SEC. File Nos. 02-86838

811-03857

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM N-1A

Registration Statement

Under

the Securities Act of 1933

Post-Effective Amendment No. 51

and

Registration Statement

Under

The Investment Company Act of 1940

Amendment No. 51

__________________

AMERICAN FUNDS INSURANCE SERIES

(Exact Name of Registrant as Specified in Charter)

333 South Hope Street

Los Angeles, California 90071-1406

(Address of Principal Executive Offices)

Registrant's telephone number, including area code:

(213) 486-9200

__________________

Steven I. Koszalka

Capital Research and Management Company

333 South Hope Street

Los Angeles, California 90071-1406

(Name and Address of Agent for Service)

__________________

Copies to:

Michael Glazer

Bingham McCutchen LLP

355 South Grand Avenue, Suite 4400

Los Angeles, CA 90071-3106

(Counsel for the Registrant)

__________________

Approximate date of proposed public offering:

It is proposed that this filing become effective on May 1, 2010, pursuant to paragraph (b) of rule 485.

..

<PLAINTEXT>
<PAGE>

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




AMERICAN FUNDS
INSURANCE SERIES(R)


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


PROSPECTUS

Class 1 shares



May 1, 2010





               TABLE OF CONTENTS

                    Summaries
                1   Global Discovery Fund
                4   Global Growth Fund
                7   Global Small Capitalization Fund
               10   Growth Fund
               13   International Fund
               16   New World Fund
               20   Blue Chip Income and Growth Fund
               23   Global Growth and Income Fund
               26   Growth-Income Fund
               29   International Growth and Income Fund
               32   Asset Allocation Fund
               35   Bond Fund
               38   Global Bond Fund
               42   High-Income Bond Fund
               45   U.S. Government/AAA-Rated Securities Fund
               48   Cash Management Fund
               50   Investment objectives, strategies and risks
               65   Management and organization
               69   Purchases and redemptions of shares
               70   Plans of distribution
               71   Distributions and taxes
               72   Financial highlights



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

<PAGE>

GLOBAL DISCOVERY FUND


INVESTMENT OBJECTIVE

The investment objective of the fund is long-term growth of capital. Current
income is a secondary consideration.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
an interest in the fund. It does not reflect insurance contract fees and
expenses. If insurance contract fees and expenses were reflected, expenses
shown would be higher.



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.58%
Other expenses.........................................................  0.03
Total annual fund operating expenses...................................  0.61



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $62    $195    $340     $762



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 60% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund seeks to achieve its objective by investing in securities of companies
that can benefit from innovation, exploit new technologies or provide products
and services that meet the demands of an evolving global economy. In
implementing this strategy the fund may invest in any company, provided that
the fund's investment adviser determines that the company could participate and
thrive in the new economy.

In pursuing its investment objective, the fund invests primarily in common
stocks that the investment adviser believes have the potential for growth. The
fund also invests in common stocks with the potential to pay dividends. The
fund may invest a significant portion of its assets in securities of issuers
domiciled outside the United States, including securities of issuers in
countries with developing economies and/or markets. The fund expects to be
invested in numerous countries around the world.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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



                                                                             ---
        GLOBAL DISCOVERY FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  1
                                                                             ---

<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

GROWTH STOCK RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks.

CONCENTRATION RISKS -- The fund may be subject to additional risks because it
invests in a more limited group of sectors and industries than the broad market.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Multi-Cap Growth Funds Index includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund and the Global
Service and Information Index reflects the market sectors and securities in
which the fund primarily invests. This information provides some indication of
the risks of investing in the fund. Past results are not predictive of future
results. Figures shown reflect fees and expenses associated with an investment
in the fund, but do not reflect insurance contract fees and expenses. If
insurance contract fees and expenses were included, results would have been
lower.



Calendar year total returns.


                                    [CHART]

  2002       2003       2004       2005      2006      2007      2008     2009
-------     ------     ------     ------    ------    ------   -------    ----
-21.41%     37.41%     10.72%     11.07%    17.66%    17.55%   -45.02%   51.49%





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


HIGHEST   24.89% (quarter ended June 30, 2009)
LOWEST   -24.97% (quarter ended December 31, 2008)



----
2   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL DISCOVERY FUND
----

<PAGE>


For periods ended December 31, 2009:





                                                                                       LIFETIME
                                                                                      (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                                           1 YEAR 5 YEARS INCEPTION)
------------------------------------------------------------------------------------------------

Fund (inception date -- 7/5/01)                                        51.49%  5.05%     4.29%
S&P 500 (reflects no deduction for fees, expenses or taxes)            26.47   0.42      0.87
Lipper Multi-Cap Growth Funds Index (reflects no deduction for fees
 or taxes)                                                             39.17   1.49      0.28
Global Service and Information Index (reflects no deduction for fees,
 expenses or taxes)                                                    30.13   0.15      0.77




MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-----------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

   GORDON CRAWFORD                      5 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
   MARK E. DENNING                      5 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
   CLAUDIA P. HUNTINGTON                9 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
        GLOBAL DISCOVERY FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  3
                                                                             ---

<PAGE>

GLOBAL GROWTH FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
capital.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
an interest in the fund. It does not reflect insurance contract fees and
expenses. If insurance contract fees and expenses were reflected, expenses
shown would be higher.



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.54%
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.56



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $57    $179    $313     $701



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 43% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks of companies located around the
world that the investment adviser believes have the potential for growth. The
fund may invest a portion of its assets in common stocks and other securities
of companies in countries with developing economies and/or markets. The fund
expects to be invested in numerous countries around the world.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.



----
4   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL GROWTH FUND
----

<PAGE>


GROWTH STOCK RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


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


Calendar year total returns


                                    [CHART]

   2000    2001    2002   2003   2004   2005   2006   2007    2008    2009
 ------- ------- ------- ------ ------ ------ ------ ------ -------   ----
 -18.71% -13.99% -14.46% 35.63% 13.80% 14.37% 20.73% 15.16% -38.23%  42.58%




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


HIGHEST   22.27% (quarter ended June 30, 2009)
LOWEST   -20.39% (quarter ended September 30, 2001)



For periods ended December 31, 2009:



                                                                     LIFETIME
                                                                    (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS INCEPTION)
------------------------------------------------------------------------------
Fund (inception date -- 4/30/97)            42.58%  6.97%    2.60%     9.28%
MSCI World Index (reflects no deduction
 for fees, expenses or taxes)               30.79   2.57     0.23      4.72
Lipper Global Funds Index (reflects no
 deduction for fees or taxes)               31.06   3.20     1.03      5.11



                                                                             ---
           GLOBAL GROWTH FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  5
                                                                             ---

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-------------------------------------------------------------------------------------------------------------

    ROBERT W. LOVELACE                 13 years              Senior Vice President - Capital World Investors
    Vice President
-------------------------------------------------------------------------------------------------------------
    STEVEN T. WATSON                   8 years               Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
    PAUL A. WHITE                      5 years               Senior Vice President - Capital World Investors




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



----
6   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL GROWTH FUND
----

<PAGE>

GLOBAL SMALL CAPITALIZATION FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
capital.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.72%
Other expenses.........................................................  0.04
Total annual fund operating expenses...................................  0.76



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $78    $243    $422     $942



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 55% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

Normally, the fund invests at least 80% of its net assets in growth-oriented
common stocks and other equity type securities (such as preferred stocks,
convertible preferred stocks and convertible bonds) of companies with small
market capitalizations, measured at the time of purchase. However, the fund's
holdings of small capitalization stocks may fall below the 80% threshold due to
subsequent market action. 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 re-evaluated and
adjusted this definition and may continue to do so in the future.

Under normal circumstances, the fund invests a significant portion of its
assets outside the United States. The fund may also invest a portion of its
assets in common stocks and other securities of companies in countries with
developing economies and/or markets. The fund expects to be invested in
numerous countries around the world.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.




                                                                                ---
GLOBAL SMALL CAPITALIZATION FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  7
                                                                                ---


<PAGE>


MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

GROWTH STOCK RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks.

SMALL CAPITALIZATION RISKS -- Investing in smaller companies may pose
additional risks as it is often more difficult to value or dispose of small
company stocks, more difficult to obtain information about smaller companies,
and the prices of their stocks may be more volatile than stocks of larger, more
established companies.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The fund
has selected the MSCI All Country World Small Cap Index to replace the S&P
Global (less than)$3 Billion Index as its broad-based securities market index.
The fund's investment adviser believes that the MSCI All Country World Small
Cap Index better reflects the market sectors and securities in which the fund
primarily invests than the S&P Global (less than)$3 Billion Index. The Lipper
Global Small-Cap Funds Average includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.


Calendar year total returns


                                    [CHART]

  2000    2001    2002   2003   2004    2005    2006   2007    2008    2009
------- ------- ------- ------ ------  ------  ------ ------ -------  ------
-16.33% -12.63% -18.83% 53.92% 21.13%  25.66%  24.35% 21.73% -53.39%  61.63%



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


HIGHEST   29.27% (quarter ended June 30, 2009)
LOWEST   -31.20% (quarter ended December 31, 2008)





----
8   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL SMALL CAPITALIZATION FUND
----


<PAGE>


For periods ended December 31, 2009:





                                                                              LIFETIME
                                                                             (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                         1 YEAR 5 YEARS 10 YEARS INCEPTION)
---------------------------------------------------------------------------------------

Fund (inception date -- 4/30/98)                     61.63%  7.46%    4.72%    10.24%
MSCI All Country World Small Cap Index
 (reflects no deduction for fees, expenses or
 taxes)                                              51.30   5.24     6.10      6.55
S&P Global (less than)$3 Billion Index (reflects no
 deduction for fees, expenses or taxes)              50.67   5.43     7.36      7.06
Lipper Global Small-Cap Funds Average
 (reflects no deduction for fees or taxes)           46.05   3.30     2.66      6.01




MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
  are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

      GORDON CRAWFORD                  12 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
      MARK E. DENNING                  12 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
      J. BLAIR FRANK                   7 years               Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
      HAROLD H. LA                     2 years               Senior Vice President - Capital Research Global Investors




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.




                                                                                ---
GLOBAL SMALL CAPITALIZATION FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  9
                                                                                ---


<PAGE>

GROWTH FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with growth of capital.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.33%
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.35



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $36    $113    $197     $443



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 37% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks and seeks to invest in companies
that appear to offer superior opportunities for growth of capital. The fund may
invest a portion of its assets in common stocks and other securities of issuers
domiciled outside the United States.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively
valued companies that, in its opinion, represent good, long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental analysis, which may include meeting with
company executives and employees, suppliers, customers and competitors.
Securities may be sold when the investment adviser believes that they no longer
represent relatively attractive investment opportunities.

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.



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

<PAGE>


GROWTH STOCK RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may also be affected by currency
controls; different accounting, auditing, financial reporting, and legal
standards and practices; 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.
Investments in securities issued by entities domiciled in the United States may
also be subject to many of these risks.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Capital Appreciation Funds Index and the Lipper Growth Funds Index include
mutual funds that disclose investment objectives that are reasonably comparable
to those of the fund. This information provides some indication of the risks of
investing in the fund. Past results are not predictive of future results.
Figures shown reflect fees and expenses associated with an investment in the
fund, but do not reflect insurance contract fees and expenses. If insurance
contract fees and expenses were included, results would have been lower.


Calendar year total returns


                                    [CHART]

 2000     2001    2002    2003    2004   2005   2006    2007    2008     2009
 ----     ----    ----    ----    ----   ----   ----    ----    ----    -----
 4.72%  -17.93%  -24.27% 37.15%  12.75% 16.50% 10.48%  12.64%  -43.83%  39.74%



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


HIGHEST   22.85% (quarter ended December 31, 2001)
LOWEST   -27.12% (quarter ended September 30, 2001)



For periods ended December 31, 2009:



                                                                     LIFETIME
                                                                    (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS INCEPTION)
------------------------------------------------------------------------------
Fund (inception date -- 2/8/84)             39.74%  2.62%    1.37%    12.41%
S&P 500 (reflects no deduction for fees,
 expenses or taxes)                         26.47   0.42    -0.95     10.63
Lipper Capital Appreciation Funds Index
 (reflects no deduction for fees or taxes)  37.36   3.05    -0.57      9.12
Lipper Growth Funds Index (reflects no
 deduction for fees or taxes)               35.91   0.02    -2.49      8.69



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

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-------------------------------------------------------------------------------------------------------------

  DONNALISA PARKS BARNUM                7 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  GREGG E. IRELAND                      4 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  GREGORY D. JOHNSON                    3 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  MICHAEL T. KERR                       5 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  RONALD B. MORROW                      7 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



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

<PAGE>

INTERNATIONAL FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
capital.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.50%
Other expenses.........................................................  0.04
Total annual fund operating expenses...................................  0.54



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $55    $173    $302     $677



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 46% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks of companies located outside the
United States that the investment adviser believes have the potential for
growth. The fund may invest a portion of its assets in common stocks and other
securities of companies in countries with developing economies and/or markets.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.



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

<PAGE>


GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


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


Calendar year total returns


                                    [CHART]

 2000    2001     2002    2003   2004   2005    2006    2007    2008   2009
 -----   -----    -----   -----  -----  -----   -----  ------  ------ -------
-21.85% -19.73%  -14.58% 35.12%  19.66% 21.75%  19.33% 20.30%  -42.01% 43.50%



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


HIGHEST   24.52% (quarter ended June 30, 2009)
LOWEST   -20.81% (quarter ended December 31, 2008)



For periods ended December 31, 2009:





                                                                        LIFETIME
                                                                       (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                   1 YEAR 5 YEARS 10 YEARS INCEPTION)
---------------------------------------------------------------------------------

Fund (inception date -- 5/1/90)                43.50%  7.78%    2.34%     9.20%
MSCI All Country World ex USA Index (reflects
 no deduction for fees, expenses or taxes)     42.14   6.30     3.12      6.47
Lipper International Funds Index (reflects no
 deduction for fees or taxes)                  35.30   4.88     1.95      6.70




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

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-----------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

  SUNG LEE                              4 years              Senior Vice President - Capital Research Global Investors
  Vice President
-----------------------------------------------------------------------------------------------------------------------
  JESPER LYCKEUS                        3 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
  CHRISTOPHER M. THOMSEN                4 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



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

<PAGE>

NEW WORLD FUND


INVESTMENT OBJECTIVE

The fund's investment objective is long-term capital appreciation.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.77%
Other expenses.........................................................  0.05
Total annual fund operating expenses...................................  0.82



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $84    $262    $455    $1,014



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 25% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks of companies with significant
exposure to countries with developing economies and/or markets and that the
investment adviser believes have potential of providing capital appreciation.
The fund may also invest in debt securities of issuers, including issuers of
lower rated bonds (rated Ba1 or below and BB+ or below by a nationally
recognized statistical rating organization or unrated but determined to be of
equivalent quality by the fund's investment adviser), with exposure to these
countries. Bonds rated Ba1 or BB+ or below are sometimes referred to as "junk
bonds."

