, 4.50% 2013		1,500		1,439
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-3, 5.09% 2015		1,450		1,366
Nissan Auto Receivables Owner Trust, Series 2008-A, Class A-4, 4.28% 2014		1,500		1,356
CenterPoint Energy Transition Bond Company III, LLC, Series 2008, Class A-1, 4.192% 2020		1,000		935
CenterPoint Energy Transition Bond Company III, LLC, Series 2008, Class A-2, 5.234% 2023		250		216
Ford Credit Auto Owner Trust, Series 2008-A, Class A-4, 4.37% 2012		1,500		1,109
Washington Mutual Master Note Trust, Series 2007-A4A, Class A-4, 5.20% 20144		1,500		1,098
Honda Auto Receivables Owner Trust, Series 2006-2, Class A-4, 5.28% 2012		1,000		981
Discover Card Execution Note Trust, Series 2008-2, Class A, 2.195% 20122		1,000		942
World Omni Auto Receivables Trust, Series 2008-A, Class A-4, 4.74% 2013		1,000		699
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-1, Class A-5, MBIA insured, 5.08% 20114		750		637
Residential Funding Mortgage Securities II, Inc., Series 2007-HSA3, Class A-I-3, MBIA insured, 6.03% 20372		1,500		195
Residential Funding Mortgage Securities II, Inc., Series 2007-HSA2, Class A-1F, MBIA insured, 8.47% 20372		387		372
AMRESCO Residential Securities Corp. Mortgage Loan Trust, Series 1997-2, Class A-7, 7.57% 2027		449		429
Saxon Asset Securities Trust, Series 2002-2, Class AF-5, 6.49% 20312		445		401
				50,401


INDUSTRIALS — 0.15%
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20131,4		1,868		1,787
Southern Capital Corp. Pass Through Trust, Series 2002-1, Class G, MBIA insured, 5.70% 20231,4		908		911
				2,698


ENERGY — 0.01%
Petroleum Export Ltd., Class A-1, MBIA insured, 4.623% 20101,4		167		164


Total bonds, notes & other debt instruments (cost: $1,622,264,000)				1,668,381



Short-term securities — 8.13%

AT&T Inc. 0.50% due 2/25/20094		23,400		23,392
Hewlett-Packard Co. 0.90% due 1/5/20094		23,200		23,197
Enterprise Funding Co. LLC 0.30% due 1/6/20094		13,900		13,899
Ranger Funding Co. LLC 0.30% due 1/9/20094		8,922		8,921
Merck & Co. Inc. 0.80% due 1/26/2009		20,000		19,988
Emerson Electric Co. 0.60% due 2/2/20094		15,000		14,992
HSBC Finance Corp. 0.05% due 1/2/2009		13,800		13,800
Caterpillar Inc. 0.15% due 1/26/20094		10,000		9,999
Walt Disney Co. 0.50% due 3/5/2009		6,200		6,196
Coca-Cola Co. 1.20% due 1/20/20094		4,500		4,497
Procter & Gamble International Funding S.C.A. 0.30% due 2/19/20094		3,300		3,299

Total short-term securities (cost: $142,169,000)				142,180


Total investment securities (cost: $1,764,433,000)				1,810,561
Other assets less liabilities				(62,077	)

Net assets			$	1,748,484

1	Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

2	Coupon rate may change periodically.

3	Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $35,287,000, which represented 2.02% of the net assets of the fund.

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $143,916,000, which represented 8.23% of the net assets of the fund.

5	Index-linked bond whose principal amount moves with a government retail price index.

Cash Management Fund

Investment portfolio

December 31, 2008

Short-term securities — 100.78%	Principal amount (000)		Value (000)

FEDERAL AGENCY DISCOUNT NOTES — 51.46%
Fannie Mae 0.12%–1.00% due 1/7–2/23/2009	$	191,597	$	191,540
Federal Home Loan Bank 0.20%–2.40% due 1/9–3/3/2009		190,036		189,965
Freddie Mac 0.17%–2.35% due 1/7–3/9/2009		186,719		186,623
International Bank for Reconstruction and Development 0.25%–2.10% due 1/12–3/16/2009		52,400		52,383
				620,511


CORPORATE SHORT-TERM NOTES — 49.32%
Hewlett-Packard Co. 0.10%–0.90% due 1/5–2/3/20091		54,100		54,092
Eli Lilly and Co. 1.40% due 1/21/20091		36,500		36,475
General Dynamics Corp. 0.15% due 1/15/20091		31,000		30,998
Siemens Capital Co. LLC 0.20%–0.72% due 1/6–1/15/20091		30,351		30,348
Harvard University 1.50% due 1/2/2009		30,000		29,997
KfW 0.94% due 1/15/20091		30,000		29,988
Johnson & Johnson 0.55% due 2/5/20091		30,000		29,972
AT&T Inc. 0.85% due 2/11/20091		28,500		28,473
Bank of Nova Scotia 0.64% due 2/17/2009		28,000		27,951
Merck & Co. Inc. 1.15%–1.50% due 1/5–1/12/2009		26,000		25,993
Abbott Laboratories 1.00% due 1/9/20091		25,000		24,994
Denmark (Kingdom of) 0.88% due 2/6/2009		25,000		24,977
Estée Lauder Companies Inc. 1.25%–1.30% due 1/12–1/20/20091		25,000		24,972
Total Capital Canada Ltd. 0.65% due 2/17/20091		25,000		24,956
Chevron Funding Corp. 0.25% due 2/4/2009		20,000		19,995
Nokia Corp. 2.00% due 1/13/20091		20,000		19,986
Jupiter Securitization Co., LLC 1.40% due 1/21/20091		20,000		19,972
Private Export Funding Corp. 2.00% due 1/6/20091		18,400		18,394
BASF AG 1.76%–2.48% due 1/2–1/9/20091		17,021		17,017
Statoil ASA 1.35%–2.30% due 1/8–1/16/20091		16,900		16,891
Old Line Funding, LLC 0.30% due 1/26/20091		15,317		15,314
Unilever Capital Corp. 0.90%–1.05% due 2/9/20091		13,500		13,470
Calyon North America Inc. 0.97% due 1/12/2009		10,500		10,497
Pfizer Inc 1.05% due 2/3/20091		10,000		9,989
Procter & Gamble International Funding S.C.A. 1.85% due 1/5/20091		3,700		3,699
Procter & Gamble Co. 1.60% due 1/12/20091		1,800		1,799
Enterprise Funding Co. LLC 1.45% due 1/7/20091		2,500		2,499
Microsoft Corp. 0.30% due 1/5/20091		1,000		1,000
				594,708


Total investment securities (cost: $1,215,210,000)				1,215,219
Other assets less liabilities				(9,369	)

Net assets			$	1,205,850

Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $455,298,000, which represented 37.76% of the net assets of the fund.

Financial Statements

Statement of assets and liabilities
at December 31, 2008
	Global Discovery Fund			Global Growth Fund			Global Small Capitalization Fund			Growth Fund			International Fund			New World Fund			Blue Chip Income and Growth Fund			Global Growth and Income Fund
Assets:

Investment securities, at value:
Unaffiliated issuers	$	148,219		$	3,842,833		$	1,946,987		$	17,371,382		$	6,770,089		$	1,290,154		$	2,816,021		$	1,621,606
Affiliated issuers		-			15,735			92,846			786,353			-			-			-			6,635
Cash denominated in currencies other than U.S. dollars		-			-			2,245			-			-			311			-			46
Cash		869			175			65			151			97			107			85			191
Unrealized gain on forward currency contracts		-			-			-			-			-			20			-			-
Receivables for:
Sales of investments		-			1,783			5,224			25,419			9,950			204			289			12,324
Sales of fund's shares		24			11,170			10,456			164,138			38,900			1,622			1,113			691
Dividends and interest		226			7,302			2,769			27,794			17,796			6,176			7,629			5,216
Other assets		-			-			587			-			-			-			-			-
		149,338			3,878,998			2,061,179			18,375,237			6,836,832			1,298,594			2,825,137			1,646,709
Liabilities:
Unrealized loss on forward currency contracts		-			-			-			-			-			-			-			-
Payables for:
Purchases of investments		-			1,262			5,396			11,752			4,796			3			928			21,543
Repurchases of fund's shares		40			2,060			467			6,620			3,594			489			511			173
Investment advisory services		64			1,549			1,088			4,463			2,499			754			907			729
Distribution services		27			650			350			2,729			994			214			532			310
Trustees' deferred compensation		1			50			30			616			266			11			31			5
Other		2			30			29			26			2,650			29			1			12
		134			5,601			7,360			26,206			14,799			1,500			2,910			22,772
Net assets at December 31, 2008 (total: $72,925,308)	$	149,204		$	3,873,397		$	2,053,819		$	18,349,031		$	6,822,033		$	1,297,094		$	2,822,227		$	1,623,937
Investment securities, at cost:
Unaffiliated issuers	$	227,815		$	4,857,851		$	2,955,529		$	23,062,615		$	8,883,973		$	1,579,835		$	3,642,517		$	2,328,239
Affiliated issuers	$	-		$	102,458		$	274,649		$	1,666,073		$	-		$	-		$	-		$	15,205
Cash denominated in currencies other than U.S. dollars, at cost	$	-		$	-		$	2,245		$	-		$	-		$	311		$	-		$	46

Net assets consist of:
Capital paid in on shares of beneficial interest	$	237,970		$	5,352,508		$	3,486,912		$	26,682,934		$	9,230,608		$	1,683,215		$	4,021,561		$	2,660,267
Undistributed (distributions in excess of) net investment income		552			13,764			(21,213	)		44,711			17,082			67			14,491			7,532
(Accumulated) undistributed net realized (loss) gain		(9,722	)		(391,162	)		(221,539	)		(1,807,687	)		(311,912	)		(96,309	)		(387,329	)		(328,559	)
Net unrealized (depreciation) appreciation		(79,596	)		(1,101,713	)		(1,190,341	)		(6,570,927	)		(2,113,745	)		(289,879	)		(826,496	)		(715,303	)
Net assets at December 31, 2008	$	149,204		$	3,873,397		$	2,053,819		$	18,349,031		$	6,822,033		$	1,297,094		$	2,822,227		$	1,623,937

Shares of beneficial interest issued and outstanding (no stated par value) - unlimited shares authorized:

Class 1:
Net assets (total: $18,686,287)	$	18,104		$	675,318		$	306,125		$	4,768,325		$	1,864,506		$	253,412		$	220,170		$	95,384
Shares outstanding		2,429			48,390			27,387			142,304			152,517			18,681			33,021			14,278
Net asset value per share	$	7.45		$	13.96		$	11.18		$	33.51		$	12.22		$	13.57		$	6.67		$	6.68
Class 2:
Net assets (total: $53,662,238)	$	131,100		$	3,198,079		$	1,747,694		$	13,383,018		$	4,900,816		$	1,043,682		$	2,602,057		$	1,528,553
Shares outstanding		17,656			230,399			158,459			402,274			402,074			77,475			392,921			229,185
Net asset value per share	$	7.43		$	13.88		$	11.03		$	33.27		$	12.19		$	13.47		$	6.62		$	6.67
Class 3:
Net assets (total: $576,783)		-			-			-		$	197,688		$	56,711			-			-			-
Shares outstanding		-			-			-			5,894			4,636			-			-			-
Net asset value per share		-			-			-		$	33.54		$	12.23			-			-			-

(*) Amount less than one thousand.