Under normal market conditions, the fund invests at least 35% of its assets in
equity and debt securities of issuers primarily based in qualified countries
that have developing economies and/or markets.

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

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



----
16  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  NEW WORLD FUND
----

<PAGE>


The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure,
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

SMALL CAPITALIZATION RISKS -- Investing in smaller companies may pose
additional risks as it is often more difficult to value or dispose of small
company stocks, more difficult to obtain information about smaller companies
and the prices of their stocks may be more volatile than stocks of larger, more
established companies.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. There may be little trading in the secondary market for particular
debt securities, which may make them more difficult to value or sell.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.



                                                                             ---
               NEW WORLD FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  17
                                                                             ---

<PAGE>

INVESTMENT RESULTS


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


Calendar year total returns


                                    [CHART]

  2000     2001    2002    2003    2004   2005    2006   2007    2008    2009
  ----     ----    ----    ----    ----   ----    ----   ----    ----  ------
 -12.43%  -3.99%  -5.45%  39.56%  19.07% 21.10%  32.88% 32.53% -42.20% 49.95%



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


HIGHEST   24.00% (quarter ended June 30, 2009)
LOWEST   -22.22% (quarter ended December 31, 2008)



For periods ended December 31, 2009:



                                                                     LIFETIME
                                                                    (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS INCEPTION)
------------------------------------------------------------------------------
Fund (inception date -- 6/17/99)            49.95%  13.07%   9.34%    10.60%
MSCI All Country World Index (reflects no
 deduction for fees, expenses or taxes)     35.41    3.64    0.89      2.23
MSCI Emerging Markets Index (reflects no
 deduction for fees, expenses or taxes)     79.02   15.88   10.11     11.39



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

    CARL M. KAWAJA                     11 years              Senior Vice President - Capital World Investors
    Vice President
------------------------------------------------------------------------------------------------------------------------
    ROBERT W. LOVELACE                 11 years              Senior Vice President - Capital World Investors
    Vice President
------------------------------------------------------------------------------------------------------------------------
    DAVID C. BARCLAY                   11 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company




----
18  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  NEW WORLD FUND
----

<PAGE>


TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
               NEW WORLD FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  19
                                                                             ---

<PAGE>

BLUE CHIP INCOME AND GROWTH FUND


INVESTMENT OBJECTIVES

The fund's investment objectives are to produce income exceeding the average
yield on U.S. stocks generally and to provide an opportunity for growth of
principal consistent with sound common stock investing.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.43%
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.44



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $45    $141    $246     $555



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 22% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in dividend-paying common stocks of larger, more
established companies domiciled in the United States with market
capitalizations of $4 billion and above. In seeking to provide you with a level
of current income that exceeds the average yield on U.S. stocks, the fund
generally looks to the average yield on stocks of companies listed on the S&P
500. The fund also ordinarily invests at least 90% of its equity assets in the
stock of companies whose debt securities are rated at least investment grade.
The fund may invest up to 10% of its assets in equity securities of larger
companies domiciled outside the United States, so long as they are listed or
traded in the United States. The fund invests, under normal market conditions,
at least 90% of its assets in equity securities. The fund is designed for
investors seeking both income and capital appreciation.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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




----
20  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  BLUE CHIP INCOME AND GROWTH FUND
----


<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of, and the income generated by, the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in the
United States may also be subject to many of these risks.

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, purchased by the fund may involve large price swings and
potential for loss.

INCOME STOCKS RISKS -- Income provided by the fund may be affected by changes
in the dividend policies of the companies in which the fund invests and the
capital resources available for such payments at such companies.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Growth & Income Funds Index includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.


  Calendar year total returns.


                                      [CHART]

     2002      2003     2004      2005      2006      2007      2008      2009
     ----      ----     ----      ----      ----      -----     -----    -----
    -22.93%    31.24%   9.94%     7.57%     17.73%    2.25%    -36.30%   28.18%



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

HIGHEST   17.18% (quarter ended June 30, 2003)
LOWEST   -21.19% (quarter ended December 31, 2008)



                                                                                ---
BLUE CHIP INCOME AND GROWTH FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  21
                                                                                ---


<PAGE>


For periods ended December 31, 2009:





                                                                                       LIFETIME
                                                                                      (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                                           1 YEAR 5 YEARS INCEPTION)
------------------------------------------------------------------------------------------------

Fund (inception date -- 7/5/01)                                        28.18%  1.12%     1.28%
S&P 500 (reflects no deduction for fees, expenses or taxes)            26.47   0.42      0.87
Lipper Growth & Income Funds Index (reflects no deduction for fees or
 taxes)                                                                29.10   0.75      1.76




MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-----------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

JAMES K. DUNTON                         9 years              Senior Vice President - Capital Research Global Investors
Vice Chairman of the Board
-----------------------------------------------------------------------------------------------------------------------
C. ROSS SAPPENFIELD                     9 years              Senior Vice President - Capital Research Global Investors
Senior Vice President
-----------------------------------------------------------------------------------------------------------------------
CHRISTOPHER D. BUCHBINDER               3 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
JAMES B. LOVELACE                       3 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.






----
22  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  BLUE CHIP INCOME AND GROWTH FUND
----


<PAGE>

GLOBAL GROWTH AND INCOME FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
capital while providing current income.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.60%
Other expenses.........................................................  0.03
Total annual fund operating expenses...................................  0.63



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $64    $202    $351     $786



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 47% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks of well-established companies
located around the world, many of which the investment adviser believes have
the potential for growth and/or to pay dividends. Under normal market
circumstances, the fund invests a significant portion of its assets in
securities of issuers domiciled outside the United States, including in issuers
in countries with developing economies and/or markets. The fund expects to be
invested in numerous countries around the world.

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

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.



                                                                             ---
GLOBAL GROWTH AND INCOME FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  23
                                                                             ---

<PAGE>


MARKET RISKS -- The prices of, and the income generated by, the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, purchased by the fund may involve large price swings and
potential for loss.

INCOME STOCKS RISKS -- Income provided by the fund may be affected by changes
in the dividend policies of the companies in which the fund invests and the
capital resources available for such payments at such companies.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The fund
has selected the MSCI World Index to replace the MSCI All Country World Index
as its broad-based securities market index. The fund's investment adviser
believes that the MSCI World Index better reflects the market sectors and
securities in which the fund primarily invests than the MSCI All Country World
Index. The Lipper Global Funds Index includes mutual funds that disclose
investment objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.


Calendar year total returns


                                    [CHART]

                                 2007    2008      2009
                                 ----    -----   ------
                                13.04%  -41.06%  40.11%



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




HIGHEST   19.43% (quarter ended September 30, 2009)
LOWEST   -20.37% (quarter ended December 31, 2008)




----
24  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL GROWTH AND INCOME FUND
----

<PAGE>


For periods ended December 31, 2009:





                                                                                          LIFETIME
                                                                                         (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                                                      1 YEAR INCEPTION)
---------------------------------------------------------------------------------------------------

Fund (inception date -- 5/1/06)                                                   40.11%    0.84%
MSCI World Index (reflects no deduction for fees, expenses or taxes)              30.79    -1.77
MSCI All Country World Index (reflects no deduction for fees, expenses or taxes)  35.41    -0.87
Lipper Global Funds Index (reflects no deduction for fees or taxes)               31.06    -1.34




MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-------------------------------------------------------------------------------------------------------------

     GREGG E. IRELAND                   4 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
     ANDREW B. SUZMAN                   1 year               Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
     STEVEN T. WATSON                   4 years              Senior Vice President - Capital World Investors




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
GLOBAL GROWTH AND INCOME FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  25
                                                                             ---
<PAGE>

GROWTH-INCOME FUND


INVESTMENT OBJECTIVE

The fund's investment objectives are to achieve long-term growth of capital and
income.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.28%
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.29



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $30     $93    $163     $368



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 24% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks or other securities that
demonstrate the potential for appreciation and/or dividends. Although the fund
focuses on investments in medium to larger capitalization companies, the fund's
investments are not limited to a particular capitalization size. The fund may
invest up to 15% of its assets, at the time of purchase, in securities of
issuers domiciled outside the United States. The fund is designed for investors
seeking both capital appreciation and income.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of, and the income generated by, common stocks and
other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.



----
26  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GROWTH-INCOME FUND
----

<PAGE>


RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent and may also be affected by currency fluctuation and
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices in some countries; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, purchased by the fund may involve large price swings and
potential for loss.

INCOME STOCKS RISKS -- Income provided by the fund may be affected by changes
in the dividend policies of the companies in which the fund invests and the
capital resources available for such payments at such companies.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Growth & Income Funds Index includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.


Calendar year total returns


                                    [CHART]

 2000   2001     2002    2003    2004   2005    2006   2007    2008     2009
 ----   ----     ----    ----    ----   ----    ----   ----    ----    -----
 8.24%  2.78%   -18.15%  32.76% 10.66%  6.08%  15.51%  5.32%  -37.68%  31.54%



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

HIGHEST   16.97% (quarter ended June 30, 2003)
LOWEST   -21.91% (quarter ended December 31, 2008)


For periods ended December 31, 2009:





                                                                       LIFETIME
                                                                      (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                  1 YEAR 5 YEARS 10 YEARS INCEPTION)
--------------------------------------------------------------------------------

Fund (inception date -- 2/8/84)               31.54%  1.13     3.54%    10.94%
S&P 500 (reflects no deduction for fees,
 expenses or taxes)                           26.47   0.42    -0.95     10.63
Lipper Growth & Income Funds Index (reflects
 no deduction for fees or taxes)              29.10   0.75     1.20      9.45






                                                                             ---
           GROWTH-INCOME FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  27
                                                                             ---

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-----------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

JAMES K. DUNTON                        26 years              Senior Vice President - Capital Research Global Investors
Vice Chairman of the Board
-----------------------------------------------------------------------------------------------------------------------
DONALD D. O'NEAL                       5 years               Senior Vice President - Capital Research Global Investors
President and Trustee
-----------------------------------------------------------------------------------------------------------------------
C. ROSS SAPPENFIELD                    11 years              Senior Vice President - Capital Research Global Investors
Senior Vice President
-----------------------------------------------------------------------------------------------------------------------
J. BLAIR FRANK                         4 years               Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
CLAUDIA P. HUNTINGTON                  16 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
DYLAN J. YOLLES                        5 years               Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



----
28  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GROWTH-INCOME FUND
----

<PAGE>

INTERNATIONAL GROWTH AND INCOME FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
  capital while providing current income.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.69%
Other expenses.........................................................  0.05
Total annual fund operating expenses...................................  0.74



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $76    $237    $411     $918



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 21% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in stocks of larger, well-established companies
domiciled outside of the United States, including countries with developing
economies and/or markets, that the investment adviser believes have the
potential for growth and/or to pay dividends. 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. The fund therefore expects to be invested in
numerous countries outside the United States.

The fund is designed for investors seeking both capital appreciation and
income. In pursuing its objective, the fund focuses on stocks of companies with
strong earnings that pay dividends. We believe that these stocks will be more
resistant to market declines than stocks of companies that do not pay dividends.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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




                                                                                    ---
INTERNATIONAL GROWTH AND INCOME FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  29
                                                                                    ---

<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of and the income generated by the common stocks and
other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency and interest rate fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside of the United States may also be affected by 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, purchased by the fund may involve large price swings and
potential for loss.

INCOME STOCKS RISKS -- Income provided by the fund may be affected by changes
in the dividend policies of the companies in which the fund invests and the
capital resources available for such payments at such companies.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

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


Calendar year total returns.


                                    [CHART]

  2009
 ------
 40.38%


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



HIGHEST  22.63% (quarter ended June 30, 2009)
LOWEST   -7.33% (quarter ended March 31, 2009)




----
30  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  INTERNATIONAL GROWTH AND INCOME FUND
----


<PAGE>


For periods ended December 31, 2009:



                                                                     LIFETIME
                                                                    (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                                 1 YEAR INCEPTION)
------------------------------------------------------------------------------
Fund (inception date -- 11/18/08)                            40.38%   46.64%
MSCI World ex USA Index (reflects no deduction for fees,
 expenses or taxes)                                          34.39    40.17
Lipper International Funds Index (reflects no deduction for
 fees or taxes)                                              35.30    43.14



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





--------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
--------------------------------------------------------------------------------------------------------------------

      SUNG LEE                          2 years              Senior Vice President - Capital Research Global
      Vice President                                         Investors
--------------------------------------------------------------------------------------------------------------------
      JESPER LYCKEUS                    2 years              Senior Vice President - Capital Research Global
                                                             Investors
--------------------------------------------------------------------------------------------------------------------
      DAVID M. RILEY                    2 years              Senior Vice President - Capital Research Global
                                                             Investors
--------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.




                                                                                    ---
INTERNATIONAL GROWTH AND INCOME FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  31
                                                                                    ---


<PAGE>

ASSET ALLOCATION FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with high total return
(including income and capital gains) consistent with preservation of capital
over the long term.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.31%
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.32



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $33    $103    $180     $406



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 41% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

In seeking to pursue its investment objective, the fund varies its mix of
equity securities, debt securities and money market instruments. Under normal
market conditions, the fund's investment adviser expects (but is not required)
to maintain an investment mix falling within the following ranges: 40%-80% in
equity securities, 20%-50% in debt securities and 0%-40% in money market
instruments. As of December 31, 2009, the fund was approximately 70% invested
in equity securities, 23% invested in debt securities and 7% invested in money
market instruments. The proportion of equities, debt and money market
securities held by the fund varies with market conditions and the investment
adviser's assessment of their relative attractiveness as investment
opportunities.

The fund invests in a diversified portfolio of common stocks and other equity
securities, bonds and other intermediate and long-term debt securities, and
money market instruments (debt securities maturing in one year or less). The
fund may invest up to 15% of its assets in common stocks and other equity
securities of issuers domiciled outside the United States and up to 5% of its
assets in debt securities of issuers domiciled outside the United States. In
addition, the fund may invest up to 25% of its debt assets in lower quality
debt securities (rated Ba1 or below by Moody's Investors Service and BB+ or
below by Standard & Poor's Corporation or unrated but determined to be of
equivalent quality). Such securities are sometimes referred to as "junk bonds."

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.



----
32  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  ASSET ALLOCATION FUND
----

<PAGE>


MARKET RISKS -- The prices of, and the income generated by, the common stocks,
bonds and other securities held by the fund may decline in response to certain
events taking place around the world, including those directly involving the
issuers whose securities are owned by the fund; conditions affecting the
general economy; overall market changes; local, regional or global political,
social or economic instability; governmental or governmental agency responses
to economic conditions; and currency, interest rate and commodity price
fluctuations.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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. A security backed by the U.S. Treasury
or the full faith and credit of the U.S. government is guaranteed only as to
the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. There may be little trading in the secondary market for particular
debt securities, which may make them more difficult to value or sell.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
fluctuations and controls; different accounting, auditing, financial reporting,
disclosure, regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

ASSET ALLOCATION RISK -- The fund's percentage allocation to equity securities,
debt securities and money market instruments could cause the fund to
underperform relative to relevant benchmarks and other funds with similar
investment objectives.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The
Citigroup Broad Investment-Grade (BIG) Bond Index reflect market sectors and
securities in which the fund primarily invests. This information provides some
indication of the risks of investing in the fund. Past results are not
predictive of future results. Figures shown reflect fees and expenses
associated with an investment in the fund, but do not reflect insurance
contract fees and expenses. If insurance contract fees and expenses were
included, results would have been lower.