See Notes to Financial Statements

Statement of assets and liabilities
at December 31, 2008													(dollars and shares in thousands, except per-share amounts)
	Growth-Income Fund			International Growth and Income Fund			Asset Allocation Fund			Bond Fund			Global Bond Fund			High-Income Bond Fund			U.S. Government/AAA-Rated Securities Fund			Cash Management Fund
Assets:

Investment securities, at value:
Unaffiliated issuers	$	18,174,122		$	14,500		$	7,071,437		$	5,747,459		$	899,057		$	1,108,702		$	1,810,561		$	1,215,219
Affiliated issuers		-			-			-			-			-			-			-			-
Cash denominated in currencies other than U.S. dollars		-			-			-			-			-			42			-			-
Cash		110			915			1,201			9,017			152			2,511			120			232
Unrealized gain on forward currency contracts		-			-			-			3,756			4,151			-			-			-
Receivables for:
Sales of investments		30,790			-			12			2,391			7			711			6,317			-
Sales of fund's shares		72,470			410			9,908			7,426			1,123			6,254			2,754			13
Dividends and interest		31,601			15			33,719			72,448			14,326			21,823			11,665			-
Other assets		-			-			-			-			-			19			-			-
		18,309,093			15,840			7,116,277			5,842,497			918,816			1,140,062			1,831,417			1,215,464
Liabilities:
Unrealized loss on forward currency contracts		-			-			1,120			12,254			2,428			84			-			-
Payables for:
Purchases of investments		8,374			3			2,407			195,584			1,822			509			81,474			-
Repurchases of fund's shares		8,541			-	*		3,626			109,906			686			812			620			9,066
Investment advisory services		3,814			7			1,682			1,620			387			394			529			297
Distribution services		2,704			1			1,002			716			166			160			260			226
Trustees' deferred compensation		693			-			166			43			1			62			50			25
Other		29			-	*		10			93			8			439			-	*		-
		24,155			11			10,013			320,216			5,498			2,460			82,933			9,614
Net assets at December 31, 2008 (total: $72,925,308)	$	18,284,938		$	15,829		$	7,106,264		$	5,522,281		$	913,318		$	1,137,602		$	1,748,484		$	1,205,850
Investment securities, at cost:
Unaffiliated issuers	$	23,422,439		$	13,419		$	8,510,902		$	6,547,464		$	927,530		$	1,530,834		$	1,764,433		$	1,215,210
Affiliated issuers	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Cash denominated in currencies other than U.S. dollars, at cost	$	-		$	-		$	-		$	-		$	-		$	42		$	-		$	-

Net assets consist of:
Capital paid in on shares of beneficial interest	$	25,087,033		$	14,694		$	8,989,269		$	6,456,729		$	945,135		$	1,742,474		$	1,674,422		$	1,203,906
Undistributed (distributions in excess of) net investment income		77,379			54			40,422			25,297			1,276			16,493			10,612			1,902
(Accumulated) undistributed net realized (loss) gain		(1,631,055	)		-	*		(482,791	)		(151,035	)		(6,063	)		(199,143	)		17,322			33
Net unrealized (depreciation) appreciation		(5,248,419	)		1,081			(1,440,636	)		(808,710	)		(27,030	)		(422,222	)		46,128			9
Net assets at December 31, 2008	$	18,284,938		$	15,829		$	7,106,264		$	5,522,281		$	913,318		$	1,137,602		$	1,748,484		$	1,205,850

Shares of beneficial interest issued and outstanding (no stated par value) - unlimited shares authorized:

Class 1:
Net assets (total: $18,686,287)	$	5,033,487		$	11,821		$	2,242,890		$	2,090,577		$	111,452		$	339,875		$	496,537		$	158,304
Shares outstanding		207,598			1,083			184,463			221,337			10,434			42,199			40,399			13,834
Net asset value per share	$	24.25		$	10.92		$	12.16		$	9.45		$	10.68		$	8.05		$	12.29		$	11.44
Class 2:
Net assets (total: $53,662,238)	$	13,046,429		$	4,008		$	4,822,353		$	3,431,704		$	801,866		$	779,605		$	1,218,952		$	1,022,322
Shares outstanding		541,069			367			399,099			366,769			75,250			97,601			99,917			89,827
Net asset value per share	$	24.11		$	10.92		$	12.08		$	9.36		$	10.66		$	7.99		$	12.20		$	11.38
Class 3:
Net assets (total: $576,783)	$	205,022			-		$	41,021			-			-		$	18,122		$	32,995		$	25,224
Shares outstanding		8,449			-			3,372			-			-			2,246			2,683			2,206
Net asset value per share	$	24.27			-		$	12.17			-			-		$	8.07		$	12.30		$	11.44

(*) Amount less than one thousand.

See Notes to Financial Statements

Statements of operations
for the year ended December 31, 2008


	Global Discovery Fund					Global Growth Fund			Global Small Capitalization Fund			Growth Fund			International Fund			New World Fund			Blue Chip Income and Growth Fund			Global Growth and Income Fund
Investment income:
Income (net of non-U.S. taxes) (1) (2):
Dividends	$	3,671				$	123,241		$	42,832		$	338,781		$	248,460		$	34,690		$	94,736		$	57,132
Interest		561					25,816			11,059			51,750			25,689			18,950			6,968			16,748
		4,232					149,057			53,891			390,531			274,149			53,640			101,704			73,880
Fees and expenses (3) :
Investment advisory services		1,310					27,394			23,424			83,525			46,787			13,849			15,618			12,322
Distribution services - Class 2		497					11,068			7,400			50,119			18,374			3,916			8,736			4,993
Distribution services - Class 3		-					-			-			588			166			-			-			-
Transfer agent services		-		(4	)		3			2			18			7			1			3			2
Reports to shareholders		6					179			115			900			287			55			112			63
Registration statement and prospectus		2					57			39			293			107			20			42			22
Postage, stationery and supplies		2					76			51			389			110			21			42			24
Trustees' compensation		1					17			13			(114	)		(63	)		10			14			15
Auditing and legal		5					54			26			149			69			28			22			12
Custodian		30					748			796			601			2,323			790			20			308
State and local taxes		3					60			42			304			113			22			43			23
Other		4					41			47			48			62			41			7			36
Total fees and expenses before waiver		1,860					39,697			31,955			136,820			68,342			18,753			24,659			17,820
Less waiver of fees and expenses:
Investment advisory services		131					2,739			2,342			8,352			4,679			1,385			1,562			1,232
Total fees and expenses after waiver		1,729					36,958			29,613			128,468			63,663			17,368			23,097			16,588
Net investment income		2,503					112,099			24,278			262,063			210,486			36,272			78,607			57,292

Net realized (loss) gain and unrealized
(depreciation) appreciation on investments
and currency:
Net realized (loss) gain on:
Investments (2)		(9,722	)				(389,204	)		(216,059	)		(1,804,897	)		(311,421	)		(97,039	)		(385,264	)		(328,790	)
Currency transactions		(127	)				(4,252	)		(3,435	)		(105	)		(13,761	)		(3,526	)		-			(906	)
		(9,849	)				(393,456	)		(219,494	)		(1,805,002	)		(325,182	)		(100,565	)		(385,264	)		(329,696	)
Net unrealized (depreciation) appreciation on:
Investments		(118,827	)				(2,144,127	)		(2,107,697	)		(12,402,196	)		(4,851,466	)		(896,844	)		(1,311,260	)		(807,481	)
Currency translations		2					34			(23	)		(181	)		(460	)		(233	)		-			(126	)
		(118,825	)				(2,144,093	)		(2,107,720	)		(12,402,377	)		(4,851,926	)		(897,077	)		(1,311,260	)		(807,607	)
Net realized (loss) gain and
unrealized (depreciation) appreciation
on investments and currency		(128,674	)				(2,537,549	)		(2,327,214	)		(14,207,379	)		(5,177,108	)		(997,642	)		(1,696,524	)		(1,137,303	)
Net (decrease) increase in net assets resulting
from operations	$	(126,171	)			$	(2,425,450	)	$	(2,302,936	)	$	(13,945,316	)	$	(4,966,622	)	$	(961,370	)	$	(1,617,917	)	$	(1,080,011	)

																				(dollars in thousands)

	Growth- Income Fund			International Growth and Income Fund (5)				Asset Allocation Fund			Bond Fund			Global Bond Fund			High-Income Bond Fund			U.S. Government/ AAA-Rated Securities Fund			Cash Management Fund
Investment income:
Income (net of non-U.S. taxes) (1) (2):
Dividends	$	487,208		$	18			$	117,661		$	5,676		$	32		$	1,154		$	-		$	-
Interest		69,071			7				159,939			337,391			37,225			109,475			54,893			19,747
		556,279			25				277,600			343,067			37,257			110,629			54,893			19,747
Fees and expenses (3) :
Investment advisory services					10				26,361			21,584			4,382			6,092			5,079			2,746
Distribution services - Class 2					1				15,852			10,134			1,743			2,327			2,141			1,762
Distribution services - Class 3					-				105			-			-			43			55			42
Transfer agent services					-				6			3			1			1			1			1
Reports to shareholders					-	(4	)		258			185			23			34			32			23
Registration statement and prospectus					-	(4	)		93			57			6			14			11			8
Postage, stationery and supplies					-	(4	)		96			75			8			12			10			7
Trustees' compensation					-	(4	)		(20	)		20			5			(23	)		(19	)		(8	)
Auditing and legal		147			-	(4	)		59			41			6			8			12			9
Custodian		618			-	(4	)		119			220			114			11			3			2
State and local taxes					-				96			58			6			14			10			8
Other		60			-	(4	)		21			14			7			8			2			1
Total fees and expenses before waiver					11				43,046			32,391			6,301			8,541			7,337			4,601
Less waiver of fees and expenses:
Investment advisory services					1				2,636			2,158			438			609			508			275
Total fees and expenses after waiver					10				40,410			30,233			5,863			7,932			6,829			4,326
Net investment income					15				237,190			312,834			31,394			102,697			48,064			15,421

Net realized (loss) gain and unrealized
(depreciation) appreciation on investments
and currency:
Net realized (loss) gain on:
Investments (2)		(1,610,102	)		-	(4	)		(480,328	)		(151,292	)		(11,813	)		(70,109	)		24,592			52
Currency transactions					48				904			5,094			16,815			174			-			-
		(1,610,536	)		48				(479,424	)		(146,198	)		5,002			(69,935	)		24,592			52
Net unrealized (depreciation) appreciation on:
Investments		(9,905,989	)		1,081				(2,649,168	)		(726,337	)		(32,918	)		(374,803	)		33,068			30
Currency translations					-	(4	)		(1,139	)		(8,866	)		1,630			(118	)		-			-
		(9,906,142	)		1,081				(2,650,307	)		(735,203	)		(31,288	)		(374,921	)		33,068			30
Net realized (loss) gain and
unrealized (depreciation) appreciation
on investments and currency					1,129				(3,129,731	)		(881,401	)		(26,286	)		(444,856	)		57,660			82
Net (decrease) increase in net assets resulting
from operations	$	(11,069,200	)	$	1,144			$	(2,892,541	)	$	(568,567	)	$	5,108		$	(342,159	)	$	105,724		$	15,503


(1) Additional information related to non-U.S. taxes is included in the Notes to Financial Statements.
(2) Additional information related to affiliated transactions is included in the Notes to Financial Statements.
(3) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements.
(4) Amount less than one thousand.
(5) For the period November 18, 2008, commencement of operations, through December 31, 2008.

See Notes to Financial Statements

Statements of changes in net assets

	Global Discovery Fund						Global Growth Fund						Global Small Capitalization Fund						Growth Fund						International Fund
	Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2008			Year ended December 31, 2007
Operations:
Net investment income	$	2,503		$	2,289		$	112,099		$	93,582		$	24,278		$	8,474		$	262,063		$	230,097		$	210,486		$	163,553
Net realized (loss) gain on investments and
currency transactions		(9,849	)		22,831			(393,456	)		441,598			(219,494	)		509,642			(1,805,002	)		2,962,852			(325,182	)		1,313,255
Net unrealized (depreciation) appreciation
on investments and currency translations		(118,825	)		9,005			(2,144,093	)		141,822			(2,107,720	)		162,605			(12,402,377	)		146,972			(4,851,926	)		363,568
Net (decrease) increase in net assets
resulting from operations		(126,171	)		34,125			(2,425,450	)		677,002			(2,302,936	)		680,721			(13,945,316	)		3,339,921			(4,966,622	)		1,840,376

Dividends and distributions paid to shareholders:
Dividends from net investment income:
Class 1		(277	)		(377	)		(18,705	)		(15,248	)		-			(9,957	)		(74,161	)		(50,378	)		(57,453	)		(27,717	)
Class 2		(1,515	)		(2,059	)		(80,484	)		(129,196	)		-			(106,466	)		(161,761	)		(192,512	)		(135,888	)		(135,569	)
Class 3		-			-			-			-			-			-			(2,621	)		(3,515	)		(1,652	)		(1,795	)
Total dividends from net investment income		(1,792	)		(2,436	)		(99,189	)		(144,444	)		-			(116,423	)		(238,543	)		(246,405	)		(194,993	)		(165,081	)
Distributions from net realized gain on investments:
Short-term net realized gains:
Class 1		(365	)		(1,013	)		(8,688	)		(1,007	)		(7,339	)		(5,130	)		(78,011	)		(23,434	)		(35,879	)		(13,679	)
Class 2		(2,739	)		(6,707	)		(48,505	)		(13,287	)		(63,935	)		(65,805	)		(249,962	)		(113,371	)		(106,959	)		(67,770	)
Class 3		-			-			-			-			-			-			(4,124	)		(2,111	)		(1,383	)		(991	)
Long-term net realized gains:
Class 1		(358	)		(1,382	)		(58,847	)		(13,121	)		(40,224	)		(15,875	)		(618,631	)		(310,646	)		(290,130	)		(67,908	)
Class 2		(2,684	)		(9,278	)		(328,542	)		(173,088	)		(350,423	)		(203,660	)		(1,982,221	)		(1,502,851	)		(864,914	)		(336,431	)
Class 3		-			-			-			-			-			-			(32,706	)		(27,987	)		(11,178	)		(4,920	)
Total distributions from net realized gain on investments		(6,146	)		(18,380	)		(444,582	)		(200,503	)		(461,921	)		(290,470	)		(2,965,655	)		(1,980,400	)		(1,310,443	)		(491,699	)
Total dividends and distributions paid to shareholders		(7,938	)		(20,816	)		(543,771	)		(344,947	)		(461,921	)		(406,893	)		(3,204,198	)		(2,226,805	)		(1,505,436	)		(656,780	)