Calendar year total returns


                                    [CHART]

 2000    2001    2002    2003    2004    2005    2006    2007    2008    2009
------  ------  ------  ------  ------  ------  ------  ------  ------  ------
 4.62%   0.77% -12.19%  22.14%   8.50%   9.45%  14.96%   6.82% -29.30%  24.27%




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

HIGHEST   12.24% (quarter ended June 30, 2003)
LOWEST   -16.30% (quarter ended December 31, 2008)


                                                                             ---
        ASSET ALLOCATION FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  33
                                                                             ---

<PAGE>


For periods ended December 31, 2009:



                                                                     LIFETIME
                                                                    (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS INCEPTION)
------------------------------------------------------------------------------
Fund (inception date -- 8/1/89)             24.27%  3.38%    3.78%     7.88%
S&P 500 (reflects no deduction for fees,
 expenses or taxes)                         26.47   0.42    -0.95      8.25
Barclays Capital U.S. Aggregate Index
 (reflects no deduction for fees, expenses
 or taxes)                                   5.93   4.97     6.33      6.98
Citigroup Broad Investment-Grade (BIG)
 Bond Index (reflects no deduction for
 fees, expenses or taxes)                    5.06   5.22     6.47      7.09



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

   ALAN N. BERRO                       10 years              Senior Vice President - Capital World Investors
   Senior Vice President
------------------------------------------------------------------------------------------------------------------------
   JEFFREY T. LAGER                    3 years               Senior Vice President - Capital World Investors
------------------------------------------------------------------------------------------------------------------------
   JAMES R. MULALLY                    4 years               Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
   EUGENE P. STEIN                     2 years               Senior Vice President - Capital World Investors
------------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



----
34  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  ASSET ALLOCATION FUND
----

<PAGE>

BOND FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide as high a level of current income
as is consistent with the preservation of capital.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.38%
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.39



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $40    $125    $219     $493



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 125% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund seeks to maximize your level of current income and preserve your
capital by investing primarily in bonds. Normally, the fund invests at least
80% of its assets in bonds and other debt securities. The fund invests at least
65% of its assets in investment-grade debt securities (including cash and cash
equivalents), including securities issued and guaranteed by the U.S. and other
governments, and securities backed by mortgage and other assets. The fund may
invest up to 35% of its assets in debt securities rated Ba1 or below by Moody's
Investors Service and BB+ or below by Standard & Poor's Corporation or unrated
but determined by the fund's investment adviser to be of equivalent quality.
Such securities are sometimes referred to as "junk bonds." The fund may invest
in debt securities of issuers domiciled outside the United States. The fund may
also invest up to 20% of its assets in preferred stocks, including convertible
and nonconvertible preferred stocks. The fund is designed for investors seeking
income and more price stability than stocks, and capital preservation over the
long term.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively
priced securities that, in its opinion, represent above-average, long-term
investment opportunities. The investment adviser believes that an important way
to accomplish this is through fundamental research, which may include analysis
of credit quality, general economic conditions and various quantitative
measures and, in the case of corporate obligations, meeting with company
executives and employees, suppliers, customers and competitors. Securities may
be sold when the investment adviser believes that they no longer represent
relatively attractive investment opportunities.

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

MARKET RISKS -- The prices of, and the income generated by, the bonds and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.



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

<PAGE>


INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. There may be little trading in the secondary market for particular
debt securities, which may make them more difficult to value or sell.

PREPAYMENT RISKS RELATED TO ASSET-BACKED SECURITIES -- Many types of debt
securities, including mortgage-related securities, are subject to pre-payment
risk. For example, when interest rates fall, homeowners are more likely to
refinance their home mortgages and "prepay" their principal earlier than
expected. The fund must then reinvest the prepaid principal in new securities
when interest rates on new mortgage investments are falling, thus reducing the
fund's income. Conversely, if interest rates increase, homeowners may not make
prepayments to the extent expected, resulting in an extension of the term of
the security backed by such mortgages.

SECURITIES BACKED BY THE U.S. TREASURY -- A security backed by the U.S.
Treasury or the full faith and credit of the U.S. government is guaranteed only
as to the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates. The fund may also invest in debt securities and
mortgage-backed securities issued by federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government. These
securities are neither issued nor guaranteed by the U.S. Treasury.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
fluctuations and controls; different accounting, auditing, financial reporting,
disclosure, regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. Lipper
Corporate Debt A-Rated Bond Funds Average includes mutual funds that disclose
investment objectives reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.


  Calendar year total returns.


                                      [CHART]

  2000   2001   2002    2003   2004   2005   2006   2007    2008    2009
  ----   ----   ----    ----   ----   ----   ----   ----    ----    ----
  5.22%  8.48%  4.26%  13.07%  6.04%  1.77%  7.31%  3.66%  -9.16%  12.83%





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


                (quarter ended June 30,
HIGHEST   6.05% 2009)
LOWEST   -5.47% (quarter ended September 30, 2008)



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

<PAGE>


For periods ended December 31, 2009:



                                                                     LIFETIME
                                                                    (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS INCEPTION)
------------------------------------------------------------------------------
Fund (inception date -- 1/2/96)             12.83%  3.02%    5.17%     5.34%
Barclays Capital U.S. Aggregate Index
 (reflects no deduction for fees, expenses
 or taxes)                                   5.93   4.97     6.33      6.01
Lipper Corporate Debt A-Rated Bond Funds
 Average (reflects no deduction for fees
 or taxes)                                  15.18   3.52     5.48      5.21



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





------------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

     DAVID C. BARCLAY                  12 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
     MARK H. DALZELL                   5 years               Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
     DAVID A. HOAG                     3 years               Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
     THOMAS H. HOGH                    3 years               Senior Vice President - Fixed Income, Capital Research
                                                             Company
------------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



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

<PAGE>

GLOBAL BOND FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you, over the long term, with a
high level of total return consistent with prudent investment management.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.56%
Other expenses.........................................................  0.03
Total annual fund operating expenses...................................  0.59



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $60    $189    $329     $738



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 86% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

Under normal market circumstances, the fund invests at least 80% of its assets
in bonds. The fund invests primarily in debt securities of governmental,
supranational and corporate issuers denominated in various currencies,
including U.S. dollars. The fund may invest substantially in securities of
issuers domiciled outside the United States, including issuers domiciled in
developing countries. Normally, the fund's debt obligations consist
substantially of investment-grade bonds (rated Baa3 or better or BBB- or better
by a nationally recognized statistical rating organization or unrated but
determined to be of equivalent quality by the fund's investment adviser). The
fund may also invest a portion of its assets in lower quality, higher yielding
debt securities (rated Ba1 or below and BB+ or below by a nationally recognized
statistical rating organization or unrated but determined to be of equivalent
quality by the fund's investment adviser). Such securities are sometimes
referred to as "junk bonds." The total return of the fund will be the result of
interest income, changes in the market value of the fund's investments and
changes in the values of other currencies relative to the U.S. dollar.

The fund is non-diversified, which allows it to invest a greater percentage of
its assets in any one issuer than would otherwise be the case. However, the
fund intends to limit its investments in the securities of any single issuer.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively
valued securities that, in its opinion, represent above-average, long-term
investment opportunities. The investment adviser believes that an important way
to accomplish this is through fundamental analysis, which may include meeting
with government officials, central banks and company executives. Securities may
be sold when the investment adviser believes that they no longer represent
relatively attractive investment opportunities.



----
38  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL BOND FUND
----

<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

MARKET RISKS -- The prices of, and the income generated by, the bonds and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. There may be little trading in the secondary market for particular
debt securities, which may make them more difficult to value or sell.

CURRENCY RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may also be affected by changes in relative
currency values. If the U.S. dollar appreciates against foreign currencies, the
value in U.S. dollars of the fund's securities denominated in such currencies
would generally fall and vice versa. U.S. dollar-denominated securities of
foreign issuers may also be affected by changes in relative currency values.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

NON-DIVERSIFICATION RISKS -- As a non-diversified fund, the fund has the
ability to invest a larger percentage of its assets in the securities of a
smaller number of issuers than a diversified fund. Although the fund does not
intend to limit its investments to the securities of a small number of issuers,
if it were to do so, poor performance by a single large holding would adversely
impact the fund's investment results more than if the fund were invested in a
larger number of issuers.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Global Income Funds Average includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.



                                                                             ---
             GLOBAL BOND FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  39
                                                                             ---

<PAGE>



Calendar year total returns


                                    [CHART]

                             2007     2008      2009
                            ------   ------   ------
                             9.54%    3.60%   10.04%




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


HIGHEST   7.22% (quarter ended September 30, 2009)
LOWEST   -4.19% (quarter ended September 30, 2008)



For periods ended December 31, 2009:





                                                                                                     LIFETIME
                                                                                                    (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                                                                 1 YEAR INCEPTION)
--------------------------------------------------------------------------------------------------------------

Fund (inception date -- 10/4/06)                                                             10.04%    7.92%
Barclays Capital Global Aggregate Index (reflects no deduction for fees, expenses or taxes)   6.93     7.10
Lipper Global Income Funds Average (reflects no deduction for fees or taxes)                 15.23     5.57




MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





------------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

     MARK H. DALZELL                    4 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
     THOMAS H. HOGH                     4 years              Senior Vice President - Fixed Income, Capital Research
                                                             Company
------------------------------------------------------------------------------------------------------------------------
     JAMES R. MULALLY                   2 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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



----
40  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL BOND FUND
----

<PAGE>


PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
             GLOBAL BOND FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  41
                                                                             ---

<PAGE>

HIGH-INCOME BOND FUND


INVESTMENT OBJECTIVE

The fund's primary investment objective is to provide you with a high level of
current income. Its secondary investment objective is capital appreciation.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.47%
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.48



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $49    $154    $269     $604



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 47% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in higher yielding and generally lower quality debt
securities (rated Ba1 or below or BB+ or below by a nationally recognized
statistical rating organization or unrated but determined by the fund's
investment adviser to be of equivalent quality), including corporate loan
obligations. Such securities are sometimes referred to as "junk bonds." The
fund may also invest a portion of its assets in securities of issuers domiciled
outside the United States.

The fund is designed for investors seeking a high level of current income and
who are able to tolerate greater credit risk and price fluctuations than those
that exist in funds investing in higher quality debt securities.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may



----
42  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  HIGH-INCOME BOND FUND
----

<PAGE>


fluctuate more than higher quality securities and may decline significantly in
periods of general economic difficulty. There may be little trading in the
secondary market for particular debt securities, which may make them more
difficult to value or sell.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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.

MARKET RISKS -- The prices of, and the income generated by, the bonds and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The fund
has selected the Barclays Capital U.S. Corporate High Yield Index 2% Issuer Cap
to replace the Credit Suisse High Yield Index as its broad-based securities
market index. The fund's investment adviser believes that the Barclays Capital
U.S. Corporate High Yield Index 2% Issuer Cap better reflects the market
sectors and securities in which the fund primarily invests than the Credit
Suisse High Yield Index. The Citigroup Broad Investment-Grade (BIG) Bond Index
reflects the market sectors and securities in which the fund primarily invests
and the Lipper High Current Yield Funds Index includes mutual funds that
disclose investment objectives that are reasonably comparable to those of the
fund. This information provides some indication of the risks of investing in
the fund. Past results are not predictive of future results. Figures shown
reflect fees and expenses associated with an investment in the fund, but do not
reflect insurance contract fees and expenses. If insurance contract fees and
expenses were included, results would have been lower.


Calendar year total returns


                                    [CHART]

 2000    2001   2002    2003    2004    2005    2006    2007   2008    2009
------  -----  ------  ------  ------  ------  ------  -----  ------  ------
-3.06%  8.02%  -1.51%  29.79%   9.83%   2.46%  10.89%  1.62% -23.74%  39.45%




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


HIGHEST   16.06% (quarter ended June 30, 2009)
LOWEST   -16.06% (quarter ended December 31, 2008)



                                                                             ---
        HIGH-INCOME BOND FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  43
                                                                             ---

<PAGE>


For periods ended December 31, 2009:





                                                                                                LIFETIME
                                                                                               (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                                           1 YEAR 5 YEARS 10 YEARS INCEPTION)
---------------------------------------------------------------------------------------------------------

Fund (inception date -- 2/8/84)                                        39.45%  4.19%    6.08%     9.51%
Barclays Capital U.S. Corporate High Yield Index 2% Issuer Cap
 (reflects no deduction for fees, expenses or taxes)                   58.76   6.49     6.87       N/A
Credit Suisse High Yield Index (reflects no deduction for fees,
 expenses or taxes)                                                    54.22   5.99     7.07       N/A
Citigroup Broad Investment-Grade (BIG) Bond Index (reflects no
 deduction for fees, expenses or taxes)                                 5.06   5.22     6.47      8.35
Lipper High Current Yield Funds Index (reflects no deduction for fees
 or taxes)                                                             49.49   4.27     4.13      7.48




MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

   ABNER D. GOLDSTINE                  12 years              Senior Vice President - Fixed Income, Capital Research and
   Senior Vice President                                     Management Company
------------------------------------------------------------------------------------------------------------------------
   DAVID C. BARCLAY                    17 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
   DAVID A. DAIGLE                      1 year               Senior Vice President - Fixed Income, Capital Research
                                                             Company
------------------------------------------------------------------------------------------------------------------------
   MARCUS B. LINDEN                    3 years               Senior Vice President - Fixed Income, Capital Research
                                                             Company




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



----
44  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  HIGH-INCOME BOND FUND
----

<PAGE>

U.S. GOVERNMENT/AAA-RATED SECURITIES FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide a high level of current income
consistent with preservation of capital.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.39%
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.41



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $42    $132    $230     $518



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 100% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

Normally, the fund invests at least 80% of its assets in securities that are
guaranteed or sponsored by the U.S. government or debt securities that are
rated Aaa by Moody's Investors Service or AAA by Standard & Poor's Corporation
or unrated but determined to be of equivalent quality by the fund's investment
adviser. The fund is designed for investors seeking income and more price
stability than from investing in stocks and lower quality debt securities, and
capital preservation over the long term.

The fund may also invest a significant portion of its assets in mortgage-backed
securities. Certain of these securities may not be backed by the full faith and
credit of the U.S. government and are supported only by the credit of the
issuer.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively
valued securities that, in its opinion, represent above-average, long-term
investment opportunities. The investment adviser believes that an important way
to accomplish this is by analyzing various factors, which may include the
credit strength of the issuer, prices of similar securities issued by
comparable issuers and anticipated changes in interest rates, general market
conditions and other factors pertinent to the particular security being
evaluated. Securities may be sold when the investment adviser believes that
they no longer represent relatively attractive investment opportunities.