Capital share transactions:
Class 1:
Proceeds from initial capitalization		-			-			-			-			-			-			-			-			-			-
Proceeds from shares sold		2,400			6,060			621,804			399,261			319,417			126,470			3,762,573			2,309,420			1,737,223			10,273
Proceeds from reinvestment of dividends and distributions		1,000			2,772			86,240			29,376			47,563			30,962			770,803			384,458			383,462			109,304
Cost of shares repurchased		(4,466	)		(4,255	)		(250,373	)		(43,793	)		(119,721	)		(54,125	)		(744,896	)		(1,277,505	)		(378,505	)		(261,901	)
Net (decrease) increase from Class 1 transactions		(1,066	)		4,577			457,671			384,844			247,259			103,307			3,788,480			1,416,373			1,742,180			(142,324	)
Class 2:
Proceeds from shares sold		34,335			71,657			461,271			675,865			305,775			650,430			1,909,204			2,390,962			816,329			1,410,185
Proceeds from reinvestment of dividends and distributions		6,938			18,044			457,531			315,571			414,358			375,931			2,393,944			1,808,734			1,107,761			539,770
Cost of shares repurchased		(31,698	)		(11,522	)		(397,952	)		(137,454	)		(492,404	)		(234,256	)		(3,409,648	)		(2,925,475	)		(1,916,909	)		(457,606	)
Net increase (decrease) from Class 2 transactions		9,575			78,179			520,850			853,982			227,729			792,105			893,500			1,274,221			7,181			1,492,349
Class 3:
Proceeds from shares sold		-			-			-			-			-			-			2,203			4,170			676			3,053
Proceeds from reinvestment of dividends and distributions		-			-			-			-			-			-			39,451			33,613			14,213			7,706
Cost of shares repurchased		-			-			-			-			-			-			(60,450	)		(82,589	)		(20,357	)		(22,414	)
Net (decrease) increase from Class 3 transactions		-			-			-			-			-			-			(18,796	)		(44,806	)		(5,468	)		(11,655	)
Net increase in net assets resulting from
capital share transactions		8,509			82,756			978,521			1,238,826			474,988			895,412			4,663,184			2,645,788			1,743,893			1,338,370

Total (decrease) increase in net assets		(125,600	)		96,065			(1,990,700	)		1,570,881			(2,289,869	)		1,169,240			(12,486,330	)		3,758,904			(4,728,165	)		2,521,966

Net assets:
Beginning of period		274,804			178,739			5,864,097			4,293,216			4,343,688			3,174,448			30,835,361			27,076,457			11,550,198			9,028,232
End of period	$	149,204		$	274,804		$	3,873,397		$	5,864,097		$	2,053,819		$	4,343,688		$	18,349,031		$	30,835,361		$	6,822,033		$	11,550,198

Undistributed (distributions in excess of) net investment income	$	552		$	(12	)	$	13,764		$	3,943		$	(21,213	)	$	(59,598	)	$	44,711		$	21,694		$	17,082		$	15,527

Shares of beneficial interest:
Class 1:
Shares issued from initial capitalization		-			-			-			-			-			-			-			-			-			-
Shares sold		239			423			28,686			15,922			17,356			4,520			67,645			33,820			83,834			415
Shares issued on reinvestment of dividends and distributions		95			202			4,469			1,195			2,210			1,132			14,290			5,708			21,402			4,615
Shares repurchased		(400	)		(304	)		(11,957	)		(1,788	)		(5,755	)		(1,999	)		(14,771	)		(18,697	)		(21,555	)		(11,093	)
Net (decrease) increase in shares outstanding		(66	)		321			21,198			15,329			13,811			3,653			67,164			20,831			83,681			(6,063	)
Class 2:
Shares sold		2,929			5,027			22,272			27,538			16,749			23,682			38,460			35,619			41,995			59,148
Shares issued on reinvestment of dividends and distributions		643			1,325			23,454			12,903			19,490			13,858			44,065			27,058			61,328			22,881
Shares repurchased		(3,007	)		(832	)		(22,507	)		(5,664	)		(25,275	)		(8,879	)		(60,320	)		(43,455	)		(94,449	)		(19,682	)
Net increase (decrease) in shares outstanding		565			5,520			23,219			34,777			10,964			28,661			22,205			19,222			8,874			62,347
Class 3:
Shares sold		-			-			-			-			-			-			43			63			31			130
Shares issued on reinvestment of dividends and distributions		-			-			-			-			-			-			719			499			781			326
Shares repurchased		-			-			-			-			-			-			(1,199	)		(1,224	)		(1,155	)		(951	)
Net (decrease) increase in shares outstanding		-			-			-			-			-			-			(437	)		(662	)		(343	)		(495	)

	New World Fund						Blue Chip Income and Growth Fund						Growth and Income Fund						Growth-Income Fund						International Growth and Income Fund			Asset Allocation Fund
	Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2008			Period ended December 31, 2007			Year ended December 31, 2008			Year ended December 31, 2007			Period ended December 31, 2008 (*)			Year ended December 31, 2008			Year ended December 31, 2007
Operations:
Net investment income	$	36,272		$	28,392		$	78,607		$	75,469		$	57,292		$	29,034		$	447,478		$	466,168		$	15		$	237,190		$	211,683
Net realized (loss) gain on investments and
currency transactions		(100,565	)		165,173			(385,264	)		254,410			(329,696	)		77,806			(1,610,536	)		1,633,341			48			(479,424	)		357,101
Net unrealized (depreciation) appreciation
on investments and currency translations		(897,077	)		263,385			(1,311,260	)		(250,926	)		(807,607	)		41,796			(9,906,142	)		(740,365	)		1,081			(2,650,307	)		(75,392	)
Net (decrease) increase in net assets
resulting from operations		(961,370	)		456,950			(1,617,917	)		78,953			(1,080,011	)		148,636			(11,069,200	)		1,359,144			1,144			(2,892,541	)		493,392

Dividends and distributions paid to shareholders:
Dividends from net investment income:
Class 1		(6,036	)		(6,659	)		(6,456	)		(4,468	)		(2,936	)		(1,370	)		(132,802	)		(99,611	)		(8	)		(75,328	)		(42,539	)
Class 2		(23,170	)		(49,605	)		(71,777	)		(109,535	)		(43,953	)		(30,736	)		(313,153	)		(355,785	)		(1	)		(159,530	)		(157,653	)
Class 3		-			-			-			-			-			-			(5,210	)		(6,561	)		-			(1,396	)		(1,590	)
Total dividends from net investment income		(29,206	)		(56,264	)		(78,233	)		(114,003	)		(46,889	)		(32,106	)		(451,165	)		(461,957	)		(9	)		(236,254	)		(201,782	)
Distributions from net realized gain on investments:
Short-term net realized gains:
Class 1		(3,297	)		(2,014	)		(2,408	)		(1,063	)		(394	)		(1,952	)		(42,380	)		(17,061	)		-			(2,375	)		(5,053	)
Class 2		(19,413	)		(19,962	)		(32,987	)		(28,489	)		(9,569	)		(47,286	)		(130,677	)		(69,728	)		-			(7,163	)		(28,051	)
Class 3		-			-			-			-			-			-			(2,231	)		(1,354	)		-			(65	)		(297	)
Long-term net realized gains:
Class 1		(18,570	)		(7,335	)		(14,843	)		(3,868	)		(236	)		(565	)		(351,389	)		(164,342	)		-			(85,489	)		(36,748	)
Class 2		(109,350	)		(72,698	)		(203,359	)		(103,659	)		(5,742	)		(14,077	)		(1,083,493	)		(671,641	)		-			(257,869	)		(204,006	)
Class 3		-			-			-			-			-			-			(18,492	)		(13,040	)		-			(2,333	)		(2,162	)
Total distributions from net realized gain on investments		(150,630	)		(102,009	)		(253,597	)		(137,079	)		(15,941	)		(63,880	)		(1,628,662	)		(937,166	)		-			(355,294	)		(276,317	)
Total dividends and distributions paid to shareholders		(179,836	)		(158,273	)		(331,830	)		(251,082	)		(62,830	)		(95,986	)		(2,079,827	)		(1,399,123	)		(9	)		(591,548	)		(478,099	)

Capital share transactions:
Class 1:
Proceeds from initial capitalization		-			-			-			-			-			-			-			-			10,000			-			-
Proceeds from shares sold		260,949			120,507			213,241			8,279			76,516			44,895			3,161,911			2,341,348			853			1,212,808			896,096
Proceeds from reinvestment of dividends and distributions		27,903			16,008			23,707			9,399			3,566			3,887			526,571			281,014			8			163,192			84,340
Cost of shares repurchased		(116,713	)		(29,946	)		(31,478	)		(29,039	)		(11,387	)		(18,147	)		(1,017,390	)		(673,969	)		-	†		(140,613	)		(115,427	)
Net (decrease) increase from Class 1 transactions		172,139			106,569			205,470			(11,361	)		68,695			30,635			2,671,092			1,948,393			10,861			1,235,387			865,009
Class 2:
Proceeds from shares sold		230,183			374,113			295,696			462,760			680,989			1,224,641			1,083,314			2,013,524			3,832			330,159			717,517
Proceeds from reinvestment of dividends and distributions		151,933			142,265			308,123			241,683			59,264			92,099			1,527,323			1,097,154			1			424,562			389,710
Cost of shares repurchased		(251,926	)		(86,420	)		(454,222	)		(200,407	)		(118,283	)		(6,505	)		(3,077,453	)		(2,602,486	)		-	†		(698,531	)		(193,263	)
Net increase (decrease) from Class 2 transactions		130,190			429,958			149,597			504,036			621,970			1,310,235			(466,816	)		508,192			3,833			56,190			913,964
Class 3:
Proceeds from shares sold		-			-			-			-			-			-			328			778			-			1,176			3,124
Proceeds from reinvestment of dividends and distributions		-			-			-			-			-			-			25,933			20,955			-			3,794			4,049
Cost of shares repurchased		-			-			-			-			-			-			(62,387	)		(77,378	)		-			(12,304	)		(12,795	)
Net (decrease) increase from Class 3 transactions		-			-			-			-			-			-			(36,126	)		(55,645	)		-			(7,334	)		(5,622	)
Net increase in net assets resulting from
capital share transactions		302,329			536,527			355,067			492,675			690,665			1,340,870			2,168,150			2,400,940			14,694			1,284,243			1,773,351

Total (decrease) increase in net assets		(838,877	)		835,204			(1,594,680	)		320,546			(452,176	)		1,393,520			(10,980,877	)		2,360,961			15,829			(2,199,846	)		1,788,644

Net assets:
Beginning of period		2,135,971			1,300,767			4,416,907			4,096,361			2,076,113			682,593			29,265,815			26,904,854			-			9,306,110			7,517,466
End of period	$	1,297,094		$	2,135,971		$	2,822,227		$	4,416,907		$	1,623,937		$	2,076,113		$	18,284,938		$	29,265,815		$	15,829		$	7,106,264		$	9,306,110

Undistributed (distributions in excess of) net investment income	$	67		$	(2,541	)	$	14,491		$	14,776		$	7,532		$	(1,372	)	$	77,379		$	82,693		$	54		$	40,422		$	39,608

Shares of beneficial interest:
Class 1:
Shares issued from initial capitalization		-			-			-			-			-			-			-			-			1,000			-			-
Shares sold		12,875			4,878			21,505			668			8,370			3,807			88,411			52,474			82			78,479			46,825
Shares issued on reinvestment of dividends and distributions		1,403			681			2,745			769			495			337			15,930			6,397			1			11,171			4,483
Shares repurchased		(5,684	)		(1,305	)		(3,582	)		(2,380	)		(1,337	)		(1,495	)		(28,874	)		(15,323	)		-	†		(9,302	)		(6,055	)
Net (decrease) increase in shares outstanding		8,594			4,254			20,668			(943	)		7,528			2,649			75,467			43,548			1,083			80,348			45,253
Class 2:
Shares sold		10,350			15,801			32,066			38,123			65,607			104,297			31,219			46,137			367			20,423			37,981
Shares issued on reinvestment of dividends and distributions		7,444			6,123			35,486			19,932			7,976			8,017			45,619			25,097			-	†		28,402			20,722
Shares repurchased		(13,292	)		(3,867	)		(47,846	)		(16,554	)		(14,272	)		(561	)		(85,751	)		(59,040	)		-	†		(47,156	)		(10,240	)
Net increase (decrease) in shares outstanding		4,502			18,057			19,706			41,501			59,311			111,753			(8,913	)		12,194			367			1,669			48,463
Class 3:
Shares sold		-			-			-			-			-			-			9			18			-			72			165
Shares issued on reinvestment of dividends and distributions		-			-			-			-			-			-			767			476			-			251			214
Shares repurchased		-			-			-			-			-			-			(1,855	)		(1,757	)		-			(806	)		(671	)
Net (decrease) increase in shares outstanding		-			-			-			-			-			-			(1,079	)		(1,263	)		-			(483	)		(292	)

																			(dollars and shares in thousands)

	Bond Fund						Global Bond Fund						High-Income Bond Fund						U.S. Government/AAA-Rated Securities Fund						Cash Management Fund
	Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2008			Year ended December 31, 2007
Operations:
Net investment income	$	312,834		$	233,657		$	31,394		$	6,041		$	102,697		$	92,403		$	48,064		$	33,300		$	15,421		$	22,878
Net realized (loss) gain on investments and
currency transactions		(146,198	)		34,797			5,002			3,344			(69,935	)		3,093			24,592			2,138			52			3
Net unrealized (depreciation) appreciation
on investments and currency translations		(735,203	)		(128,206	)		(31,288	)		4,164			(374,921	)		(81,331	)		33,068			12,104			30			(32	)
Net (decrease) increase in net assets
resulting from operations		(568,567	)		140,248			5,108			13,549			(342,159	)		14,165			105,724			47,542			15,503			22,849

Dividends and distributions paid to shareholders:
Dividends from net investment income:
Class 1		(130,394	)		(27,191	)		(5,117	)		(761	)		(29,619	)		(34,436	)		(12,502	)		(15,945	)		(2,670	)		(7,248	)
Class 2		(210,186	)		(327,209	)		(37,266	)		(7,129	)		(70,268	)		(110,945	)		(30,378	)		(37,372	)		(14,466	)		(25,540	)
Class 3					-			-			-			(1,668	)		(3,325	)		(870	)		(2,188	)		(396	)		(1,300	)
Total dividends from net investment income		(340,580	)		(354,400	)		(42,383	)		(7,890	)		(101,555	)		(148,706	)		(43,750	)		(55,505	)		(17,532	)		(34,088	)
Distributions from net realized gain on investments:
Short-term net realized gains:
Class 1		(3,045	)		-			(23	)		-			-			-			-			-			-			-
Class 2		(6,365	)		-			(262	)		-			-			-			-			-			-			-
Class 3		-			-			-			-			-			-			-			-			-			-
Long-term net realized gains:
Class 1		(1,523	)		-			-			-			-			-			-			-			-			-
Class 2		(3,182	)		-			-			-			-			-			-			-			-			-
Class 3		-			-			-			-			-			-			-			-			-			-
Total distributions from net realized gain on investments		(14,115	)		-			(285	)		-			-			-			-			-			-			-
Total dividends and distributions paid to shareholders		(354,695	)		(354,400	)		(42,668	)		(7,890	)		(101,555	)		(148,706	)		(43,750	)		(55,505	)		(17,532	)		(34,088	)

Capital share transactions:
Class 1:
Proceeds from initial capitalization		-			-			-			-			-			-			-			-			-			-
Proceeds from shares sold		2,343,349			223,507			122,622			15,323			219,626			64,447			346,530			17,198			108,538			82,701
Proceeds from reinvestment of dividends and distributions		134,962			27,191			5,140			761			29,619			34,436			12,502			15,945			2,670			7,248
Cost of shares repurchased		(496,411	)		(27,058	)		(40,178	)		(687	)		(94,708	)		(54,035	)		(90,947	)		(37,415	)		(65,037	)		(73,550	)
Net (decrease) increase from Class 1 transactions		1,981,900			223,640			87,584			15,397			154,537			44,848			268,085			(4,272	)		46,171			16,399
Class 2:
Proceeds from shares sold		557,306			1,307,778			696,760			256,862			166,838			222,164			585,103			179,695			801,545			400,501
Proceeds from reinvestment of dividends and distributions		219,733			327,209			37,528			7,129			70,268			110,945			30,378			37,372			14,466			25,540
Cost of shares repurchased		(1,427,995	)		(133,653	)		(178,394	)		(4,474	)		(140,321	)		(67,426	)		(37,148	)		(17,046	)		(243,682	)		(247,164	)
Net increase (decrease) from Class 2 transactions		(650,956	)		1,501,334			555,894			259,517			96,785			265,683			578,333			200,021			572,329			178,877
Class 3:
Proceeds from shares sold		-			-			-			-			3,359			2,454			9,104			3,966			22,468			20,409
Proceeds from reinvestment of dividends and distributions		-			-			-			-			1,668			3,325			870			2,188			396			1,300
Cost of shares repurchased		-			-			-			-			(7,012	)		(8,871	)		(7,273	)		(8,953	)		(17,849	)		(19,332	)
Net (decrease) increase from Class 3 transactions		-			-			-			-			(1,985	)		(3,092	)		2,701			(2,799	)		5,015			2,377
Net increase in net assets resulting from
capital share transactions		1,330,944			1,724,974			643,478			274,914			249,337			307,439			849,119			192,950			623,515			197,653

Total (decrease) increase in net assets		407,682			1,510,822			605,918			280,573			(194,377	)		172,898			911,093			184,987			621,486			186,414

Net assets:
Beginning of period		5,114,599			3,603,777			307,400			26,827			1,331,979			1,159,081			837,391			652,404			584,364			397,950
End of period	$	5,522,281		$	5,114,599		$	913,318		$	307,400		$	1,137,602		$	1,331,979		$	1,748,484		$	837,391		$	1,205,850		$	584,364

Undistributed (distributions in excess of) net investment income	$	25,297		$	49,998		$	1,276		$	1,377		$	16,493		$	15,604		$	10,612		$	6,027		$	1,902		$	3,995

Shares of beneficial interest:
Class 1:
Shares issued from initial capitalization		-			-			-			-			-			-			-			-			-			-
Shares sold		215,356			19,367			11,157			1,435			20,911			5,144			29,015			1,447			9,431			7,068
Shares issued on reinvestment of dividends and distributions		14,256			2,432			485			71			3,668			2,837			1,030			1,385			233			633
Shares repurchased		(47,442	)		(2,340	)		(3,772	)		(66	)		(8,842	)		(4,245	)		(7,661	)		(3,160	)		(5,654	)		(6,295	)
Net (decrease) increase in shares outstanding		182,170			19,459			7,870			1,440			15,737			3,736			22,384			(328	)		4,010			1,406
Class 2:
Shares sold		51,745			113,731			62,564			24,105			16,293			17,346			49,249			15,266			70,023			34,457
Shares issued on reinvestment of dividends and distributions		23,300			29,490			3,545			667			8,688			9,210			2,522			3,262			1,270			2,244
Shares repurchased		(132,359	)		(11,757	)		(16,718	)		(425	)		(13,609	)		(5,429	)		(3,099	)		(1,450	)		(21,302	)		(21,256	)
Net increase (decrease) in shares outstanding		(57,314	)		131,464			49,391			24,347			11,372			21,127			48,672			17,078			49,991			15,445
Class 3:
Shares sold		-			-			-			-			324			191			760			333			1,956			1,743
Shares issued on reinvestment of dividends and distributions		-			-			-			-			203			273			72			190			35			114
Shares repurchased		-			-			-			-			(657	)		(690	)		(608	)		(759	)		(1,553	)		(1,658	)
Net (decrease) increase in shares outstanding		-			-			-			-			(130	)		(226	)		224			(236	)		438			199


(*) For the period November 18, 2008, commencement of operations, through December 31, 2008.
(†) Amount less than one thousand.

See Notes to Financial Statements

Notes to financial statements

1.	Organization and significant accounting policies

Organization – American Funds Insurance Series (the "series") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company with 16 different funds (the “funds”). The assets of each fund are segregated, with each fund accounted for separately. The funds’ investment objectives are as follows:

Global Discovery Fund	Seeks long-term growth of capital by investing primarily in stocks of companies in the services and information area of the global economy.
Global Growth Fund	Seeks long-term growth of capital by investing primarily in common stocks of companies located around the world.
Global Small Capitalization Fund	Seeks long-term growth of capital by investing primarily in stocks of smaller companies located around the world.
Growth Fund	Seeks long-term growth of capital by investing primarily in common stocks of companies that appear to offer superior opportunities for growth of capital.
International Fund	Seeks long-term growth of capital by investing primarily in common stocks of companies based outside the United States.
New World Fund	Seeks long-term growth of capital by investing primarily in stocks of companies with significant exposure to countries with developing economies and/or markets.
Blue Chip Income and Growth Fund	Seeks growth of capital and income over time by investing primarily in common stocks of larger, more established companies based in the United States.
Global Growth and Income Fund	Seeks long-term growth of capital and to provide current income by investing primarily in stocks of well-established companies located around the world.
Growth-Income Fund	Seeks growth of capital and income over time by investing primarily in U.S. common stocks and other securities that appear to offer potential for capital appreciation and/or dividends.
International Growth and Income Fund	Seeks long-term growth of capital and to provide current income by investing primarily in stocks of larger, well-established companies domiciled outside of the U.S., including developing countries.
Asset Allocation Fund	Seeks high total return (including income and capital gains) consistent with the preservation of capital over the long term.
Bond Fund	Seeks to maximize current income and preserve capital by investing primarily in fixed-income securities.
Global Bond Fund	Seeks a high level of total return over the long term by investing primarily in investment-grade bonds issued by entities based around the world and denominated in various currencies, including U.S. dollars.
High-Income Bond Fund	Seeks to provide a high level of current income with capital appreciation as a secondary goal by investing primarily in higher yielding and generally lower quality debt securities.
U.S. Government/AAA-Rated Securities Fund	Seeks to provide a high level of current income and preservation of capital by investing primarily in a combination of securities guaranteed by the U.S. government and other debt securities rated AAA or Aaa.
Cash Management Fund	Seeks to provide income on cash reserves while preserving capital and maintaining liquidity.

Each fund in the series offers two or three share classes (1, 2 and 3). Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for certain distribution expenses. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the funds:

Security valuation – Equity securities 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, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) 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. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. Forward currency contracts are valued at the mean of representative quoted bid and asked prices.

Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the series’ board of trustees. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly securities outside the U.S.) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, 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.

Security transactions and related investment income – Security transactions are recorded by the funds as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the funds will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Class allocations –Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution expenses, are accrued daily and charged directly to the respective share class.

Dividends and distributions to shareholders –Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.

Forward currency contracts – The funds may enter into forward currency contracts, which represent agreements to exchange currencies on specific future dates at predetermined rates. The funds enter into these contracts to manage their exposure to changes in exchange rates arising from investments denominated in currencies other than U.S. dollars. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in exchange rates. Due to these risks, the funds could incur losses up to the entire contract amount, which may exceed the net unrealized value shown on the accompanying financial statements. On a daily basis, the funds value forward currency contracts based on the applicable exchange rates and record unrealized gains or losses. The funds record realized gains or losses at the time the forward contract is closed or offset by another contract with the same broker for the same settlement date and currency. Closed forward currency contracts that have not reached their expiration date are included in the respective receivables for sales or payables for purchases of investment securities in the statements of assets and liabilities.

Mortgage dollar rolls – The funds may enter into mortgage dollar roll transactions in which a fund sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction.

Loan transactions – The funds may enter into loan transactions in which a fund acquires a loan either through an agent, by assignment from another holder, or as a participation interest in another holder's portion of a loan. The loan is often administered by a financial institution that acts as agent for the holders of the loan, and the fund may be required to receive approval from the agent and/or borrower prior to the sale of the investment. The loan's interest rate and maturity date may change based on the terms of the loan, including potential early payments of principal. Risks may arise due to the delayed settlement date of the loan transaction and the ability of the agent and/or borrower to meet the obligations of the loan.

2.	Risk Factors

Investing in the funds may involve certain risks including, but not limited to, those described below.

The values of and the income generated by securities held by the funds may fluctuate in response to certain events, including, for example, those directly involving the companies whose securities are owned by the funds; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate fluctuations. In particular, growth-oriented, equity securities may involve large price swings and potential for loss. In addition, the stock prices of smaller companies may be more volatile than the prices of larger, more established companies.

The values of and the income generated by most debt securities held by the funds 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 funds’ portfolios 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. In addition, there may be little trading in the secondary market for certain lower quality debt securities, which may adversely affect the fund’s ability to dispose of such securities.

Investments in securities issued by entities based outside the United States may be affected to a greater extent than investments in the United States by certain issues and events including, but not limited to, 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 may involve risks in addition to and greater than those generally associated with developed countries such as less developed legal and accounting systems, government instability and smaller securities markets and trading volumes. The economies of these countries may be dependent on relatively few industries that are more susceptible to local and global changes.

Certain of the funds may invest 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 with credit and liquidity enhancements. Changes in the credit quality of banks and financial institutions providing these enhancements could cause the funds to experience a loss and may affect its share price.

3. Taxation and distributions

Federal income taxation – Each fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and each intends to distribute substantially all of its net taxable income and net capital gains each year. The funds are not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.

As of and during the period ended December 31, 2008, none of the funds had a liability for any unrecognized tax benefits. Each fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statements of operations. During the period, none of the funds incurred any significant interest or penalties.

All of the funds, with the exception of Global Growth and Income Fund, International Growth and Income Fund and Global Bond Fund, are not subject to examination by U.S. federal tax authorities for years before 2005, nor by state tax authorities for years before 2004. Global Growth and Income Fund and Global Bond Fund were each launched in 2006; therefore, their only tax years, 2006 to 2008, remain open for examination by U.S. federal and state tax authorities. International Growth and Income Fund was launched in 2008; therefore, its only tax year, 2008, remains open for examination by U.S. federal and state tax authorities. The following funds are not subject to examination by tax authorities outside the U.S. for the years indicated: Global Small Capitalization Fund, International Fund and New World Fund for tax years before 2001; Global Growth Fund for tax years before 2002; Global Discovery Fund for tax years before 2004; Growth Fund for tax years before 2005; and Global Growth and Income Fund for tax years before 2007. All other funds are not subject to examination by tax authorities outside the U.S.