                                                                                         ---
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  45
                                                                                         ---


<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

INTEREST RATE RISKS -- While the fund invests primarily in securities that are
guaranteed or sponsored by the U.S. government, these securities are subject to
interest rate and prepayment risks. The prices of, and the income generated by,
most debt securities held by the fund may be affected by changing interest
rates and by changes in the effective maturities and credit ratings of these
securities. For example, the prices of debt securities in the fund's portfolio
generally will decline when interest rates rise and increase when interest
rates fall. In addition, falling interest rates may cause an issuer to redeem,
"call" or refinance a security before its stated maturity, which may result in
the fund having to reinvest the proceeds in lower yielding securities. Longer
maturity debt securities generally have higher rates of interest and may be
subject to greater price fluctuations than shorter maturity debt securities.

SECURITIES BACKED BY THE U.S. TREASURY -- A security backed by the U.S.
Treasury or the full faith and credit of the U.S. government is guaranteed only
as to the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates. The fund may also invest in debt securities and
mortgage-backed securities issued by federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government. These
securities are neither issued nor guaranteed by the U.S. Treasury.

PREPAYMENT RISKS RELATED TO ASSET-BACKED SECURITIES -- Many types of debt
securities, including mortgage-related securities, are subject to prepayment
risk. For example, when interest rates fall, homeowners are more likely to
refinance their home mortgages and "prepay" their principal earlier than
expected. The fund must then reinvest the prepaid principal in new securities
when interest rates on new mortgage investments are falling, thus reducing the
fund's income. Conversely, if interest rates increase, homeowners may not make
prepayments to the extent expected, resulting in an extension of the term of
the security backed by such mortgages.

CREDIT RISKS -- 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.

MARKET RISKS -- The prices of, and the income generated by, the bonds and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

It is important to note that neither your investment in the fund nor the fund's
yield is guaranteed by the U.S. government. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.


INVESTMENT RESULTS


The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
General U.S. Government Funds Average includes mutual funds that disclose
investment objectives that are reasonably comparable to those of the fund. The
Consumer Price Index provides a comparison of the fund's results to inflation.
This information provides some indication of the risks of investing in the
fund. Past results are not predictive of future results. Figures shown reflect
fees and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.

Calendar year total returns


                                      [CHART]

   2000    2001    2002    2003    2004    2005    2006    2007    2008    2009
  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------
  11.69%   7.24%   9.45%   2.51%   3.58%   2.70%   3.95%   6.83%   7.84%   2.79%




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

HIGHEST   5.23% (quarter ended December 31, 2008)
LOWEST   -1.76% (quarter ended June 30, 2004)



----
46  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
----


<PAGE>


For periods ended December 31, 2009:





                                                                                 LIFETIME
                                                                                (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                            1 YEAR 5 YEARS 10 YEARS INCEPTION)
------------------------------------------------------------------------------------------

Fund (inception date -- 12/1/85)                         2.79%  4.80%    5.82%     6.87%
Citigroup Treasury/Govt. Sponsored/Mortgage Index
 (reflects no deduction for fees, expenses or taxes)     1.63   5.35     6.35      7.57
Lipper General U.S. Government Funds Average (reflects
 no deduction for fees or taxes)                         1.25   3.82     5.28      6.30
CPI                                                      2.72   2.56     2.52      2.88




MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
  are:





----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
----------------------------------------------------------------------------------------------------------------------------

   JOHN H. SMET                        18 years              Senior Vice President - Fixed Income, Capital Research and
   Senior Vice President                                     Management Company
----------------------------------------------------------------------------------------------------------------------------
   THOMAS H. HOGH                      13 years              Senior Vice President - Fixed Income, Capital Research Company
----------------------------------------------------------------------------------------------------------------------------
   FERGUS N. MACDONALD             Less than 1 year          Vice President - Fixed Income, Capital Research Company
----------------------------------------------------------------------------------------------------------------------------

   WESLEY K.-S. PHOA               Less than 1 year          Senior Vice President - Fixed Income, Capital Research Company
----------------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.




                                                                                         ---
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  47
                                                                                         ---


<PAGE>

CASH MANAGEMENT FUND


INVESTMENT OBJECTIVE

The investment objective of the fund is to provide you with a way to earn
income on your cash reserves while preserving capital and maintaining liquidity.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 1
-------------------------------------------------------------------------------
Management fee.........................................................  0.32%
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.33



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 1                                          $34    $106    $185     $418



PRINCIPAL INVESTMENT STRATEGIES

Normally, the fund invests substantially in high-quality money market
instruments such as commercial paper, commercial bank obligations, savings
association obligations, U.S. or Canadian government securities, and short-term
corporate bonds and notes. These securities may have credit and liquidity
support features, including guarantees and letters of credit.

The fund may invest in securities issued by entities domiciled outside the
United States and securities with credit and liquidity support features
provided by entities domiciled outside of the United States. The fund may also
invest in securities of U.S. issuers with substantial operations outside the
United States.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to provide current income while
preserving capital and maintaining liquidity. The investment adviser believes
that an important way to accomplish this is by analyzing various factors,
including the credit strength of the issuer, prices of similar securities
issued by comparable issuers, current and anticipated changes in interest
rates, general market conditions and other factors pertinent to the particular
security being evaluated.

PRINCIPAL RISKS

THE FUND IS NOT MANAGED TO MAINTAIN A STABLE ASSET VALUE OF $1.00 PER SHARE AND
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.

INTEREST RATE RISKS -- The value and liquidity of the securities held by the
fund may be affected by changing interest rates and by changes in credit
ratings of the securities. For example, the values of these securities may
decline when interest rates rise and increase when interest rates fall.

CREDIT AND LIQUIDITY SUPPORT RISKS -- Some of the securities held by the fund
may have credit and liquidity support features. Changes in the credit quality
of the issuer or provider of these support features could cause the fund to
experience a loss and may affect its share price.

MARKET RISKS -- Additionally, the securities held by the fund may be affected
by certain events taking place around the world, including those directly
involving the issuers whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; governmental or governmental
agency responses to economic conditions; and currency, interest rate and
commodity price fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices;



----
48  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  CASH MANAGEMENT FUND
----

<PAGE>


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.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


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


Calendar year total returns


                                    [CHART]

  2000    2001    2002    2003    2004    2005    2006    2007    2008    2009
 ------  ------  ------  ------  ------  ------  ------  ------  ------  ------
  6.04%   3.66%   1.24%   0.67%   0.96%   2.97%   4.81%   4.95%   2.15%  -0.10%




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


HIGHEST   1.57% (quarter ended December 31, 2000)
LOWEST   -0.09% (quarter ended December 31, 2009)



For periods ended December 31, 2009:



AVERAGE ANNUAL TOTAL RETURNS     1 YEAR 5 YEARS 10 YEARS LIFETIME
-----------------------------------------------------------------
Fund (inception date -- 2/8/84)  -0.10%  2.94%    2.72%    4.62%



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
         CASH MANAGEMENT FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  49
                                                                             ---

<PAGE>


INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

GLOBAL DISCOVERY FUND

The investment objective of the fund is long-term growth of capital. Current
income is a secondary consideration.

The fund is designed for investors seeking capital appreciation through
investments in stocks of issuers based around the world. Investors in the fund
should have a long-term perspective and, for example, be able to tolerate
potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

NEW ECONOMY -- The fund seeks to achieve its objective by investing in
securities of companies that can benefit from innovation, exploit new
technologies or provide products and services that meet the demands of an
evolving global economy. In implementing this strategy, the fund may invest in
any company, provided that the investment adviser determines that the company
could participate and thrive in the new economy. As it is inherently difficult
to articulate a precise formula for what constitutes the new economy at any
given time, the investment adviser's definition of what constitutes the new
economy may change over time.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
common stocks that the investment adviser believes have the potential for
growth. The fund also invests in common stocks with the potential to pay
dividends.

The prices of the common stocks and other securities held by the fund may
decline in response to certain events taking place around the world, including
those directly involving the issuers whose securities are owned by the fund;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations. The growth-oriented common stocks and
other equity-type securities, such as preferred stocks, convertible preferred
stocks and convertible bonds, generally purchased by the fund may involve large
price swings and potential for loss, particularly in the case of smaller
capitalization stocks. The fund may be subject to additional risks because it
invests in a more limited group of sectors and industries than the broad market.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest a significant
portion of its assets in securities of issuers domiciled outside the United
States. Investments in securities issued by entities based outside the United
States may be subject to the risks described above to a greater extent. These
investments may also be affected by currency controls; different accounting,
auditing, financial reporting, disclosure, and regulatory and legal standards
and practices; 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. These risks may be
heightened in connection with investments in developing countries. Investments
in securities issued by entities domiciled in the United States may also be
subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
likely to impose capital controls, nationalize a company or industry, place
restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Standard & Poor's 500 Composite Index is a market
capitalization-weighted index based on the average weighted performance of 500
widely held common stocks. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes. Lipper Multi-Cap Growth Funds
Index is an equally weighted index of funds that invest in a variety of market
capitalization ranges without concentrating 75% of their equity assets in any
one market capitalization range over an extended period of time. Multi-cap
growth funds typically have an above-average price-to-earnings ratio,
price-to-book ratio, and three-year sales-per-share growth value, compared to
the S&P SuperComposite 1500 Index (a broad-based index representing the
large-cap, mid-cap and small-cap segments of the U.S. equity market). The
results of the underlying funds in the index include the reinvestment of
dividends and capital gain distributions, as well as brokerage commissions paid
by the funds for portfolio transactions and other fund expenses, but do not
reflect the effect of sales charges or taxes. Global Service and Information
Index is a subset of the unmanaged MSCI World Index, which is a free
float-adjusted market capitalization-weighted index that measures the returns
of companies in more than 20 developed countries. This subset is 70%
U.S.-weighted and consists



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

<PAGE>


specifically of companies in the service and information industries that
together represent approximately 60% of the MSCI World Index. The index is
compiled by the fund's investment adviser, Capital Research and Management
Company, is unmanaged and its results include reinvested dividends and/or
distributions, but do not reflect the effect of sales charges, commissions,
expenses or taxes.

GLOBAL GROWTH FUND

The fund's investment objective is to provide you with long-term growth of
capital.

The fund is designed for investors seeking capital appreciation through
investments in stocks. Investors in the fund should have a long-term
perspective and, for example, be able to tolerate potentially sharp declines in
value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund invests primarily in common stocks of companies located around the
world that the investment adviser believes have the potential for growth.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations. The
growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, generally
purchased by the fund may involve large price swings and potential for loss.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
likely to impose capital controls, nationalize a company or industry, place
restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI World Index is a free float-adjusted market
capitalization-weighted index that is designed to measure equity market
performance of developed markets. The index consists of more than 20 developed
market country indexes, including an index for the United States. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
Lipper Global Funds Index is an equally weighted index of funds that invest at
least 25% of their portfolios in securities traded outside the United States
and may own U.S. securities as well. The results of the underlying funds in the
index include the reinvestment of dividends and capital gain distributions, as
well as brokerage commissions paid by the funds for portfolio transactions and
other fund expenses, but do not reflect the effect of sales charges or taxes.



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

<PAGE>


GLOBAL SMALL CAPITALIZATION FUND

The fund's investment objective is to provide you with long-term growth of
capital.

The fund is designed for investors seeking capital appreciation through
investments in stocks. Investors in the fund should have a long-term
perspective and, for example, be able to tolerate potentially sharp declines in
value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

SMALL CAPITALIZATION ISSUERS -- Normally, the fund invests at least 80% of its
net assets in growth-oriented common stocks and other equity-type securities
(such as preferred stocks, convertible preferred stocks and convertible bonds)
of companies with small market capitalizations, measured at the time of
purchase. However, the fund's holdings of small capitalization stocks may fall
below the 80% threshold due to subsequent market action. This policy is subject
to change only upon 60 days' written notice to shareholders. 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 re-evaluated and adjusted this definition and may
continue to do so in the future.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations. The
growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, generally
purchased by the fund may involve large price swings and potential for loss,
particularly in the case of smaller capitalization stocks.

Investing in smaller companies may pose additional risks as it is often more
difficult to value or dispose of small company stocks, more difficult to obtain
information about smaller companies, and the prices of their stocks may be more
volatile than stocks of larger, more established companies.

INVESTING OUTSIDE THE UNITED STATES -- Under normal circumstances, the fund
invests a significant portion of its assets outside the United States.
Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent. These
investments may also be affected by currency controls; different accounting,
auditing, financial reporting, disclosure, and regulatory and legal standards
and practices; 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. These risks may be
heightened in connection with investments in developing countries. Investments
in securities issued by entities domiciled in the United States may also be
subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
more likely to impose capital controls, nationalize a company or industry,
place restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI All Country World Small Cap Index is a free
float-adjusted market capitalization-weighted index that is designed to measure
equity market performance of smaller capitalization companies in both developed
and emerging markets. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes. S&P Global (less than)$3 Billion
Index has been used since May 2006. Cumulative returns for periods beginning
before May 2006 also include results from the comparative indexes used in those
periods as follows: S&P Global (less than)$2 Billion (May 2004 to April 2006),
S&P Developed (less than)$1.5 Billion (January 2000 to April 2004), and S&P
Developed (less than)$1.2 Billion (1990 to 1999). The S&P Global indexes
include both developed and developing countries. The S&P Developed indexes
(used prior to May 2004) only include stocks in developed countries. Indexes
are unmanaged and their results include reinvested dividends and/or
distributions, but do not reflect the effect of sales charges, commissions,
expenses or taxes. Lipper Global Small-Cap Funds Average is composed of funds
that invest at least 25% of their portfolios in securities with primary trading
markets outside the United States, and that limit at least 65% of their
investments to companies with market capitalizations of less than $1 billion at
the time of purchase. The results of the underlying funds in the average
include the reinvestment of dividends and capital gain distributions, as well
as brokerage commissions paid by the funds for portfolio transactions and other
fund expenses, but do not reflect the effect of sales charges or taxes.



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52  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
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<PAGE>


GROWTH FUND

The fund's investment objective is to provide you with growth of capital.

The fund is designed for investors seeking capital appreciation through
investments in stocks. Investors in the fund should have a long-term
perspective and, for example, be able to tolerate potentially sharp declines in
value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
common stocks and seeks to invest in companies that appear to offer superior
opportunities for growth of capital.

The prices of the common stocks and other securities held by the fund may
decline in response to certain events taking place around the world, including
those directly involving the issuers whose securities are owned by the fund;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations. The growth-oriented common stocks and
other equity-type securities, such as preferred stocks, convertible preferred
stocks and convertible bonds, generally purchased by the fund may involve large
price swings and potential for loss, particularly in the case of smaller
capitalization stocks.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest a portion of its
assets in securities of issuers domiciled outside the United States. In
addition to the risks described above, investments in securities issued by
entities based outside the United States may be affected by currency controls;
different accounting, auditing, financial reporting, and legal standards and
practices; 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. These risks may be
heightened in connection with investments in developing countries. Investments
in securities issued by entities domiciled in the United States may also be
subject to many of these risks.