Non-U.S. taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Gains realized by the funds on the sale of securities in certain countries are subject to taxes in those countries. The funds record a liability based on unrealized gains to provide for potential taxes payable upon the sale of these securities.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in securities outside the U.S.; deferred expenses; cost of investments sold; paydowns on fixed-income securities; net capital losses; net operating losses; non-U.S. taxes on capital gains; amortization of premiums; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes.

Dividends from net investment income and currency gains and distributions from short-term net realized gains shown on the accompanying financial statements are considered ordinary income distributions for tax purposes. Distributions from long-term net realized gains on the accompanying financial statements are considered long-term capital gain distributions for tax purposes.

As indicated in the table on the following page, 12 funds had capital loss carryforwards available at December 31, 2008. These will be used to offset any capital gains realized by the funds in future years through the expiration dates. Those funds will not make distributions from capital gains while capital loss carryforwards remain.

Additional tax basis disclosures are as follows:

	Global Discovery Fund			Global Growth Fund			Global Small Capitalization Fund			Growth Fund			International Fund			New World Fund			Blue Chip Income and Growth Fund			Global Growth and Income Fund
As of December 31, 2008:
Undistributed ordinary income	$	568		$	14,442		$	-		$	45,923		$	17,347		$	4,689		$	14,522		$	7,839
Post-October currency loss deferrals (realized during the period
November 1, 2008, through December 31, 2008)*		(14	)		(628	)		-			(596	)		-			(500	)		-			(83	)
Undistributed long-term capital gain		-			-			-			-			40,962			-			-			-
Post-October capital loss deferrals (realized during the period
November 1, 2008, through December 31, 2008)*	$	(8,441	)	$	(174,829	)	$	(161,366	)	$	(503,551	)	$	(343,685	)	$	(72,358	)	$	(61,877	)	$	(212,008	)

Capital loss carryforwards:
Expiring 2009		-			-			-			-			-			-			-			-
Expiring 2010		-			-			-			-			-			-			-			-
Expiring 2011		-			-			-			-			-			-			-			-
Expiring 2016		(1,077	)		(215,002	)		(57,654	)		(1,280,904	)		-			(23,949	)		(304,021	)		(116,550	)
	$	(1,077	)	$	(215,002	)	$	(57,654	)	$	(1,280,904	)	$	-		$	(23,949	)	$	(304,021	)	$	(116,550	)
Capital loss carryforwards utilized	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Reclassification to (from) undistributed net investment income
from (to) undistributed net realized gain	$	(147	)	$	(3,089	)	$	2,016		$	(503	)	$	(13,938	)	$	(4,458	)	$	(659	)	$	(1,499	)
Reclassification to undistributed net investment income
from capital paid in on shares of beneficial interest		-			-			12,091			-			-			-			-			-
Reclassification to undistributed net realized gain
from capital paid in on shares of beneficial interest		-			-			161			-			-			-			-			-

Gross unrealized appreciation on investment securities	$	3,174		$	218,481		$	107,586		$	1,359,487		$	337,307		$	96,077		$	153,462		$	24,803
Gross unrealized depreciation on investment securities		(82,975	)		(1,321,553	)		(1,321,633	)		(7,953,672	)		(2,460,381	)		(389,850	)		(1,001,389	)		(740,378	)
Net unrealized (depreciation) appreciation on investment securities		(79,801	)		(1,103,072	)		(1,214,047	)		(6,594,185	)		(2,123,074	)		(293,773	)		(847,927	)		(715,575	)
Cost of investment securities	$	228,020		$	4,961,640		$	3,253,880		$	24,751,920		$	8,893,163		$	1,583,927		$	3,663,948		$	2,343,816

																			(dollars in thousands)

	Growth-Income Fund			International Growth and Income Fund			Asset Allocation Fund			Bond Fund			Global Bond Fund			High-Income Bond Fund			U.S. Government/AAA-Rated Securities Fund			Cash Management Fund
As of December 31, 2008:
Undistributed ordinary income	$	78,073		$	77		$	40,825		$	54,562		$	3,105		$	17,500		$	24,815		$	1,961
Post-October currency loss deferrals (realized during the period
November 1, 2008, through December 31, 2008)*		-			-			(1,417	)		(37,270	)		-			(345	)		-			-
Undistributed long-term capital gain		-			-			-			-			-			-			3,455			-
Post-October capital loss deferrals (realized during the period
November 1, 2008, through December 31, 2008)*	$	(554,442	)	$	-		$	(79,461	)	$	(50,772	)	$	-		$	(23,501	)	$	-		$	-

Capital loss carryforwards:
Expiring 2009		-			-			-			-			-			(41,518	)		-			-
Expiring 2010		-			-			-			-			-			(50,900	)		-			-
Expiring 2011		-			-			-			-			-			(35,517	)		-			-
Expiring 2016		(691,368	)		-			(400,076	)		(98,035	)		(5,498	)		(47,291	)		-			-
	$	(691,368	)	$	-		$	(400,076	)	$	(98,035	)	$	(5,498	)	$	(175,226	)	$	-		$	-
Capital loss carryforwards utilized	$	-		$	-		$	-		$	-		$	-		$	-		$	6,912		$	1
Reclassification to (from) undistributed net investment income
from (to) undistributed net realized gain	$	(1,627	)	$	48		$	(122	)	$	3,045		$	10,888		$	(253	)	$	271		$	18
Reclassification to undistributed net investment income
from capital paid in on shares of beneficial interest		-			-			-			-			-			-			-			-
Reclassification to undistributed net realized gain
from capital paid in on shares of beneficial interest		-			-			-			-			-			-			-			-

Gross unrealized appreciation on investment securities	$	919,183		$	1,110		$	318,286		$	143,613		$	33,369		$	12,029		$	69,006		$	125
Gross unrealized depreciation on investment securities		(6,552,744	)		(52	)		(1,761,042	)		(946,906	)		(62,557	)		(434,942	)		(23,164	)		(116	)
Net unrealized (depreciation) appreciation on investment securities		(5,633,561	)		1,058			(1,442,756	)		(803,293	)		(29,188	)		(422,913	)		45,842			9
Cost of investment securities	$	23,807,683		$	13,442		$	8,514,193		$	6,550,752		$	928,245		$	1,531,615		$	1,764,719		$	1,215,210

* These deferrals are considered incurred in the subsequent year.

4. Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the series’ investment adviser, is the parent company of American Funds Service Company ® ("AFS"), the series’ transfer agent, and American Funds Distributors, ® Inc. ("AFD"), the distributor of the series’ shares.

Investment advisory services – The Investment Advisory and Service Agreement between CRMC and the series provides for monthly fees accrued daily. These fees are based on annual rates that generally decrease as average net asset levels increase.

The board of trustees approved an amended agreement for Global Small Capitalization Fund, Growth Fund, New World Fund, Global Growth and Income Fund, Growth-Income Fund, Global Bond Fund and Cash Management Fund, effective January 1, 2009, that provides for reduced annual rates as reflected in the table below. During the year ended December 31, 2008, CRMC voluntarily reduced investment advisory services fees to the proposed rates for Cash Management Fund. In addition, CRMC waived a portion of its investment advisory services fees from September 1, 2004, through December 31, 2008. During the year ended December 31, 2008, total aggregate investment advisory services fees waived by CRMC were $35,636,000. As a result, the aggregate fees shown on the accompanying financial statements of $356,380,000 were reduced to $320,744,000. The range of rates and asset levels and the current annualized rates of average net assets for each fund, before and after the expense waiver, are as follows:

	Rates						Net asset level (in billions)				For the year ended December 31, 2008, before waiver			For the year ended December 31, 2008, after waiver
Fund	Beginning with			Ending with			Up to		In excess of
Global Discovery		.580	%		.440	%	$	.5	$	1.0		.58	%		.52	%
Global Growth		.690			.460			.6		5.0		.53			.48
Global Small Capitalization		.800			.635			.6		5.0		.71			.64
Growth		.500			.280			.6		34.0		.32			.29
International		.690			.430			.5		21.0		.49			.44
New World		.850			.620			.5		2.5		.76			.68
Blue Chip Income and Growth		.500			.370			.6		4.0		.42			.38
Global Growth and Income		.690			.480			.6		3.0		.59			.53
Growth-Income		.500			.219			.6		34.0		.27			.24
International Growth and Income		.690			.530			.5		1.0		.69	*		.62	*
Asset Allocation		.500			.250			.6		8.0		.31			.28
Bond		.480			.340			.6		5.0		.39			.35
Global Bond		.570			.500			1.0		1.0		.57			.51
High-Income Bond		.500			.420			.6		2.0		.47			.43
U.S. Government/AAA-Rated Securities		.460			.340			.6		2.0		.42			.38
Cash Management		.320			.290			1.0		1.0		.32			.29

* Annualized ratios based on activity during the period November 18, 2008, commencement of operations, through December 31, 2008.

Transfer agent services – The aggregate fee of $66,000 was incurred during the year ended December 31, 2008, pursuant to an agreement with AFS. Under this agreement, the series compensates AFS for transfer agent services, including shareholder recordkeeping, communications and transaction processing.

Trustees’ deferred compensation – Since the adoption of the deferred compensation plan in 1993, trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the funds, are treated as if invested in one or more of the American Funds. These amounts represent general, unsecured liabilities of the funds and vary according to the total returns of the selected funds. Trustees’ compensation on the accompanying financial statements includes current fees (either paid in cash or deferred) and a net decrease in the value of the deferred amounts as follows:

	(dollars in thousands)

Fund	Current fees			Decrease in value of deferred amounts

Global Discovery	$	2		$	(1	)
Global Growth		38			(21	)
Global Small Capitalization		24			(11	)
Growth		221			(335	)
International		82			(145	)
New World		13			(3	)
Blue Chip Income and Growth		24			(10	)
Global Growth and Income		15			-	*
Growth-Income		209			(378	)
International Growth and Income		-	*		-
Asset Allocation		70			(90	)
Bond		41			(21	)
Global Bond		5			-	*
High-Income Bond		11			(34	)
U.S. Government/AAA-Rated Securities		8			(27	)
Cash Management		6			(14	)

*Amount less than one thousand.

Affiliated officers and trustees – Officers and certain trustees of the series are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or trustees received any compensation directly from the series.

5.	Distribution services

The series has adopted plans of distribution for Classes 2 and 3 shares. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares. The plans provide for annual expenses, based on average daily net assets, of 0.25% for Class 2 and 0.18% for Class 3 to pay service fees to firms that have entered into agreements with the series. During the year ended December 31, 2008, distribution expenses under the plans for the series aggregated $185,539,000 for Class 2 and $1,564,000 for Class 3. Class 1 shares have not adopted a plan of distribution.

6. Disclosure of fair value measurements

The series adopted the Statement of Financial Accounting Standards No. 157 (“FAS 157”), Fair Value Measurements, on January 1, 2008. FAS 157 requires the funds to classify their assets and liabilities based on valuation method using three levels. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the funds’ determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk associated with the underlying investment. For example, U.S. government securities are generally high quality and liquid; however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.

The following table presents the funds’ valuation levels as of December 31, 2008 (dollars in thousands):

	Global Discovery Fund		Global Growth Fund		Global Small Capitalization Fund		Growth Fund		International Fund		New World Fund		Blue Chip Income and Growth Fund		Global Growth and Income Fund
Investment securities:
Level 1 — Quoted prices	$	85,836	$	1,240,310	$	829,457	$	14,673,393	$	650,457	$	282,129	$	2,557,597	$	675,796
Level 2 — Other significant observable inputs		62,383		2,594,714		1,196,715		3,446,822		6,112,709		1,002,150		258,424		939,094
Level 3 — Significant unobservable inputs		-		23,544		13,661		37,520		6,923		5,875		-		13,351
Total	$	148,219	$	3,858,568	$	2,039,833	$	18,157,735	$	6,770,089	$	1,290,154	$	2,816,021	$	1,628,241

Investment securities trading outside the U.S. (1)	$	46,066	$	1,867,716	$	819,785	$	1,421,384	$	5,212,423	$	590,524	$	-	$	547,828

Forward currency contracts(2):
Level 2 — Other significant observable inputs	$	-	$	-	$	-	$	-	$	-	$	20	$	-	$	-

	Growth-Income Fund		International Growth and Income Fund		Assets Allocation Fund			Bond Fund			Global Bond Fund		High-Income Bond Fund			U.S. Government/AAA-Rated Securities Fund		Cash Management Fund
Investment securities:
Level 1 — Quoted prices	$	14,304,035	$	777	$	4,287,518		$	25,821		$	-	$	3,971		$	-	$	-
Level 2 — Other significant observable inputs		3,870,087		13,723		2,745,919			5,680,147			896,720		1,078,667			1,800,973		1,215,219
Level 3 — Significant unobservable inputs		-		-		38,000			41,491			2,337		26,064			9,588		-
Total	$	18,174,122	$	14,500	$	7,071,437		$	5,747,459		$	899,057	$	1,108,702		$	1,810,561	$	1,215,219

Investment securities trading outside the U.S. (1)	$	1,366,798	$	9,402	$	204,413		$	-		$	-	$	-		$	-	$	-

Forward currency contracts(2):
Level 2 — Other significant observable inputs	$	-	$	-	$	(1,120	)	$	(8,498	)	$	1,723	$	(84	)	$	-	$	-

The following table reconciles the valuation of the funds’ Level 3 investment securities and related transactions during the year ended December 31, 2008 (dollars in thousands):

	Global Growth Fund			Global Small Capitalization Fund			Growth Fund			International Fund			New World Fund			Blue Chip Income and Growth Fund			Global Growth and Income Fund
Beginning value at 1/1/2008	$	7,120		$	7,795		$	85,603		$	8,540		$	-		$	-		$	-
Net purchases (sales)		-			-			42,138			-			-			4,200			-
Net realized loss (3)		-			-			-			-			-			-			-
Net unrealized (depreciation) appreciation (3)		(477	)		(6,215	)		(40,958	)		(1,617	)		(1,805	)		(4,200	)		(3,960	)
Net transfers into (out of) Level 3		16,901			12,081			(49,263	)		-			7,680			-			17,311
Ending value at 12/31/2008	$	23,544		$	13,661		$	37,520		$	6,923		$	5,875		$	-		$	13,351

Net unrealized depreciation during the period
!on Level 3 investment securities held at 12/31/2008	$	(477	)	$	(5,414	)	$	(35,621	)	$	(1,617	)	$	(1,805	)	$	(4,200	)	$	(3,960	)

1Represents certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading; therefore, these amounts were classified as Level 2 instead of Level 1 in the above chart.
2Net unrealized appreciation (depreciation) on forward currency contracts is not included in the summary investment portfolio.
3Net realized loss and net unrealized (depreciation) appreciation are included in the related amounts on investments in the statements of operations.

	Growth-Income Fund			Assets Allocation Fund			Bond Fund			Global Bond Fund			High-Income Bond Fund			U.S. Government/ AAA-Rated Securities Fund
Beginning value at 1/1/2008	$	-		$	57,405		$	29,355		$	885		$	17,514		$	8,677
Net purchases (sales)		112,000			(2,859	)		4,996			(96	)		(1,344	)		(61	)
Net realized loss*		-			(14,803	)		-			(9	)		(997	)		-
Net unrealized (depreciation) appreciation*		(112,000	)		9,149			(1,424	)		(126	)		(8,063	)		(396	)
Net transfers into (out of) Level 3		-			(10,892	)		8,564			1,683			18,954			1,368
Ending value at 12/31/2008	$	-		$	38,000		$	41,491		$	2,337		$	26,064		$	9,588

Net unrealized depreciation during the period
!on Level 3 investment securities held at 12/31/2008	$	(112,000	)	$	(2,177	)	$	(449	)	$	-		$	(8,629	)	$	(321	)

*Net realized loss and net unrealized (depreciation) appreciation are included in the related amounts on investments in the statements of operations.

7. Investment transactions and other disclosures

As of December 31, 2008, New World Fund, Asset Allocation Fund, Bond Fund, Global Bond Fund and High-Income Bond Fund had open forward currency contracts to purchase or sell currencies as follows:

						(amounts in thousands)

		Contract				U.S. valuation at
		amount				December 31, 2008

									Unrealized
									appreciation
Fund		Receive		Deliver		Amount			(depreciation)

Purchases:
Bond	Australian dollars, expiring 1/29/2009	$	A18,779	$	12,500	$	13,312		$	812
Bond	Canadian dollars, expiring 1/12/2009	$	C15,409		12,500		12,637			137
Bond	New Zealand dollars, expiring 1/29/2009	NZ$22,707			12,500		13,287			787
Global Bond	Australian dollars, expiring 1/29/2009	$	A12,769		8,500		9,052			552
Global Bond	Canadian dollars, expiring 1/12/2009	$	C10,478		8,500		8,593			93
Global Bond	Euros, expiring 1/7-1/30/2009	€	26,476		35,145		36,869			1,724
Global Bond	Japanese yen, expiring 1/9-2/12/2009	¥	9,328,589		102,733		102,692			(41	)
Global Bond	New Turkish liras, expiring 1/28/2009	TRY2,760			1,750		1,777			27
Global Bond	New Zealand dollars, expiring 1/29/2009	NZ$9,083			5,000		5,315			315
Sales:
New World	Czech korunas, expiring 1/16/2009	$	188	CZK3,600			187			1
New World	Polish zloty, expiring 1/16/2009		526	PLN1,500			507			19
Asset Allocation	Euros, expiring 1/12-1/26/2009		11,759	€	9,250		12,879			(1,120	)
Bond	Australian dollars, expiring 1/13-1/27/2009		3,775	$	A13,235		4,218			(443	)
Bond	British pounds, expiring 1/9-1/27/2009		10,043	£	6,122		9,350			693
Bond	Euros, expiring 1/14-2/5/2009		231,526	€	173,721		241,873			(10,347	)
Bond	Israeli shekels, expiring 1/23/2009		-	ILS45,206			(216	)		216
Bond	Japanese yen, expiring 1/15-1/29/2009		50,508	¥	4,620,539		50,861			(353	)
Global Bond	Australian dollars, expiring 1/12-1/27/2009		5,565	$	A8,380		5,951			(386	)
Global Bond	British pounds, expiring 1/7-1/27/2009		18,972	£	12,605		18,324			648
Global Bond	Euros, expiring 1/9-2/10/2009		31,981	€	23,720		33,024			(1,043	)
Global Bond	Israeli shekels, expiring 1/8/2009		3,428	ILS13,595			3,594			(166	)
High-Income Bond	Euros, expiring 1/26/2009		821	€	650		905			(84	)

The following table presents additional information for the year ended December 31, 2008:

	Global Discovery Fund		Global Growth Fund		Global Small Capitalization Fund			Growth Fund			International Fund		New World Fund		Blue Chip Income and Growth Fund		Global Growth and Income Fund

Purchases of investment securities(*)	$	118,698	$	2,545,429	$	1,623,307		$	7,999,015		$	4,957,592	$	675,314	$	1,005,434	$	1,455,824
Sales of investment securities(*)		94,336		1,628,342		1,389,434			6,313,842			4,521,135		507,685		840,203		627,475
Non-U.S. taxes paid on dividend income		312		9,915		2,950			9,566			32,580		3,975		793		3,970
Non-U.S. taxes paid on interest income		-		-		-			-			-		-		-		-
Non-U.S. taxes paid on realized gains		-		853		995			-			-		84		-		-
Dividends from affiliated issuers		-		-		3,656			7,626			-		-		-		968
Net realized (loss) gain from affiliated issuers		-		-		(11,159	)		(98,906	)		-		-		-		-

	Growth-Income Fund		International Growth and Income Fund (†)		Asset Allocation Fund		Bond Fund		Global Bond Fund		High-Income Bond Fund		U.S. Government/ AAA-Rated Securities Fund		Cash Management Fund

Purchases of investment securities(*)	$	7,833,603	$	9,201	$	4,073,043	$	3,418,571	$	1,092,336	$	307,100	$	1,119,139	$	7,177,416
Sales of investment securities(*)		6,952,754		-		2,572,702		1,973,890		552,981		296,447		495,836		6,545,646
Non-U.S. taxes paid on dividend income		10,598		1		1,390		-		-		-		-		-
Non-U.S. taxes paid on interest income		-		-		1		132		87		5		-		-
Non-U.S. taxes paid on realized gains		-		-		-		-		-		-		-		-
Dividends from affiliated issuers		-		-		-		-		-		-		-		-
Net realized (loss) gain from affiliated issuers		-		-		12,808		-		-		-		-		-

(*) Excludes short-term securities, except for Cash Management Fund, and U.S. government obligations, if any.
(†) For the period November 18, 2008, commencement of operations, through December 31, 2008.

Financial Highlights (1)


			(Loss) income from investment operations (2)											Dividends and distributions
Period ended	Net asset value, beginning of period		Net investment income (loss)			Net (losses) gains on securities (both realized and unrealized)					Total from investment operations			Dividends (from net investment income)			Distributions (from capital gains)					Total dividends and distributions			Net asset value, end of period		Total return (3)			Net assets, end of period (in millions)		Ratio of expenses to average net assets before waiver					Ratio of expenses to average net assets after waiver (3)					Ratio of net income (loss) to average net assets (3)