DEBT SECURITIES -- The fund may invest in debt securities, including a portion
of its assets in lower quality nonconvertible debt securities (rated Ba1 or
below by Moody's Investors Service and BB+ or below by Standard & Poor's
Corporation or unrated but determined by the fund's investment adviser to be of
equivalent quality). Such securities are sometimes referred to as "junk bonds."
The values of debt securities may be affected by changing interest rates and by
changes in effective maturities and credit ratings of these securities. For
example, the values of debt securities generally decline when interest rates
rise and increase when interest rates fall. 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 debt securities generally have higher rates of interest and may be
subject to greater price fluctuations than higher quality debt securities. In
addition, longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than shorter maturity
debt securities.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Standard & Poor's 500 Composite Index is a market
capitalization-weighted index based on the average weighted performance of 500
widely held common stocks. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes. Lipper Capital Appreciation
Funds Index is an equally weighted index of funds that aim for maximum capital
appreciation. The results of the underlying funds in the index include the
reinvestment of dividends and capital gain distributions, as well as brokerage
commissions paid by the funds for portfolio transactions and other fund
expenses, but do not reflect the effect of sales charges or taxes. Lipper
Growth Funds Index is an equally weighted index of growth funds. These funds
normally invest in companies with long-term earnings expected to grow
significantly faster than the earnings of the stocks represented in the major
unmanaged stock indexes. The results of the underlying funds in the index
include the reinvestment of dividends and capital gain distributions, as well
as brokerage commissions paid by the funds for portfolio transactions and other
fund expenses, but do not reflect the effect of sales charges or taxes.

INTERNATIONAL FUND

The fund's investment objective is to provide you with long-term growth of
capital.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund invests primarily in common stocks of companies located outside the
United States.



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

<PAGE>


COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations. The
growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, generally
purchased by the fund may involve large price swings and potential for loss.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
likely to impose capital controls, nationalize a company or industry, place
restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI All Country World ex USA Index is a free
float-adjusted market capitalization-weighted index that is designed to measure
equity market performance in the global developed and emerging markets,
excluding the United States. The index consists of more than 40 developed and
emerging market country indexes. This index is unmanaged and its results
include reinvested dividends and/or distributions, but do not reflect the
effect of sales charges, commissions, expenses or taxes. Lipper International
Funds Index is an equally weighted index of funds that invest assets in
securities with primary trading markets outside the United States. The results
of the underlying funds in the index include the reinvestment of dividends and
capital gain distributions, as well as brokerage commissions paid by the funds
for portfolio transactions and other fund expenses, but do not reflect the
effect of sales charges or taxes.

NEW WORLD FUND

The fund's investment objective is long-term capital appreciation.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

DEVELOPING COUNTRIES -- The fund invests primarily in common stocks of
companies with significant exposure to countries with developing economies
and/or markets and that the investment adviser believes have potential of
providing capital appreciation. The fund may also invest in debt securities of
issuers, including issuers of lower rated bonds (rated Ba1 or below and BB+ or
below by a nationally recognized statistical rating organization or unrated but
determined to be of equivalent quality by the fund's investment adviser), with
exposure to these countries. Bonds rated Ba1 or BB+ or below are sometimes
referred to as "junk bonds."

Under normal market conditions, the fund invests at least 35% of its assets in
equity and debt securities of issuers primarily based in qualified countries
that have developing economies and/or markets.

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

In determining whether a country is qualified, the fund considers such factors
as the country's per capita gross domestic product, the percentage of the
country's economy that is industrialized, market capital as a percentage of
gross domestic product, the overall regulatory environment, the presence of
government regulation limiting or banning foreign ownership, and restrictions
on repatriation of



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54  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
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<PAGE>


initial capital, dividends, interest and/or capital gains. The fund's
investment adviser maintains a list of qualified countries and securities in
which the fund may invest. Qualified developing countries in which the fund may
invest currently include, but are not limited to, Argentina, Bahrain, Brazil,
Bulgaria, Chile, China, Colombia, Croatia, Czech Republic, Dominican Republic,
Egypt, Hungary, India, Jordan, Kazakhstan, Lebanon, Malaysia, Malta, Mexico,
Morocco, Oman, Panama, Peru, Philippines, Poland, Russian Federation, South
Africa, Thailand, Turkey, Ukraine, United Arab Emirates and Venezuela.

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

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations. The
growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, generally
purchased by the fund may involve large price swings and potential for loss,
particularly in the case of smaller capitalization stocks.

SMALL CAPITALIZATION COMPANIES -- Investing in smaller companies may pose
additional risks as its is often more difficult to value or dispose of small
company stocks, more difficult to obtain information about smaller companies
and the prices of these stocks may be more volatile than stocks of larger, more
established companies.

DEBT SECURITIES -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance 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. Longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than shorter maturity
debt securities.

HIGH YIELD BONDS -- Lower rated debt securities generally have higher rates of
interest and involve greater risk of default or price changes due to changes in
the issuer's creditworthiness than higher rated debt securities. The market
prices of these securities may fluctuate more than higher quality securities
and may decline significantly in periods of general economic difficulty. There
may be little trading in the secondary market for particular debt securities,
which may make them more difficult to value or sell.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure,
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI All Country World Index is a free
float-adjusted market capitalization-weighted index that measures equity market
performance in the global developed and emerging markets, consisting of more
than 40 developed and emerging market country indexes. This index is unmanaged
and its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. MSCI
Emerging Markets Index is a free float-adjusted market capitalization-weighted
index that is designed to measure equity market performance in the global
emerging markets, consisting of more than 20 emerging market country indexes.
This index is unmanaged and its results include reinvested dividends and/or
distributions, but do not reflect the effect of sales charges, commissions,
expenses or taxes.



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  55
                                                                             ---

<PAGE>


BLUE CHIP INCOME AND GROWTH FUND

The fund's investment objectives are to produce income exceeding the average
yield on U.S. stocks generally and to provide an opportunity for growth of
principal consistent with sound common stock investing.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
dividend-paying common stocks of larger, more established companies domiciled
in the United States with market capitalizations of $4 billion and above. In
seeking to provide you with a level of current income that exceeds the average
yield on U.S. stocks, the fund generally looks to the average yield on stocks
of companies listed on the S&P 500. The fund also ordinarily invests at least
90% of its equity assets in the stock of companies whose debt securities are
rated at least investment grade. The fund may invest up to 10% of its assets in
equity securities of larger companies domiciled outside the United States, so
long as they are listed or traded in the United States. The fund invests, under
normal market conditions, at least 90% of its assets in equity securities. The
fund is designed for investors seeking both income and capital appreciation.

The prices of, and the income generated by, the common stocks and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

The growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, purchased
by the fund may involve large price swings and potential for loss. Income
provided by the fund may be affected by changes in the dividend policies of the
companies in which the fund invests and the capital resources available for
such payments at such companies.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- Investments in securities issued
by entities based outside the United States may be subject to the risks
described above to a greater extent. These investments may also be affected by
currency controls; different accounting, auditing, financial reporting,
disclosure, and regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Standard & Poor's 500 Composite Index is a market
capitalization-weighted index based on the average weighted performance of 500
widely held common stocks. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes. Lipper Growth & Income Funds
Index is an equally weighted index of funds that combine a growth-of-earnings
orientation and an income requirement for level and/or rising dividends. The
results of the underlying funds in the index include the reinvestment of
dividends and capital gain distributions, as well as brokerage commissions paid
by the funds for portfolio transactions and other fund expenses, but do not
reflect the effect of sales charges or taxes.

GLOBAL GROWTH AND INCOME FUND

The fund's investment objective is to provide you with long-term growth of
capital while providing current income.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
common stocks of well-established companies located around the world, many of
which have the potential for growth and/or to pay dividends. The fund invests,
on a global basis, in common stocks that are denominated in U.S. dollars or
other currencies.

The prices of, and the income generated by, the common stocks and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions



----
56  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; governmental or governmental
agency responses to economic conditions; and currency, interest rate and
commodity price fluctuations.

The growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, purchased
by the fund may involve large price swings and potential for loss. Income
provided by the fund may be affected by changes in the dividend policies of the
companies in which the fund invests and the capital resources available for
such payments at such companies.

INVESTING OUTSIDE THE UNITED STATES -- Under normal market circumstances the
fund invests a significant portion of its assets in securities of issuers
domiciled outside the United States. Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
likely to impose capital controls, nationalize a company or industry, place
restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI World Index is a free float-adjusted market
capitalization-weighted index that is designed to measure equity market
performance of developed markets. The index consists of more than 20 developed
market country indexes, including an index for the United States. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
MSCI All Country World Index is a free float-adjusted market
capitalization-weighted index that measures equity market performance in the
global developed and emerging markets, consisting of more than 40 developed and
emerging market country indexes. This index is unmanaged and its results
include reinvested dividends and/or distributions, but do not reflect the
effect of sales charges, commissions, expenses or taxes. Lipper Global Funds
Index is an equally weighted index of funds that invest at least 25% of their
portfolios in securities traded outside the United States and may own U.S.
securities as well. The results of the underlying funds in the index include
the reinvestment of dividends and capital gain distributions, as well as
brokerage commissions paid by the funds for portfolio transactions and other
fund expenses, but do not reflect the effect of sales charges or taxes.

GROWTH-INCOME FUND

The fund's investment objectives are to achieve long-term growth of capital and
income.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
common stocks or other securities that demonstrate the potential for
appreciation and/or dividends. Although the fund focuses on investments in
medium to larger capitalization companies, the fund's investments are not
limited to a particular capitalization size. The fund is designed for investors
seeking both capital appreciation and income.

The prices of, and the income generated by, common stocks and other securities
held by the fund may decline in response to certain events taking place around
the world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

The growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, purchased
by the fund may involve large price swings and potential for loss. Income
provided by the fund may be



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  57
                                                                             ---

<PAGE>


affected by changes in the dividend policies of the companies in which the fund
invests and the capital resources available for such payments at such companies.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest up to 15% of its
assets, at the time of purchase, in securities of issuers domiciled outside the
United States. Investments in securities issued by entities based outside the
United States may be subject to the risks described above to a greater extent
and may also be affected by currency fluctuation and controls; different
accounting, auditing, financial reporting, disclosure, and regulatory 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. Investments in securities issued by entities domiciled in the
United States may also be subject to many of these risks.

DEBT SECURITIES -- The fund may also invest in bonds and other debt securities.
The prices of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the prices of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem, "call" or refinance 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. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Standard & Poor's 500 Composite Index is a market
capitalization-weighted index based on the average weighted performance of 500
widely held common stocks. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes. Lipper Growth & Income Funds
Index is an equally weighted index of funds that combine a growth-of-earnings
orientation and an income requirement for level and/or rising dividends. The
results of the underlying funds in the index include the reinvestment of
dividends and capital gain distributions, as well as brokerage commissions paid
by the funds for portfolio transactions and other fund expenses, but do not
reflect the effect of sales charges or taxes.

INTERNATIONAL GROWTH AND INCOME FUND

The fund's investment objective is to provide you with long-term growth of
capital while providing current income.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund invests primarily in stocks of larger, well-established companies
domiciled outside the United States, including countries with developing
economies and/or markets, that the investment adviser believes have the
potential for growth and/or to pay dividends. 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. The fund therefore expects to be invested in
numerous countries outside the United States. The fund is designed for
investors seeking both capital appreciation and income. In pursuing its
objective, the fund focuses on stocks of companies with strong earnings that
pay dividends. We believe that these stocks will be more resistant to market
declines than stocks of companies that do not pay dividends.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of, and the income
generated by, the common stocks and other securities held by the fund may
decline in response to certain events taking place around the world, including
those directly involving the issuers whose securities are owned by the fund;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations. Income provided by the fund may be
affected by changes in the dividend policies of the companies in which the fund
invests and the capital resources available for such payments at such
companies. The growth-oriented common stocks and other equity-type securities,
such as preferred stocks, convertible preferred stocks and convertible bonds,
purchased by the fund may involve large price swings and potential for loss.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; expropriation; changes in tax
policy; greater market volatility; different securities market structures;
higher transaction costs; and various administrative difficulties, such as
delays in clearing



----
58  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


and settling portfolio transactions or in receiving payment of dividends. These
risks may be heightened in connection with investments in developing countries.
Investments in securities issued by entities domiciled in the United States may
also be subject to many of these risks.

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

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI World ex USA Index is a free float-adjusted
market capitalization-weighted index that is designed to measure equity market
performance of developed markets, excluding the United States. The index
consists of more than 20 developed market country indexes. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
Lipper International Funds Index is an equally weighted index of funds that
invest assets in securities with primary trading markets outside the United
States. The results of the underlying funds in the index include the
reinvestment of dividends and capital gain distributions, as well as brokerage
commissions paid by the funds for portfolio transactions and other fund
expenses, but do not reflect the effect of sales charges or taxes.

ASSET ALLOCATION FUND

The fund's investment objective is to provide you with high total return
(including income and capital gains) consistent with preservation of capital
over the long term.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund invests in a diversified portfolio of common stocks and other equity
securities, bonds and other intermediate and long-term debt securities, and
money market instruments (debt securities maturing in one year or less). In
seeking to pursue its investment objective, the fund varies its mix of equity
securities, debt securities and money market instruments. Under normal market
conditions, the fund's investment adviser expects (but is not required) to
maintain an investment mix falling within the following ranges: 40%-80% in
equity securities, 20%-50% in debt securities and 0%-40% in money market
instruments. As of December 31, 2009, the fund was approximately 70% invested
in equity securities, 23% invested in debt securities and 7% invested in money
market instruments. The proportion of equities, debt and money market
securities held by the fund varies with market conditions and the investment
adviser's assessment of their relative attractiveness as investment
opportunities. The fund's percentage allocation to equity securities, debt
securities and money market instruments could cause the fund to underperform
relative to relevant benchmarks and other funds with similar investment
objectives.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of, and the income
generated by, the common stocks, bonds and other securities held by the fund
may decline in response to certain events taking place around the world,
including those directly involving the issuers whose securities are owned by
the fund; conditions affecting the general economy; overall market changes;
local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

DEBT SECURITIES -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt 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. A security backed by the U.S. Treasury or the full faith
and credit of the U.S. government is



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  59
                                                                             ---

<PAGE>


guaranteed only as to the timely payment of interest and principal when held to
maturity. Accordingly, the current market values for these securities will
fluctuate with changes in interest rates.

HIGH YIELD BONDS -- The fund may invest up to 25% of its debt assets in lower
quality debt securities (rated Ba1 or below by Moody's Investors Service and
BB+ or below by Standard & Poor's Corporation or unrated but determined to be
of equivalent quality). Such securities are sometimes referred to as "junk
bonds." Lower rated debt securities generally have higher rates of interest and
involve greater risk of default or price changes due to changes in the issuer's
creditworthiness than higher rated debt securities. The market prices of these
securities may fluctuate more than higher quality securities and may decline
significantly in periods of general economic difficulty. There may be little
trading in the secondary market for particular debt securities, which may make
them more difficult to value or sell.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest up to 15% of its
assets in common stocks and other equity securities of issuers domiciled
outside the United States and up to 5% of its assets in debt securities of
issuers domiciled outside the United States. Investments in securities issued
by entities based outside the United States may be subject to the risks
described above to a greater extent. These investments may also be affected by
currency fluctuations and controls; different accounting, auditing, financial
reporting, disclosure, regulatory and legal standards and practices;
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. Investments in securities
issued by entities domiciled in the United States may also be subject to many
of these risks.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Barclays Capital U.S. Aggregate Index represents
the U.S. investment-grade fixed-rate bond market. This index is unmanaged and
its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. Standard &
Poor's 500 Composite Index is a market capitalization-weighted index based on
the average weighted performance of 500 widely held common stocks. This index
is unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
Citigroup Broad Investment-Grade (BIG) Bond Index is a market
capitalization-weighted index that includes fixed-rate U.S. Treasury,
government-sponsored, mortgage-backed, asset-backed and investment-grade
corporate securities with maturities of one year or longer. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.

BOND FUND

The fund's investment objective is to provide as high a level of current income
as is consistent with the preservation of capital.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund seeks to maximize your level of current income and preserve your
capital by investing primarily in bonds. Normally, the fund invests at least
80% of its assets in bonds and other debt securities. This policy is subject to
change only upon 60 days' written notice to shareholders. The fund invests at
least 65% of its assets in investment-grade debt securities (including cash and
cash equivalents), including securities issued and guaranteed by the U.S. and
other governments, and securities backed by mortgage and other assets. The fund
may invest up to 35% of its assets in debt securities rated Ba1 or below by
Moody's Investors Service and BB+ or below by Standard & Poor's Corporation or
unrated but determined by the fund's investment adviser to be of equivalent
quality. Such securities are sometimes referred to as "junk bonds." The fund
may invest in debt securities of issuers domiciled outside the United States.
The fund may also invest up to 20% of its assets in preferred stocks, including
convertible and nonconvertible preferred stocks. The fund is designed for
investors seeking income and more price stability than stocks, and capital
preservation over the long term.

DEBT SECURITIES -- The prices of, and the income generated by, the bonds and
other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

The prices of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the prices of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem, "call" or refinance 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



----
60  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


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. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

HIGH YIELD BONDS -- Lower rated debt securities generally have higher rates of
interest and involve greater risk of default or price changes due to changes in
the issuer's creditworthiness than higher rated debt securities. The market
prices of these securities may fluctuate more than higher quality securities
and may decline significantly in periods of general economic difficulty. There
may be little trading in the secondary market for particular debt securities,
which may make them more difficult to value or sell.

MORTGAGE-BACKED SECURITIES -- Many types of debt securities, including
mortgage-related securities, are subject to pre-payment risk. For example, when
interest rates fall, homeowners are more likely to refinance their home
mortgages and "prepay" their principal earlier than expected. The fund must
then reinvest the prepaid principal in new securities when interest rates on
new mortgage investments are falling, thus reducing the fund's income.
Conversely, if interest rates increase, homeowners may not make prepayments to
the extent expected, resulting in an extension of the term of the security
backed by such mortgages.

SECURITIES BACKED BY THE U.S. TREASURY -- A security backed by the U.S.
Treasury or the full faith and credit of the U.S. government is guaranteed only
as to the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates. The fund may also invest in debt securities and
mortgage-backed securities issued by federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government. These
securities are neither issued nor guaranteed by the U.S. Treasury.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
fluctuations and controls; different accounting, auditing, financial reporting,
disclosure, regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Barclays Capital U.S. Aggregate Index represents
the U.S. investment-grade fixed-rate bond market. This index is unmanaged and
its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. Lipper
Corporate Debt A-Rated Bond Funds Average is composed of funds that invest
primarily in corporate debt issues rated A or better or government issues. The
results of the underlying funds in the average include the reinvestment of
dividends and capital gain distributions, as well as expenses and brokerage
commissions paid by the fund for portfolio transactions and other fund
expenses, but do not reflect the effect of sales charges or taxes.

GLOBAL BOND FUND

The fund's investment objective is to provide you, over the long term, with a
high level of total return consistent with prudent investment management.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

DEBT SECURITIES -- Under normal market circumstances, the fund invests at least
80% of its assets in bonds. This policy is subject to change only upon 60 days'
written notice to shareholders. The fund invests primarily in debt securities
of governmental, supranational and corporate issuers denominated in various
currencies, including U.S. dollars. The fund may invest substantially in
securities of issuers domiciled outside the United States, including issuers
domiciled in developing countries. Normally, the fund's debt obligations
consist substantially of investment-grade bonds (rated Baa3 or better or BBB-
or better by a nationally recognized statistical rating organization or unrated
but determined to be of equivalent quality by the fund's investment adviser).
The total return of the fund will be the result of interest income, changes in
the market value of the fund's investments and changes in the values of other
currencies relative to the U.S. dollar. Generally, the fund may invest in debt
securities of any maturity or duration.

The prices of, and the income generated by, the bonds and other securities held
by the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  61
                                                                             ---

<PAGE>


The prices of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the prices of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem, "call" or refinance 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. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

The prices of, and the income generated by, most debt securities held by the
fund may also be affected by changes in relative currency values. If the U.S.
dollar appreciates against foreign currencies, the value in U.S. dollars of the
fund's securities denominated in such currencies would generally fall and vice
versa. U.S. dollar-denominated securities of foreign issuers may also be
affected by changes in relative currency values.

HIGH YIELD BONDs -- The fund may invest a portion of its assets in lower
quality, higher yielding debt securities (rated Ba1 or below and BB+ or below
by a nationally recognized statistical rating organization or unrated but
determined to be of equivalent quality by the fund's investment adviser). Such
securities are sometimes referred to as "junk bonds." Lower rated debt
securities generally have higher rates of interest and involve greater risk of
default or price changes due to changes in the issuer's creditworthiness than
higher rated debt securities. The market prices of these securities may
fluctuate more than higher quality securities and may decline significantly in
periods of general economic difficulty. There may be little trading in the
secondary market for particular debt securities, which may make them more
difficult to value or sell.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

NON-DIVERSIFICATION -- The fund is non-diversified, which allows it to invest a
greater percentage of its assets in any one issuer than would otherwise be the
case. However, the fund intends to limit its investments in the securities of
any single issuer. As a non-diversified fund, the fund has the ability to
invest a larger percentage of its assets in the securities of a smaller number
of issuers than a diversified fund. Although the fund does not intend to limit
its investments to the securities of a small number of issuers, if it were to
do so, poor performance by a single large holding would adversely impact the
fund's investment results more than if the fund were invested in a larger
number of issuers.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Barclays Capital Global Aggregate Index represents
the global investment-grade fixed-income markets. This index is unmanaged and
its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. Lipper
Global Income Funds Average is composed of funds that invest primarily in U.S.
dollar and non-U.S. dollar debt securities located in at least three countries,
one of which may be the United States. The results of the underlying funds in
the average include the reinvestment of dividends and capital gain
distributions, as well as brokerage commissions paid by the funds for portfolio
transactions and other fund expenses, but do not reflect the effect of sales
charges or taxes.



----
62  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


HIGH-INCOME BOND FUND

The fund's primary investment objective is to provide you with a high level of
current income. Its secondary investment objective is capital appreciation.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

HIGH YIELD BONDs -- The fund invests primarily in higher yielding and generally
lower quality debt securities (rated Ba1 or below or BB+ or below by a
nationally recognized statistical rating organization or unrated but determined
by the fund's investment adviser to be of equivalent quality), including
corporate loan obligations. Such securities are sometimes referred to as "junk
bonds."

Lower rated debt securities generally have higher rates of interest and involve
greater risk of default or price changes due to changes in the issuer's
creditworthiness than higher rated debt securities. The market prices of these
securities may fluctuate more than higher quality securities and may decline
significantly in periods of general economic difficulty. There may be little
trading in the secondary market for particular debt securities, which may make
them more difficult to value or sell. See the appendix in this prospectus for
credit rating descriptions.

DEBT SECURITIES -- Generally, the fund may invest in debt securities of any
maturity or duration. The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance 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. Longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than shorter maturity
debt securities.

The fund may also invest in common stocks and other equity-type securities,
such as preferred stocks, convertible preferred stocks, convertible bonds and
warrants, that provide an opportunity for income and/or capital appreciation.
The prices of, and the income generated by, the bonds and other securities held
by the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

INVESTING OUTSIDE THE UNITED STATES -- The fund may also invest a portion of
its assets in securities of issuers domiciled outside the United States.
Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent. These
investments may also be affected by currency controls; different accounting,
auditing, financial reporting, disclosure, and regulatory and legal standards
and practices; 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. These risks may be
heightened in connection with investments in developing countries. Investments
in securities issued by entities domiciled in the United States may also be
subject to many of these risks. The fund's investment adviser attempts to
reduce these risks through diversification of the portfolio and ongoing credit
analysis, as well as by monitoring economic and legislative developments, but
there can be no assurance that it will be successful at doing so.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Barclays Capital U.S. Corporate High Yield Index 2%
Issuer Cap covers the universe of fixed rate, non-investment grade debt. The
index limits the maximum exposure of any one issuer to 2%. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
This index was not in existence on the date the fund began investment
operations; therefore, lifetime results are not shown. Credit Suisse High Yield
Index is designed to mirror the investable universe of the U.S.
dollar-denominated high-yield debt market. This index is unmanaged and its
results include reinvested dividends and/or distributions, but do not reflect
the effect of sales charges, commissions, expenses or taxes. This index was not
in existence on the date the fund began investment operations; therefore,
lifetime results are not shown. Citigroup Broad Investment-Grade (BIG) Bond
Index is a market capitalization-weighted index that includes fixed-rate U.S.
Treasury, government-sponsored, mortgage-backed, asset-backed and
investment-grade corporate securities with maturities of one year or longer.
This index is unmanaged and its results include reinvested dividends and/or
distributions, but do not reflect the effect of sales charges, commissions,
expenses or taxes. Lipper High Current Yield Funds Index is an equally weighted
index of funds that aim at high (relative) current yield from fixed-income
securities, have no quality or maturity restrictions and tend to invest in
lower grade debt issues. The results of the underlying funds in the index
include reinvestment of dividends and capital gain distributions, as well as
brokerage commissions paid by the funds for portfolio transactions and other
fund expenses, but do not reflect the effect of sales charges or taxes.



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  63
                                                                             ---

<PAGE>


U.S. GOVERNMENT/AAA-RATED SECURITIES FUND

The fund's investment objective is to provide a high level of current income
consistent with preservation of capital.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

Normally, the fund invests at least 80% of its assets in securities that are
guaranteed or sponsored by the U.S. government or debt securities that are
rated Aaa by Moody's Investors Service or AAA by Standard & Poor's Corporation
or unrated but determined to be of equivalent quality by the fund's investment
adviser. This policy is subject to change only upon 60 days' written notice to
shareholders. The fund is designed for investors seeking income and more price
stability than from investing in stocks and lower quality debt securities, and
capital preservation over the long term.

MORTGAGE-BACKED SECURITIES -- The fund may also invest a significant portion of
its assets in mortgage-backed securities. Certain of these securities may not
be backed by the full faith and credit of the U.S. government and are supported
only by the credit of the issuer. Many types of debt securities, including
mortgage-related securities, are subject to prepayment risk. For example, when
interest rates fall, homeowners are more likely to refinance their home
mortgages and "prepay" their principal earlier than expected. The fund must
then reinvest the prepaid principal in new securities when interest rates on
new mortgage investments are falling, thus reducing the fund's income.
Conversely, if interest rates increase, homeowners may not make prepayments to
the extent expected resulting in an extension of the term of the security
backed by such mortgages.

DEBT SECURITIES -- While the fund invests primarily in securities that are
guaranteed or sponsored by the U.S. government, these securities are subject to
interest rate and prepayment risks. The prices of, and the income generated by,
most debt securities held by the fund may be affected by changing interest
rates and by changes in the effective maturities and credit ratings of these
securities. For example, the prices of debt securities in the fund's portfolio
generally will decline when interest rates rise and increase when interest
rates fall. In addition, falling interest rates may cause an issuer to redeem,
"call" or refinance 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. Longer maturity debt securities generally have higher
rates of interest and may be subject to greater price fluctuations than shorter
maturity debt securities.

The prices of, and the income generated by, the bonds and other securities held
by the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

SECURITIES BACKED BY THE U.S. TREASURY -- A security backed by the U.S.
Treasury or the full faith and credit of the U.S. government is guaranteed only
as to the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates. The fund may also invest in debt securities and
mortgage-backed securities issued by federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government. These
securities are neither issued nor guaranteed by the U.S. Treasury.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

It is important to note that neither your investment in the fund nor the fund's
yield is guaranteed by the U.S. government.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Citigroup Treasury/Government Sponsored/Mortgage
Index is a market capitalization-weighted index that includes U.S. Treasury and
agency securities, as well as FNMAs, FHLMCs and GNMAs. This index is unmanaged
and its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. Lipper
General U.S. Government Funds Average is composed of funds that invest
primarily in U.S. government and agency issues. The results of the underlying
funds in the average include the reinvestment of dividends and capital gain
distributions, as well as brokerage commissions paid by the fund for portfolio
transactions and other fund expenses, but do not reflect the effect of sales
charges or taxes. Consumer Price Index (CPI) is a measure of the average change
over time in the prices paid by urban consumers for a market basket of consumer
goods and services. Widely used as a measure of inflation, the CPI is computed
by the U.S. Department of Labor, Bureau of Labor Statistics.



----
64  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


CASH MANAGEMENT FUND

The investment objective of the fund is to provide you with a way to earn
income on your cash reserves while preserving capital and maintaining liquidity.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

MONEY MARKET INSTRUMENTS -- Normally, the fund invests substantially in
high-quality money market instruments such as commercial paper, commercial bank
obligations, savings association obligations, U.S. or Canadian government
securities, and short-term corporate bonds and notes. Some of the securities
held by the fund may have credit and liquidity support features, including
guarantees and letters of credit. Changes in the credit quality of the issuer
or provider of these support features could cause the fund to experience a loss
and may affect its share price.

The value and liquidity of the securities held by the fund may be affected by
changing interest rates and by changes in credit ratings of the securities. For
example, the values of these securities may decline when interest rates rise
and increase when interest rates fall.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest in securities issued
by entities domiciled outside the United States and securities with credit and
liquidity support features provided by entities domiciled outside of the United
States. The fund may also invest in securities of U.S. issuers with substantial
operations outside the United States. Additionally, the securities held by the
fund may be affected by certain events taking place around the world, including
those directly involving the issuers whose securities are owned by the fund;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations. Investments in securities issued by
entities based outside the United States may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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.