Global Discovery Fund
Class 1
12/31/08	$	14.09	$	.15		$	(6.37	)			$	(6.22	)	$	(.12	)	$	(.30	)			$	(.42	)	$	7.45		(45.02	) %	$	18		.60	%				.55	%				1.33	%
12/31/07		13.05		.17			2.07					2.24			(.16	)		(1.04	)				(1.20	)		14.09		17.55			35		.60					.54					1.25
12/31/06		11.63		.15			1.89					2.04			(.13	)		(.49	)				(.62	)		13.05		17.66			28		.62					.56					1.19
12/31/05		10.79		.14			1.05					1.19			(.11	)		(.24	)				(.35	)		11.63		11.07			22		.61					.56					1.27
12/31/04		9.94		.08			.98					1.06			(.09	)		(.12	)				(.21	)		10.79		10.72			20		.61					.60					.81
Class 2
12/31/08		14.02		.12			(6.32	)				(6.20	)		(.09	)		(.30	)				(.39	)		7.43		(45.09	)		131		.85					.80					1.08
12/31/07		13.00		.14			2.05					2.19			(.13	)		(1.04	)				(1.17	)		14.02		17.22			240		.85					.79					.98
12/31/06		11.59		.11			1.89					2.00			(.10	)		(.49	)				(.59	)		13.00		17.41			151		.87					.81					.94
12/31/05		10.76		.11			1.05					1.16			(.09	)		(.24	)				(.33	)		11.59		10.80			89		.86					.81					1.04
12/31/04		9.92		.06			.97					1.03			(.07	)		(.12	)				(.19	)		10.76		10.43			51		.86					.85					.60
Global Growth Fund
Class 1
12/31/08	$	25.15	$	.47		$	(9.50	)			$	(9.03	)	$	(.41	)	$	(1.75	)			$	(2.16	)	$	13.96		(38.23	) %	$	675		.55	%				.50	%				2.37	%
12/31/07		23.44		.51			2.98					3.49			(.76	)		(1.02	)				(1.78	)		25.15		15.16			684		.55					.50					2.06
12/31/06		19.63		.41			3.62					4.03			(.22	)		-					(.22	)		23.44		20.73			278		.58					.53					1.95
12/31/05		17.31		.28			2.19					2.47			(.15	)		-					(.15	)		19.63		14.37			206		.62					.57					1.56
12/31/04		15.30		.18			1.92					2.10			(.09	)		-					(.09	)		17.31		13.80			202		.65					.64					1.15
Class 2
12/31/08		25.00		.42			(9.43	)				(9.01	)		(.36	)		(1.75	)				(2.11	)		13.88		(38.39	)		3,198		.80					.75					2.12
12/31/07		23.29		.45			2.95					3.40			(.67	)		(1.02	)				(1.69	)		25.00		14.85			5,180		.80					.75					1.84
12/31/06		19.52		.36			3.59					3.95			(.18	)		-					(.18	)		23.29		20.43			4,015		.83					.78					1.71
12/31/05		17.23		.23			2.18					2.41			(.12	)		-					(.12	)		19.52		14.07			2,617		.87					.82					1.30
12/31/04		15.25		.14			1.91					2.05			(.07	)		-					(.07	)		17.23		13.49			1,796		.90					.89					.92
Global Small Capitalization Fund
Class 1
12/31/08	$	27.20	$	.19		$	(13.33	)			$	(13.14	)	$	-		$	(2.88	)			$	(2.88	)	$	11.18		(53.39	) %	$	306		.74	%				.67	%				1.01	%
12/31/07		24.87		.12			5.27					5.39			(.90	)		(2.16	)				(3.06	)		27.20		21.73			369		.73					.66					.45
12/31/06		21.29		.19			4.74					4.93			(.14	)		(1.21	)				(1.35	)		24.87		24.35			247		.77					.69					.82
12/31/05		17.14		.13			4.23					4.36			(.21	)		-					(.21	)		21.29		25.66			231		.79					.73					.72
12/31/04		14.15		.02			2.97					2.99			-			-					-			17.14		21.13			193		.81					.80					.15
Class 2
12/31/08		26.95		.14			(13.18	)				(13.04	)		-			(2.88	)				(2.88	)		11.03		(53.52	)		1,748		.99					.92					.70
12/31/07		24.64		.05			5.22					5.27			(.80	)		(2.16	)				(2.96	)		26.95		21.43			3,975		.98					.91					.20
12/31/06		21.12		.14			4.70					4.84			(.11	)		(1.21	)				(1.32	)		24.64		24.05			2,927		1.02					.94					.61
12/31/05		17.02		.09			4.19					4.28			(.18	)		-					(.18	)		21.12		25.35			1,977		1.04					.97					.49
12/31/04		14.08		(.01	)		2.95					2.94			-			-					-			17.02		20.88			1,198		1.06					1.05					(.07	)
Growth Fund
Class 1
12/31/08	$	67.22	$	.63		$	(27.52	)			$	(26.89	)	$	(.56	)	$	(6.26	)			$	(6.82	)	$	33.51		(43.83	) %	$	4,768		.33	%				.30	%				1.23	%
12/31/07		64.51		.68			7.44					8.12			(.68	)		(4.73	)				(5.41	)		67.22		12.64			5,051		.33					.30					1.00
12/31/06		59.36		.70			5.46					6.16			(.63	)		(.38	)				(1.01	)		64.51		10.48			3,503		.34					.31					1.14
12/31/05		51.39		.46			8.00					8.46			(.49	)		-					(.49	)		59.36		16.50			3,709		.35					.32					.87
12/31/04		45.74		.32			5.51					5.83			(.18	)		-					(.18	)		51.39		12.75			3,744		.36					.36					.68
Class 2
12/31/08		66.72		.50			(27.27	)				(26.77	)		(.42	)		(6.26	)				(6.68	)		33.27		(43.97	)		13,383		.58					.55					.95
12/31/07		64.08		.50			7.39					7.89			(.52	)		(4.73	)				(5.25	)		66.72		12.35			25,359		.58					.55					.74
12/31/06		58.98		.54			5.43					5.97			(.49	)		(.38	)				(.87	)		64.08		10.22			23,122		.59					.56					.89
12/31/05		51.10		.34			7.92					8.26			(.38	)		-					(.38	)		58.98		16.19			18,343		.60					.57					.64
12/31/04		45.50		.23			5.45					5.68			(.08	)		-					(.08	)		51.10		12.50			12,055		.61					.61					.50
Class 3
12/31/08		67.21		.54			(27.50	)				(26.96	)		(.45	)		(6.26	)				(6.71	)		33.54		(43.93	)		198		.51					.48					1.02
12/31/07		64.50		.55			7.45					8.00			(.56	)		(4.73	)				(5.29	)		67.21		12.44			425		.51					.48					.81
12/31/06		59.34		.59			5.46					6.05			(.51	)		(.38	)				(.89	)		64.50		10.29			451		.52					.49					.95
12/31/05		51.38		.37			7.98					8.35			(.39	)		-					(.39	)		59.34		16.28			499		.53					.50					.69
12/31/04 (4)		47.74		.24			3.50					3.74			(.10	)		-					(.10	)		51.38		7.85			516		.54		(5	)		.53		(5	)		.54(5)
International Fund
Class 1
12/31/08	$	24.81	$	.43		$	(9.88	)			$	(9.45	)	$	(.40	)	$	(2.74	)			$	(3.14	)	$	12.22		(42.01	) %	$	1,864		.52	%				.48	%				2.42	%
12/31/07		22.01		.43			3.95					4.38			(.41	)		(1.17	)				(1.58	)		24.81		20.30			1,708		.52					.47					1.82
12/31/06		18.96		.41			3.21					3.62			(.38	)		(.19	)				(.57	)		22.01		19.33			1,648		.54					.49					1.99
12/31/05		15.82		.32			3.11					3.43			(.29	)		-					(.29	)		18.96		21.75			1,599		.57					.52					1.92
12/31/04		13.41		.22			2.41					2.63			(.22	)		-					(.22	)		15.82		19.66			1,495		.60					.59					1.54
Class 2
12/31/08		24.72		.41			(9.85	)				(9.44	)		(.35	)		(2.74	)				(3.09	)		12.19		(42.12	)		4,901		.77					.72					2.16
12/31/07		21.94		.36			3.94					4.30			(.35	)		(1.17	)				(1.52	)		24.72		20.02			9,719		.77					.72					1.55
12/31/06		18.92		.35			3.20					3.55			(.34	)		(.19	)				(.53	)		21.94		18.98			7,260		.79					.74					1.72
12/31/05		15.79		.28			3.11					3.39			(.26	)		-					(.26	)		18.92		21.50			4,790		.82					.77					1.64
12/31/04		13.39		.18			2.41					2.59			(.19	)		-					(.19	)		15.79		19.32			2,752		.84					.83					1.27
Class 3
12/31/08		24.80		.43			(9.90	)				(9.47	)		(.36	)		(2.74	)				(3.10	)		12.23		(42.10	)		57		.70					.65					2.25
12/31/07		22.00		.39			3.94					4.33			(.36	)		(1.17	)				(1.53	)		24.80		20.10			123		.70					.65					1.64
12/31/06		18.96		.37			3.20					3.57			(.34	)		(.19	)				(.53	)		22.00		19.07			120		.72					.67					1.81
12/31/05		15.82		.29			3.11					3.40			(.26	)		-					(.26	)		18.96		21.54			116		.75					.70					1.74
12/31/04 (4)		13.76		.20			2.05					2.25			(.19	)		-					(.19	)		15.82		16.45			115		.77		(5	)		.77		(5	)		1.45(5)
New World Fund
Class 1
12/31/08	$	25.88	$	.43		$	(10.68	)			$	(10.25	)	$	(.36	)	$	(1.70	)			$	(2.06	)	$	13.57		(42.20	) %	$	253		.81	%				.73	%				2.18	%
12/31/07		21.56		.46			6.25					6.71			(.83	)		(1.56	)				(2.39	)		25.88		32.53			261		.82					.74					1.92
12/31/06		16.67		.41			4.95					5.36			(.32	)		(.15	)				(.47	)		21.56		32.88			126		.88					.80					2.19
12/31/05		13.96		.33			2.58					2.91			(.20	)		-					(.20	)		16.67		21.10			88		.92					.85					2.22
12/31/04		11.99		.23			2.01					2.24			(.27	)		-					(.27	)		13.96		19.07			63		.93					.92					1.81
Class 2
12/31/08		25.69		.40			(10.62	)				(10.22	)		(.30	)		(1.70	)				(2.00	)		13.47		(42.37	)		1,044		1.06					.98					1.94
12/31/07		21.40		.40			6.20					6.60			(.75	)		(1.56	)				(2.31	)		25.69		32.21			1,875		1.07					.99					1.69
12/31/06		16.56		.36			4.92					5.28			(.29	)		(.15	)				(.44	)		21.40		32.59			1,175		1.13					1.05					1.93
12/31/05		13.89		.29			2.56					2.85			(.18	)		-					(.18	)		16.56		20.74			677		1.17					1.10					1.97
12/31/04		11.94		.19			2.01					2.20			(.25	)		-					(.25	)		13.89		18.80			373		1.18					1.17					1.57
Blue Chip Income and Growth Fund
Class 1
12/31/08	$	11.53	$	.22		$	(4.22	)			$	(4.00	)	$	(.21	)	$	(.65	)			$	(.86	)	$	6.67		(36.30	) %	$	220		.43	%				.39	%				2.48	%
12/31/07		11.97		.24			.07					.31			(.36	)		(.39	)				(.75	)		11.53		2.25			143		.42					.38					1.95
12/31/06		10.91		.20			1.63					1.83			(.16	)		(.61	)				(.77	)		11.97		17.73			159		.43					.39					1.75
12/31/05		10.26		.18			.59					.77			(.12	)		-					(.12	)		10.91		7.57			135		.45					.41					1.73
12/31/04		9.41		.15			.78					.93			(.08	)		-					(.08	)		10.26		9.94			129		.46					.46					1.60
Class 2
12/31/08		11.45		.19			(4.18	)				(3.99	)		(.19	)		(.65	)				(.84	)		6.62		(36.50	)		2,602		.68					.64					2.10
12/31/07		11.87		.21			.07					.28			(.31	)		(.39	)				(.70	)		11.45		2.03			4,274		.67					.63					1.70
12/31/06		10.83		.17			1.61					1.78			(.13	)		(.61	)				(.74	)		11.87		17.42			3,937		.68					.64					1.50
12/31/05		10.20		.15			.58					.73			(.10	)		-					(.10	)		10.83		7.24			3,029		.70					.66					1.48
12/31/04		9.36		.13			.78					.91			(.07	)		-					(.07	)		10.20		9.74			2,349		.71					.70					1.37
Global Growth and Income Fund
Class 1
12/31/08	$	11.78	$	.28		$	(5.09	)			$	(4.81	)	$	(.22	)	$	(.07	)			$	(.29	)	$	6.68		(41.06	) %	$	95		.62	%				.56	%				3.00	%
12/31/07		10.98		.28			1.14					1.42			(.22	)		(.40	)				(.62	)		11.78		13.04			79		.71					.58					2.37
12/31/06 (6)		10.00		.14			.91					1.05			(.07	)		-					(.07	)		10.98		10.49			45		.72		(5	)		.65		(5	)		2.10(5)
Class 2
12/31/08		11.75		.26			(5.07	)				(4.81	)		(.20	)		(.07	)				(.27	)		6.67		(41.17	)		1,529		.86					.81					2.73
12/31/07		10.97		.25			1.13					1.38			(.20	)		(.40	)				(.60	)		11.75		12.67			1,997		.96					.83					2.11
12/31/06 (6)		10.00		.11			.92					1.03			(.06	)		-					(.06	)		10.97		10.30			638		.97		(5	)		.90		(5	)		1.64(5)
Growth-Income Fund
Class 1
12/31/08	$	42.52	$	.69		$	(15.91	)			$	(15.22	)	$	(.69	)	$	(2.36	)			$	(3.05	)	$	24.25		(37.68	) %	$	5,034		.28	%				.25	%				2.03	%
12/31/07		42.43		.80			1.51					2.31			(.77	)		(1.45	)				(2.22	)		42.52		5.32			5,618		.27					.25					1.82
12/31/06		38.31		.77			5.03					5.80			(.72	)		(.96	)				(1.68	)		42.43		15.51			3,759		.28					.25					1.92
12/31/05		36.81		.62			1.61					2.23			(.58	)		(.15	)				(.73	)		38.31		6.08			3,825		.29					.27					1.68
12/31/04		33.61		.48			3.09					3.57			(.37	)		-					(.37	)		36.81		10.66			4,213		.31					.30					1.39
Class 2
12/31/08		42.26		.60			(15.80	)				(15.20	)		(.59	)		(2.36	)				(2.95	)		24.11		(37.85	)		13,046		.53					.50					1.75
12/31/07		42.19		.68			1.50					2.18			(.66	)		(1.45	)				(2.11	)		42.26		5.04			23,243		.52					.50					1.57
12/31/06		38.12		.67			4.99					5.66			(.63	)		(.96	)				(1.59	)		42.19		15.20			22,688		.53					.50					1.67
12/31/05		36.64		.53			1.60					2.13			(.50	)		(.15	)				(.65	)		38.12		5.83			17,608		.54					.52					1.44
12/31/04		33.48		.41			3.06					3.47			(.31	)		-					(.31	)		36.64		10.37			13,105		.56					.55					1.19
Class 3
12/31/08		42.51		.64			(15.90	)				(15.26	)		(.62	)		(2.36	)				(2.98	)		24.27		(37.78	)		205		.46					.43					1.83
12/31/07		42.42		.73			1.50					2.23			(.69	)		(1.45	)				(2.14	)		42.51		5.12			405		.45					.43					1.64
12/31/06		38.31		.70			5.01					5.71			(.64	)		(.96	)				(1.60	)		42.42		15.30			458		.46					.43					1.74
12/31/05		36.80		.56			1.61					2.17			(.51	)		(.15	)				(.66	)		38.31		5.88			471		.47					.45					1.50
12/31/04 (4)		34.64		.41			2.07					2.48			(.32	)		-					(.32	)		36.80		7.18			537		.49		(5	)		.48		(5	)		1.24(5)
International Growth and Income Fund
Class 1
12/31/08 (7)	$	10.00	$	.01		$	.92				$	.93		$	(.01	)	$	-				$	(.01	)	$	10.92		9.28	%	$	12		.09	%				.08	%				.14	%
Class 2
12/31/08 (7)		10.00		.01			.92					.93			(.01	)		-					(.01	)		10.92		9.27			4		.11					.11					.05
Asset Allocation Fund
Class 1
12/31/08	$	18.51	$	.47		$	(5.70	)			$	(5.23	)	$	(.45	)	$	(.67	)			$	(1.12	)	$	12.16		(29.30	) %	$	2,243		.32	%				.29	%				2.98	%
12/31/07		18.34		.51			.75					1.26			(.45	)		(.64	)				(1.09	)		18.51		6.82			1,927		.32					.29					2.69
12/31/06		16.56		.47			1.97					2.44			(.43	)		(.23	)				(.66	)		18.34		14.96			1,079		.33					.30					2.67
12/31/05		15.49		.41			1.05					1.46			(.39	)		-					(.39	)		16.56		9.45			879		.35					.32					2.57
12/31/04		14.58		.39			.84					1.23			(.32	)		-					(.32	)		15.49		8.50			899		.38					.37					2.64
Class 2
12/31/08		18.39		.43			(5.66	)				(5.23	)		(.41	)		(.67	)				(1.08	)		12.08		(29.51	)		4,822		.57					.54					2.70
12/31/07		18.23		.47			.74					1.21			(.41	)		(.64	)				(1.05	)		18.39		6.55			7,308		.57					.54					2.45
12/31/06		16.47		.42			1.96					2.38			(.39	)		(.23	)				(.62	)		18.23		14.66			6,362		.58					.55					2.42
12/31/05		15.42		.37			1.04					1.41			(.36	)		-					(.36	)		16.47		9.14			5,120		.60					.57					2.31
12/31/04		14.51		.36			.84					1.20			(.29	)		-					(.29	)		15.42		8.34			3,797		.62					.62					2.42
Class 3
12/31/08		18.50		.44			(5.68	)				(5.24	)		(.42	)		(.67	)				(1.09	)		12.17		(29.39	)		41		.50					.47					2.77
12/31/07		18.34		.48			.74					1.22			(.42	)		(.64	)				(1.06	)		18.50		6.56			71		.50					.47					2.52
12/31/06		16.56		.44			1.97					2.41			(.40	)		(.23	)				(.63	)		18.34		14.75			76		.51					.48					2.49
12/31/05		15.49		.38			1.05					1.43			(.36	)		-					(.36	)		16.56		9.26			76		.53					.50					2.39
12/31/04 (4)		14.85		.36			.58					.94			(.30	)		-					(.30	)		15.49		6.38			81		.55		(5	)		.55		(5	)		2.50(5)
Bond Fund
Class 1
12/31/08	$	11.14	$	.61		$	(1.64	)			$	(1.03	)	$	(.63	)	$	(.03	)			$	(.66	)	$	9.45		(9.16	) %	$	2,090		.40	%				.36	%				5.84	%
12/31/07		11.64		.65			(.24	)				.41			(.91	)		-					(.91	)		11.14		3.66			436		.41					.37					5.59
12/31/06		11.31		.63			.17					.80			(.47	)		-					(.47	)		11.64		7.31			230		.43					.39					5.54
12/31/05		11.57		.60			(.40	)				.20			(.46	)		-					(.46	)		11.31		1.77			182		.44					.40					5.30
12/31/04		11.34		.56			.10					.66			(.43	)		-					(.43	)		11.57		6.04			195		.45					.44					4.94
Class 2
12/31/08		11.03		.59			(1.63	)				(1.04	)		(.60	)		(.03	)				(.63	)		9.36		(9.35	)		3,432		.65					.61					5.53
12/31/07		11.53		.61			(.24	)				.37			(.87	)		-					(.87	)		11.03		3.33			4,679		.66					.62					5.34
12/31/06		11.22		.60			.16					.76			(.45	)		-					(.45	)		11.53		6.99			3,374		.68					.64					5.29
12/31/05		11.48		.57			(.39	)				.18			(.44	)		-					(.44	)		11.22		1.59			2,312		.69					.65					5.06
12/31/04		11.27		.53			.09					.62			(.41	)		-					(.41	)		11.48		5.72			1,759		.70					.69					4.68
Global Bond Fund
Class 1
12/31/08	$	10.83	$	.48		$	(.09	)			$	.39		$	(.54	)	$	-		(8	)	$	(.54	)	$	10.68		3.60	%	$	111		.59	%				.53	%				4.36	%
12/31/07		10.18		.49			.47					.96			(.31	)		-					(.31	)		10.83		9.54			28		.61					.55					4.61
12/31/06 (9)		10.00		.10			.15					.25			(.07	)		-					(.07	)		10.18		2.52			12		.15					.13					1.00
Class 2
12/31/08		10.81		.44			(.07	)				.37			(.52	)		-		(8	)		(.52	)		10.66		3.48			802		.84					.79					4.06
12/31/07		10.17		.47			.47					.94			(.30	)		-					(.30	)		10.81		9.23			279		.86					.80					4.41
12/31/06 (10)		10.00		.06			.18					.24			(.07	)		-					(.07	)		10.17		1.99			15		.13					.12					.60
High-Income Bond Fund
Class 1
12/31/08	$	11.65	$	.87		$	(3.64	)			$	(2.77	)	$	(.83	)	$	-				$	(.83	)	$	8.05		(23.74	) %	$	340		.48	%				.43	%				8.22	%
12/31/07		12.90		.95			(.72	)				.23			(1.48	)		-					(1.48	)		11.65		1.62			308		.48					.44					7.41
12/31/06		12.41		.92			.37					1.29			(.80	)		-					(.80	)		12.90		10.89			293		.49					.45					7.36
12/31/05		12.89		.85			(.55	)				.30			(.78	)		-					(.78	)		12.41		2.46			309		.50					.46					6.76
12/31/04		12.54		.84			.32					1.16			(.81	)		-					(.81	)		12.89		9.83			364		.50					.50					6.74
Class 2
12/31/08		11.55		.84			(3.60	)				(2.76	)		(.80	)		-					(.80	)		7.99		(23.84	)		780		.73					.68					7.92
12/31/07		12.79		.91			(.72	)				.19			(1.43	)		-					(1.43	)		11.55		1.33			996		.73					.69					7.17
12/31/06		12.32		.89			.36					1.25			(.78	)		-					(.78	)		12.79		10.59			832		.74					.70					7.12
12/31/05		12.81		.81			(.55	)				.26			(.75	)		-					(.75	)		12.32		2.20			590		.75					.71					6.55
12/31/04		12.47		.81			.32					1.13			(.79	)		-					(.79	)		12.81		9.59			444		.75					.74					6.48
Class 3
12/31/08		11.65		.86			(3.64	)				(2.78	)		(.80	)		-					(.80	)		8.07		(23.76	)		18		.66					.61					7.96
12/31/07		12.88		.92			(.72	)				.20			(1.43	)		-					(1.43	)		11.65		1.40			28		.66					.62					7.21
12/31/06		12.39		.90			.36					1.26			(.77	)		-					(.77	)		12.88		10.66			34		.67					.63					7.19
12/31/05		12.87		.82			(.55	)				.27			(.75	)		-					(.75	)		12.39		2.25			37		.68					.64					6.58
12/31/04 (4)		12.79		.78			.11					.89			(.81	)		-					(.81	)		12.87		7.52			46		.68		(5	)		.68		(5	)		6.57(5)
U.S. Government/AAA-Rated Securities Fund
Class 1
12/31/08	$	11.73	$	.50		$	.41				$	.91		$	(.35	)	$	-				$	(.35	)	$	12.29		7.84	%	$	496		.43	%				.38	%				4.17	%
12/31/07		11.87		.58			.20					.78			(.92	)		-					(.92	)		11.73		6.83			211		.46					.41					4.83
12/31/06		11.91		.55			(.10	)				.45			(.49	)		-					(.49	)		11.87		3.95			218		.47					.42					4.64
12/31/05		12.07		.48			(.16	)				.32			(.48	)		-					(.48	)		11.91		2.70			252		.47					.43					3.99
12/31/04		12.24		.45			(.03	)				.42			(.59	)		-					(.59	)		12.07		3.58			286		.47					.46					3.68
Class 2
12/31/08		11.65		.47			.41					.88			(.33	)		-					(.33	)		12.20		7.63			1,219		.68					.64					3.93
12/31/07		11.79		.54			.19					.73			(.87	)		-					(.87	)		11.65		6.49			597		.71					.66					4.58
12/31/06		11.83		.51			(.09	)				.42			(.46	)		-					(.46	)		11.79		3.75			402		.72					.67					4.40
12/31/05		12.00		.45			(.16	)				.29			(.46	)		-					(.46	)		11.83		2.41			341		.72					.68					3.75
12/31/04		12.17		.41			(.03	)				.38			(.55	)		-					(.55	)		12.00		3.30			285		.72					.71					3.42
Class 3
12/31/08		11.74		.48			.41					.89			(.33	)		-					(.33	)		12.30		7.66			33		.61					.57					4.03
12/31/07		11.86		.55			.20					.75			(.87	)		-					(.87	)		11.74		6.63			29		.64					.59					4.65
12/31/06		11.89		.52			(.09	)				.43			(.46	)		-					(.46	)		11.86		3.80			32		.65					.60					4.45
12/31/05		12.05		.46			(.16	)				.30			(.46	)		-					(.46	)		11.89		2.50			39		.65					.61					3.81
12/31/04 (4)		12.34		.41			(.11	)				.30			(.59	)		-					(.59	)		12.05		2.58			43		.65		(5	)		.65		(5	)		3.51(5)
Cash Management Fund
Class 1
12/31/08	$	11.40	$	.24		$	-		(8	)	$	.24		$	(.20	)	$	-				$	(.20	)	$	11.44		2.15	%	$	158		.32	%				.29	%				2.07	%
12/31/07		11.62		.57			-		(8	)		.57			(.79	)		-					(.79	)		11.40		4.95			112		.33					.30					4.88
12/31/06		11.31		.54			-		(8	)		.54			(.23	)		-					(.23	)		11.62		4.81			98		.33					.30					4.74
12/31/05		11.09		.33			-		(8	)		.33			(.11	)		-					(.11	)		11.31		2.97			75		.33					.30					2.91
12/31/04		11.07		.11			-		(8	)		.11			(.09	)		-					(.09	)		11.09		.96			78		.37					.36					.96
Class 2
12/31/08		11.35		.20			.02					.22			(.19	)		-					(.19	)		11.38		1.90			1,023		.57					.54					1.73
12/31/07		11.56		.54			-		(8	)		.54			(.75	)		-					(.75	)		11.35		4.73			452		.58					.55					4.61
12/31/06		11.26		.51			-		(8	)		.51			(.21	)		-					(.21	)		11.56		4.59			282		.58					.55					4.52
12/31/05		11.05		.30			-		(8	)		.30			(.09	)		-					(.09	)		11.26		2.68			153		.58					.55					2.71
12/31/04		11.03		.08			-		(8	)		.08			(.06	)		-					(.06	)		11.05		.70			110		.61					.61					.76
Class 3
12/31/08		11.40		.22			.01					.23			(.19	)		-					(.19	)		11.44		1.99			25		.50					.47					1.91
12/31/07		11.60		.55			-		(8	)		.55			(.75	)		-					(.75	)		11.40		4.83			20		.51					.48					4.70
12/31/06		11.29		.52			-		(8	)		.52			(.21	)		-					(.21	)		11.60		4.64			18		.51					.48					4.53
12/31/05		11.07		.30			-		(8	)		.30			(.08	)		-					(.08	)		11.29		2.74			16		.51					.48					2.70
12/31/04 (4)		11.07		.09			-		(8	)		.09			(.09	)		-					(.09	)		11.07		.78			20		.54		(5	)		.54		(5	)		.80(5)