The fund is not managed to maintain a stable asset value of $1.00 per share and
it is possible to lose money by investing in the fund.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

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 this prospectus.

INVESTMENT RESULTS

All fund results in the "Investment results" section of this prospectus reflect
the reinvestment of dividends and capital gains distributions, if any. Unless
otherwise noted, fund results reflect any fee waivers and/or expense
reimbursements in effect during the period presented.


MANAGEMENT AND ORGANIZATION

INVESTMENT ADVISER


Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the Series and
other mutual funds, including the American Funds. Capital Research and
Management Company is a wholly owned subsidiary of The Capital Group Companies,
Inc. and is located at 333 South Hope Street, Los Angeles, California 90071,
and 6455 Irvine Center Drive, Irvine, California 92618. Capital Research and
Management Company manages the investment portfolios and business affairs of
the Series. The total management fee paid by each fund for the previous fiscal
year (or, in the case of International Growth and Income Fund, the management
fee to be paid for the current fiscal year), expressed as a percentage of
average net assets of that fund, appear in the Annual Fund Operating Expenses
table for each fund. A more detailed description of the investment advisory and
service agreement between the Series and the investment adviser is included in
the Series' statement of additional information. A discussion regarding the
basis for the approval of the Series' investment advisory and service agreement
by the Series' board of trustees is contained in the Series' annual report to
shareholders for the fiscal year ended December 31, 2009.


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



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  65
                                                                             ---

<PAGE>


through one or both of these subsidiaries. Capital Research and Management
Company and the funds it advises have applied to the 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' boards,
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. Each fund's shareholders
pre-approved this arrangement at a meeting of 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.

In addition, shareholders approved a proposal to reorganize the series into a
Delaware statutory trust. The reorganization may be completed in 2010 or early
2011; however, the series reserves the right to delay the implementation.


EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the funds'
portfolio transactions. In selecting broker-dealers, the investment adviser
strives to obtain "best execution" (the most favorable total price reasonably
attainable under the circumstances) for the funds' portfolio transactions,
taking into account a variety of factors. Subject to best execution, the
investment adviser may consider investment research and/or brokerage services
provided to the adviser in placing orders for the funds' portfolio
transactions. The investment adviser may place orders for the funds' portfolio
transactions with broker-dealers who have sold shares of funds managed by the
investment adviser or its affiliated companies; however, the investment adviser
does not give consideration to 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 funds' portfolio transactions. A more detailed
description of the investment adviser's policies is included in the statement
of additional information.

PORTFOLIO MANAGEMENT

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

PORTFOLIO HOLDINGS

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

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

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

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





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

JAMES K. DUNTON             Serves as an equity portfolio  Senior Vice
VICE CHAIRMAN OF THE BOARD  counselor for: GROWTH-INCOME   President --
                            FUND -- 26 years (since the    Capital Research
                            fund's inception) BLUE CHIP    Global Investors
                            INCOME AND GROWTH              Investment
                            FUND -- 9 years (since the     professional for 48
                            fund's inception)              years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
DONALD D. O'NEAL            Serves as an equity portfolio  Senior Vice
PRESIDENT AND TRUSTEE       counselor for: GROWTH-INCOME   President --
                            FUND -- 5 years                Capital Research
                                                           Global Investors
                                                           Investment
                                                           professional for 25
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
ALAN N. BERRO               Serves as an equity portfolio  Senior Vice
SENIOR VICE PRESIDENT       counselor for: ASSET           President --
                            ALLOCATION FUND -- 10 years    Capital World
                                                           Investors
                                                           Investment
                                                           professional for 24
                                                           years in total; 19
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
ABNER D. GOLDSTINE          Serves as a fixed-income       Senior Vice
SENIOR VICE PRESIDENT       portfolio counselor for:       President -- Fixed
                            HIGH-INCOME BOND FUND -- 12    Income, Capital
                            years                          Research and
                                                           Management Company
                                                           Investment
                                                           professional for 58
                                                           years in total; 43
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------




----
66  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>





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

C. ROSS SAPPENFIELD         Serves as an equity portfolio                         Senior Vice
SENIOR VICE PRESIDENT       counselor for:                                        President --
                            GROWTH-INCOME FUND -- 11                              Capital Research
                            years BLUE CHIP INCOME AND                            Global Investors
                            GROWTH FUND -- 9 years (since                         Investment
                            the fund's inception)                                 professional for 18
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
JOHN H. SMET                Serves as a fixed-income                              Senior Vice
SENIOR VICE PRESIDENT       portfolio counselor for: U.S.                         President -- Fixed
                            GOVERNMENT/AAA-RATED                                  Income, Capital
                            SECURITIES FUND -- 18 years                           Research and
                                                                                  Management Company
                                                                                  Investment
                                                                                  professional for 28
                                                                                  years in total; 27
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
CARL M. KAWAJA              Serves as an equity portfolio                         Senior Vice
VICE PRESIDENT              counselor for:  NEW WORLD                             President --
                            FUND -- 11 years (since the                           Capital World
                            fund's inception)                                     Investors
                                                                                  Investment
                                                                                  professional for 22
                                                                                  years in total; 19
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
SUNG LEE                    Serves as an equity portfolio                         Senior Vice
VICE PRESIDENT              counselor for:                                        President --
                            INTERNATIONAL FUND -- 4                               Capital Research
                            years INTERNATIONAL GROWTH AND INCOME FUND -- 2 years Global Investors
                            (since the fund's inception)                          Investment
                                                                                  professional for 16
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
ROBERT W. LOVELACE          Serves as an equity portfolio                         Senior Vice
VICE PRESIDENT              counselor for: GLOBAL GROWTH                          President --
                            FUND -- 13 years (since the                           Capital World
                            fund's inception) NEW WORLD                           Investors
                            FUND -- 11 years (since the                           Investment
                            fund's inception)                                     professional for 25
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
DAVID C. BARCLAY            Serves as a fixed-income                              Senior Vice
                            portfolio counselor for:                              President -- Fixed
                            HIGH-INCOME BOND FUND -- 17                           Income, Capital
                            years NEW WORLD FUND -- 11                            Research and
                            years (since the fund's                               Management Company
                            inception) BOND FUND -- 12                            Investment
                            years                                                 professional for 29
                                                                                  years in total; 22
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
DONNALISA PARKS BARNUM      Serves as an equity portfolio                         Senior Vice
                            counselor for: GROWTH                                 President --
                            FUND -- 7 years                                       Capital World
                                                                                  Investors
                                                                                  Investment
                                                                                  professional for 29
                                                                                  years in total; 24
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
CHRISTOPHER D. BUCHBINDER   Serves as an equity portfolio                         Senior Vice
                            counselor for: BLUE CHIP                              President --
                            INCOME AND GROWTH FUND -- 3                           Capital Research
                            years                                                 Global Investors
                                                                                  Investment
                                                                                  professional for 15
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
GORDON CRAWFORD             Serves as an equity portfolio                         Senior Vice
                            counselor for: GLOBAL SMALL                           President --
                            CAPITALIZATION FUND -- 12                             Capital Research
                            years (since the fund's                               Global Investors
                            inception) GLOBAL DISCOVERY                           Investment
                            FUND -- 5 years                                       professional for 39
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
DAVID A. DAIGLE             Serves as a fixed-income                              Senior Vice
                            portfolio counselor for:                              President - Fixed
                             HIGH-INCOME BOND FUND -- 1                           Income, Capital
                            year (plus 9 years of prior                           Research Company
                            experience as an investment                           Investment
                            analyst for the fund)                                 professional for 16
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
MARK H. DALZELL             Serves as a fixed-income                              Senior Vice
                            portfolio counselor                                   President -- Fixed
                            for: BOND FUND -- 5                                   Income, Capital
                            years GLOBAL BOND FUND -- 4                           Research and
                            years (since the fund's                               Management Company
                            inception)                                            Investment
                                                                                  professional for 32
                                                                                  years in total; 22
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
MARK E. DENNING             Serves as an equity portfolio                         Senior Vice
                            counselor for: GLOBAL SMALL                           President --
                            CAPITALIZATION FUND --  12                            Capital Research
                            years (since the fund's                               Global Investors
                            inception) GLOBAL DISCOVERY                           Investment
                            FUND -- 5 years                                       professional for 28
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
J. BLAIR FRANK              Serves as an equity portfolio                         Senior Vice
                            counselor for: GLOBAL SMALL                           President --
                            CAPITALIZATION FUND --  7                             Capital Research
                            years GROWTH-INCOME FUND -- 4                         Global Investors
                            years                                                 Investment
                                                                                  professional for 17
                                                                                  years in total; 16
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
DAVID A. HOAG               Serves as a fixed-income                              Senior Vice
                            portfolio counselor for: BOND                         President -- Fixed
                            FUND -- 3 years                                       Income, Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  Investment
                                                                                  professional for 22
                                                                                  years in total; 19
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------




                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  67
                                                                             ---

<PAGE>





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

THOMAS H. HOGH              Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President -- Fixed
                            GLOBAL BOND FUND -- 4 years    Income, Capital
                            (since the fund's              Research Company
                            inception) U.S.                Investment
                            GOVERNMENT/AAA-RATED           professional for 23
                            SECURITIES FUND --13           years in total; 20
                            years BOND FUND -- 3 years     years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
CLAUDIA P. HUNTINGTON       Serves as an equity portfolio  Senior Vice
                            counselor for: GROWTH-INCOME   President --
                            FUND -- 16 years (plus 5       Capital Research
                            years of prior experience as   Global Investors
                            an investment analyst for the  Investment
                            fund) GLOBAL DISCOVERY         professional for 37
                            FUND -- 9 years (since the     years in total; 35
                            fund's inception)              years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
GREGG E. IRELAND            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH AND INCOME       Capital World
                            FUND -- 4 years (since the     Investors
                            fund's inception) GROWTH       Investment
                            FUND -- 4 years                professional for 38
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
GREGORY D. JOHNSON          Serves as an equity portfolio  Senior Vice
                            counselor for: GROWTH          President --
                            FUND -- 3 years                Capital World
                                                           Investors
                                                           Investment
                                                           professional for 17
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
MICHAEL T. KERR             Serves as an equity portfolio  Senior Vice
                            counselor for:  GROWTH         President --
                            FUND -- 5 years                Capital World
                                                           Investors
                                                           Investment
                                                           professional for 27
                                                           years in total; 25
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
HAROLD H. LA                Serves as an equity portfolio  Senior Vice
                            counselor for: GLOBAL SMALL    President --
                            CAPITALIZATION FUND -- 2       Capital Research
                            years (plus 4 years of prior   Global Investors
                            experience as an investment    Investment
                            analyst for the fund)          professional for 12
                                                           years in total; 11
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
JEFFREY T. LAGER            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            ASSET ALLOCATION FUND -- 3     Capital World
                            years                          Investors
                                                           Investment
                                                           professional for 15
                                                           years in total; 14
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
MARCUS B. LINDEN            Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President -- Fixed
                            HIGH-INCOME BOND FUND -- 3     Income, Capital
                            years                          Research Company
                                                           Investment
                                                           professional for 15
                                                           years in total; 14
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
JAMES B. LOVELACE           Serves as an equity portfolio  Senior Vice
                            counselor for: BLUE CHIP       President --
                            INCOME AND GROWTH FUND -- 3    Capital Research
                            years                          Global Investors
                                                           Investment
                                                           professional for 28
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
JESPER LYCKEUS              Serves as an equity portfolio  Senior Vice
                            counselor for: INTERNATIONAL   President --
                            FUND -- 3 years (plus 8 years  Capital Research
                            of prior experience as an      Global Investors
                            investment analyst for the     Investment
                            fund) INTERNATIONAL GROWTH     professional for 15
                            AND INCOME FUND -- 2 years     years in total; 14
                            (since the fund's inception)   years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
FERGUS N. MACDONALD         Serves as a fixed-income       Vice President,
                            portfolio counselor for:       Fixed-Income,
                            U.S. GOVERNMENT/AAA-RATED      Capital Research
                            SECURITIES FUND --Less than 1  Company
                            year                           Investment
                                                           professional for 18
                                                           years in total; 7
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
RONALD B. MORROW            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GROWTH FUND -- 7 years (plus   Capital World
                            6 years of prior experience    Investors
                            as an investment analyst for   Investment
                            the fund)                      professional for 42
                                                           years in total; 13
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
JAMES R. MULALLY            Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President -- Fixed
                            ASSET ALLOCATION FUND -- 4     Income, Capital
                            years                          Research and
                            GLOBAL BOND FUND -- 2 years    Management Company
                                                           Investment
                                                           professional for 34
                                                           years in total; 30
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
WESLEY K.-S. PHOA           Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President,
                            U.S. GOVERNMENT/AAA-RATED      Fixed-Income,
                            SECURITIES FUND --Less than 1  Capital Research
                            year                           Company
                                                           Investment
                                                           professional for 17
                                                           years in total; 11
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------




----
68  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>





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

DAVID M. RILEY              Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            INTERNATIONAL GROWTH AND       Capital Research
                            INCOME FUND -- 2 years (since  Global Investors
                            the fund's inception)          Investment
                                                           professional for 16
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
EUGENE P. STEIN             Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            ASSET ALLOCATION FUND -- 2     Capital World
                            years                          Investors
                                                           Investment
                                                           professional for 39
                                                           years in total; 38
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
ANDREW B. SUZMAN            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH AND INCOME       Capital World
                            FUND -- 1 year                 Investors
                                                           Investment
                                                           professional for 17
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
CHRISTOPHER M. THOMSEN      Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            INTERNATIONAL FUND -- 4 years  Capital Research
                                                           Global Investors
                                                           Investment
                                                           professional for 13
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
STEVEN T. WATSON            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH FUND -- 8 years  Capital World
                            (plus 4 years of prior         Investors
                            experience as an investment    Investment
                            analyst for the fund) GLOBAL   professional for 23
                            GROWTH AND INCOME              years in total; 20
                            FUND -- 4 years (since the     years with Capital
                            fund's inception)              Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
PAUL A. WHITE               Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH FUND -- 5 years  Capital World
                            (plus 5 years of prior         Investors
                            experience as an investment    Investment
                            analyst for the fund)          professional for 21
                                                           years in total; 11
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
DYLAN J. YOLLES             Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GROWTH-INCOME FUND -- 5 years  Capital Research
                            (plus 5 years of prior         Global Investors
                            experience as an investment    Investment
                            analyst for the fund)          professional for 13
                                                           years in total; 10
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate



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

PURCHASES AND REDEMPTIONS OF SHARES


Shares of the Series are currently offered only to insurance company separate
accounts as well as so-called "feeder funds" under master-feeder arrangements
sponsored by insurance companies. All such shares may be purchased or redeemed
by the separate accounts (or feeder funds) at net asset value without any sales
or redemption charges. These purchases and redemptions are made at the price
next determined after such purchases and redemptions of units of the separate
accounts (or feeder funds).