	Year Ended December 31
Portfolio turnover rate for all classes of shares	2008		2007		2006		2005		2004

Global Discovery Fund	46	%	50	%	31	%	53	%	28	%
Global Growth Fund	38		38		31		26		24
Global Small Capitalization Fund	47		49		50		47		49
Growth Fund	26		40		35		29		30
International Fund	52		41		29		40		37
New World Fund	32		34		32		26		18
Blue Chip Income and Growth Fund	24		27		21		33		13
Global Growth and Income Fund	36		36		8	(6)	-		-
Growth-Income Fund	31		24		25		20		21
International Growth and Income Fund	-	(7)	-		-		-		-
Asset Allocation Fund	36		29		38		23		20
Bond Fund	62		57		57		46		34
Global Bond Fund	118		85		7	(9)	-		-
High-Income Bond Fund	29		32		35		35		38
U.S. Government/AAA-Rated Securities Fund	108		91		76		86		68
Cash Management Fund	-		-		-		-		-

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

(2) Based on average shares outstanding.

(3) This column reflects the impact, if any, of certain waivers by CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services.

(4) From January 16, 2004, when Class 3 shares were first issued.

(5) Annualized.

(6) From May 1, 2006, commencement of operations.

(7) From November 18, 2008, commencement of operations.

(8) Amount less than $.01.

(9) From October 4, 2006, commencement of operations.

(10) From November 6, 2006, when Class 2 shares were first issued.

See Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of American Funds Insurance Series:

In our opinion, the accompanying statements of assets and liabilities, including the summary investment portfolios (investment portfolio for Cash Management Fund), and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Global Discovery Fund, Global Growth Fund, Global Small Capitalization Fund, Growth Fund, International Fund, New World Fund, Blue Chip Income and Growth Fund, Global Growth and Income Fund, Growth-Income Fund, International Growth and Income Fund, Asset Allocation Fund, Bond Fund, Global Bond Fund, High-Income Bond Fund, U.S. Government/AAA-Rated Securities Fund and Cash Management Fund (constituting the American Funds Insurance Series, hereafter referred to as the "Series") at December 31, 2008, the results of each of their operations for the period then ended, the changes in each of their net assets and their financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Series’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities owned at December 31, 2008, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Los Angeles, California

February 4, 2009