FREQUENT TRADING OF FUND SHARES

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


The Series, through its transfer agent, American Funds Service Company, has
agreements with the Series' insurance relationships to maintain its
surveillance procedures that are designed to detect frequent trading in fund
shares. Under these procedures, various analytics are used to evaluate factors
that may be indicative of frequent trading. For example, transactions in fund
shares that exceed certain monetary thresholds may be scrutinized. American
Funds Service Company may work with the insurance company separate accounts or
feeder funds to apply their procedures that American Funds Service Company
believes are reasonably designed to enforce the frequent trading policies of
the Series. You should refer to disclosures provided by the insurance company
with which you have a contract to determine the specific trading restrictions
that apply to you.

Under its procedures, American Funds Service Company also may review
transactions that occur close in time to other transactions in the same account
or in multiple accounts under common ownership or influence. Trading activity
that is identified through these procedures or as a result of any other
information available to the funds will be evaluated to determine whether such
activity might constitute frequent trading. These procedures may be modified
from time to time as appropriate to improve the detection of frequent trading,
to facilitate monitoring for frequent trading in particular retirement plans or
other accounts, and to comply with applicable laws.



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  69
                                                                             ---

<PAGE>

In addition to the Series' broad ability to restrict potentially harmful
trading as described previously, the Series' board of trustees has adopted a
"purchase blocking policy" under which any contract owner redeeming units
representing a beneficial interest in any fund other than Cash Management Fund
(including redemptions that are part of an exchange transaction) having a value
of $5,000 or more will be precluded from investing units of beneficial interest
in that fund (including investments that are part of an exchange transaction)
for 30 calendar days after the redemption transaction. Under this purchase
blocking policy, certain purchases will not be prevented and certain
redemptions will not trigger a purchase block, such as: systematic redemptions
and purchases where the entity maintaining the contract owner's account is able
to identify the transaction as a systematic redemption or purchase; purchases
and redemptions of units representing a beneficial interest in a fund having a
value of less than $5,000; retirement plan contributions, loans and
distributions (including hardship withdrawals) identified as such on the
retirement plan recordkeeper's system; and purchase transactions involving
transfers of assets, where the entity maintaining the contract owner's account
is able to identify the transaction as one of these types of transactions.

The Series reserves the right to waive the purchase blocking policy in those
instances where American Funds Service Company determines that its surveillance
procedures are adequate to detect frequent trading in fund shares.


If American Funds Service Company identifies any activity that may constitute
frequent trading, it reserves the right to contact the insurance company
separate account or feeder fund and request that the separate account or feeder
fund either provide information regarding an account owner's transactions or
restrict the account owner's trading. If American Funds Service Company is not
satisfied that insurance company separate account or feeder fund has taken
appropriate action, American Funds Service Company may terminate the separate
account's or feeder fund's ability to transact in fund shares.


There is no guarantee that all instances of frequent trading in fund shares
will be prevented.

NOTWITHSTANDING THE SERIES' SURVEILLANCE PROCEDURES AND PURCHASE BLOCKING
POLICY, ALL TRANSACTIONS IN FUND SHARES REMAIN SUBJECT TO THE SERIES' AND
AMERICAN FUNDS DISTRIBUTORS, INC.'S RIGHT TO RESTRICT POTENTIALLY ABUSIVE
TRADING GENERALLY (INCLUDING THE TYPES OF TRANSACTIONS DESCRIBED ABOVE THAT
WILL NOT BE PREVENTED OR TRIGGER A BLOCK UNDER THE PURCHASE BLOCKING POLICY).
SEE THE STATEMENT OF ADDITIONAL INFORMATION FOR MORE INFORMATION ABOUT HOW
AMERICAN FUNDS SERVICE COMPANY MAY ADDRESS OTHER POTENTIALLY ABUSIVE TRADING
ACTIVITY IN THE SERIES.

VALUING SHARES


Each fund calculates its share price, also called net asset value, each day the
New York Stock Exchange is open for trading as of approximately 4 p.m. New York
time, the normal close of regular trading. The funds will not calculate net
asset values on days that the New York Stock Exchange is closed for trading.
Assets are valued primarily on the basis of market quotations. However, the
funds have adopted procedures for making "fair value" determinations if market
quotations are not readily available or are not considered reliable. For
example, if events occur between the close of markets outside the United States
and the close of regular trading on the New York Stock Exchange that, in the
opinion of the investment adviser, materially affect the value of any of the
securities in the funds' portfolios that principally trade in those
international markets, those securities will be valued in accordance with fair
value procedures. Use of these procedures is intended to result in more
appropriate net asset values. In addition, such use will reduce, if not
eliminate, potential arbitrage opportunities otherwise available to short-term
investors.


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

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

PLANS OF DISTRIBUTION


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


DISTRIBUTIONS AND TAXES

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


----
70  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

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

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


                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  71
                                                                             ---

<PAGE>

FINANCIAL HIGHLIGHTS/1/

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




                    Income (loss) from investment operations/2/      Dividends and distributions
                    ------------------------------------------  -------------------------------------

                                    Net gains
          Net asset    Net         (losses) on                  Dividends                    Total
           value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period    beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended     of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Global Discovery Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $ 7.45      $.05           $ 3.78          $ 3.83      $(.08)       $  --        $ (.08)      $11.20     51.49%
12/31/08    14.09       .15            (6.37)          (6.22)      (.12)        (.30)         (.42)        7.45    (45.02)
12/31/07    13.05       .17             2.07            2.24       (.16)       (1.04)        (1.20)       14.09     17.55
12/31/06    11.63       .15             1.89            2.04       (.13)        (.49)         (.62)       13.05     17.66
12/31/05    10.79       .14             1.05            1.19       (.11)        (.24)         (.35)       11.63     11.07
CLASS 2
12/31/09     7.43       .03             3.74            3.77       (.05)          --          (.05)       11.15     50.91
12/31/08    14.02       .12            (6.32)          (6.20)      (.09)        (.30)         (.39)        7.43    (45.09)
12/31/07    13.00       .14             2.05            2.19       (.13)       (1.04)        (1.17)       14.02     17.22
12/31/06    11.59       .11             1.89            2.00       (.10)        (.49)         (.59)       13.00     17.41
12/31/05    10.76       .11             1.05            1.16       (.09)        (.24)         (.33)       11.59     10.80

Global Growth Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $13.96      $.26           $ 5.67          $ 5.93      $(.28)       $  --        $ (.28)      $19.61     42.58%
12/31/08    25.15       .47            (9.50)          (9.03)      (.41)       (1.75)        (2.16)       13.96    (38.23)
12/31/07    23.44       .51             2.98            3.49       (.76)       (1.02)        (1.78)       25.15     15.16
12/31/06    19.63       .41             3.62            4.03       (.22)          --          (.22)       23.44     20.73
12/31/05    17.31       .28             2.19            2.47       (.15)          --          (.15)       19.63     14.37
CLASS 2
12/31/09    13.88       .22             5.64            5.86       (.24)          --          (.24)       19.50     42.30
12/31/08    25.00       .42            (9.43)          (9.01)      (.36)       (1.75)        (2.11)       13.88    (38.39)
12/31/07    23.29       .45             2.95            3.40       (.67)       (1.02)        (1.69)       25.00     14.85
12/31/06    19.52       .36             3.59            3.95       (.18)          --          (.18)       23.29     20.43
12/31/05    17.23       .23             2.18            2.41       (.12)          --          (.12)       19.52     14.07

Global Small Capitalization Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $11.18      $.09           $ 6.80          $ 6.89      $(.07)       $  --        $ (.07)      $18.00     61.63%
12/31/08    27.20       .19           (13.33)         (13.14)        --        (2.88)        (2.88)       11.18    (53.39)
12/31/07    24.87       .12             5.27            5.39       (.90)       (2.16)        (3.06)       27.20     21.73
12/31/06    21.29       .19             4.74            4.93       (.14)       (1.21)        (1.35)       24.87     24.35
12/31/05    17.14       .13             4.23            4.36       (.21)          --          (.21)       21.29     25.66
CLASS 2
12/31/09    11.03       .05             6.70            6.75       (.04)          --          (.04)       17.74     61.30
12/31/08    26.95       .14           (13.18)         (13.04)        --        (2.88)        (2.88)       11.03    (53.52)
12/31/07    24.64       .05             5.22            5.27       (.80)       (2.16)        (2.96)       26.95     21.43
12/31/06    21.12       .14             4.70            4.84       (.11)       (1.21)        (1.32)       24.64     24.05
12/31/05    17.02       .09             4.19            4.28       (.18)          --          (.18)       21.12     25.35







                       Ratio of   Ratio of    Ratio of
                       expenses   expenses      net
          Net assets, to average to average    income
            end of    net assets net assets  (loss) to
Period    period (in    before     after      average
ended      millions)    waiver   waiver/3/  net assets/3/


Global Discovery Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 31        .61%       .61%        .59%
12/31/08        18        .60        .55        1.33
12/31/07        35        .60        .54        1.25
12/31/06        28        .62        .56        1.19
12/31/05        22        .61        .56        1.27
CLASS 2
12/31/09       192        .86        .86         .36
12/31/08       131        .85        .80        1.08
12/31/07       240        .85        .79         .98
12/31/06       151        .87        .81         .94
12/31/05        89        .86        .81        1.04

Global Growth Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09    $1,037        .56%       .56%       1.59%
12/31/08       675        .55        .50        2.37
12/31/07       684        .55        .50        2.06
12/31/06       278        .58        .53        1.95
12/31/05       206        .62        .57        1.56
CLASS 2
12/31/09     4,100        .82        .82        1.36
12/31/08     3,198        .80        .75        2.12
12/31/07     5,180        .80        .75        1.84
12/31/06     4,015        .83        .78        1.71
12/31/05     2,617        .87        .82        1.30

Global Small Capitalization Fund
---------------------------------------------------------------------------------
CLASS 1
12/31/09    $  604        .76%       .76%        .61%
12/31/08       306        .74        .67        1.01
12/31/07       369        .73        .66         .45
12/31/06       247        .77        .69         .82
12/31/05       231        .79        .73         .72
CLASS 2
12/31/09     2,678       1.01       1.01         .36
12/31/08     1,748        .99        .92         .70
12/31/07     3,975        .98        .91         .20
12/31/06     2,927       1.02        .94         .61
12/31/05     1,977       1.04        .97         .49




----
72  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>




                    Income (loss) from investment operations/2/      Dividends and distributions
                    ------------------------------------------  -------------------------------------

                                    Net gains
          Net asset    Net         (losses) on                  Dividends                    Total
           value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period    beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended     of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Growth Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $33.51      $.35          $ 12.94         $ 13.29      $(.35)      $   --        $ (.35)      $46.45     39.74%
12/31/08    67.22       .63           (27.52)         (26.89)      (.56)       (6.26)        (6.82)       33.51    (43.83)
12/31/07    64.51       .68             7.44            8.12       (.68)       (4.73)        (5.41)       67.22     12.64
12/31/06    59.36       .70             5.46            6.16       (.63)        (.38)        (1.01)       64.51     10.48
12/31/05    51.39       .46             8.00            8.46       (.49)          --          (.49)       59.36     16.50
CLASS 2
12/31/09    33.27       .25            12.84           13.09       (.26)          --          (.26)       46.10     39.41
12/31/08    66.72       .50           (27.27)         (26.77)      (.42)       (6.26)        (6.68)       33.27    (43.97)
12/31/07    64.08       .50             7.39            7.89       (.52)       (4.73)        (5.25)       66.72     12.35
12/31/06    58.98       .54             5.43            5.97       (.49)        (.38)         (.87)       64.08     10.22
12/31/05    51.10       .34             7.92            8.26       (.38)          --          (.38)       58.98     16.19
CLASS 3
12/31/09    33.54       .28            12.95           13.23       (.28)          --          (.28)       46.49     39.51
12/31/08    67.21       .54           (27.50)         (26.96)      (.45)       (6.26)        (6.71)       33.54    (43.93)
12/31/07    64.50       .55             7.45            8.00       (.56)       (4.73)        (5.29)       67.21     12.44
12/31/06    59.34       .59             5.46            6.05       (.51)        (.38)         (.89)       64.50     10.29
12/31/05    51.38       .37             7.98            8.35       (.39)          --          (.39)       59.34     16.28

International Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $12.22      $.24           $ 5.04          $ 5.28      $(.25)      $ (.08)       $ (.33)      $17.17     43.50%
12/31/08    24.81       .43            (9.88)          (9.45)      (.40)       (2.74)        (3.14)       12.22    (42.01)
12/31/07    22.01       .43             3.95            4.38       (.41)       (1.17)        (1.58)       24.81     20.30
12/31/06    18.96       .41             3.21            3.62       (.38)        (.19)         (.57)       22.01     19.33
12/31/05    15.82       .32             3.11            3.43       (.29)          --          (.29)       18.96     21.75
CLASS 2
12/31/09    12.19       .21             5.01            5.22       (.22)        (.08)         (.30)       17.11     43.07
12/31/08    24.72       .41            (9.85)          (9.44)      (.35)       (2.74)        (3.09)       12.19    (42.12)
12/31/07    21.94       .36             3.94            4.30       (.35)       (1.17)        (1.52)       24.72     20.02
12/31/06    18.92       .35             3.20            3.55       (.34)        (.19)         (.53)       21.94     18.98
12/31/05    15.79       .28             3.11            3.39       (.26)          --          (.26)       18.92     21.50
CLASS 3
12/31/09    12.23       .22             5.04            5.26       (.23)        (.08)         (.31)       17.18     43.25
12/31/08    24.80       .43            (9.90)          (9.47)      (.36)       (2.74)        (3.10)       12.23    (42.10)
12/31/07    22.00       .39             3.94            4.33       (.36)       (1.17)        (1.53)       24.80     20.10
12/31/06    18.96       .37             3.20            3.57       (.34)        (.19)         (.53)       22.00     19.07
12/31/05    15.82       .29             3.11            3.40       (.26)          --          (.26)       18.96     21.54

New World Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $13.57      $.34          $  6.42         $  6.76      $(.29)      $   --        $ (.29)      $20.04     49.95%
12/31/08    25.88       .43           (10.68)         (10.25)      (.36)       (1.70)        (2.06)       13.57    (42.20)
12/31/07    21.56       .46             6.25            6.71       (.83)       (1.56)        (2.39)       25.88     32.53
12/31/06    16.67       .41             4.95            5.36       (.32)        (.15)         (.47)       21.56     32.88
12/31/05    13.96       .33             2.58            2.91       (.20)          --          (.20)       16.67     21.10
CLASS 2
12/31/09    13.47       .29             6.38            6.67       (.25)          --          (.25)       19.89     49.65
12/31/08    25.69       .40           (10.62)         (10.22)      (.30)       (1.70)        (2.00)       13.47    (42.37)
12/31/07    21.40       .40             6.20            6.60       (.75)       (1.56)        (2.31)       25.69     32.21
12/31/06    16.56       .36             4.92            5.28       (.29)        (.15)         (.44)       21.40     32.59
12/31/05    13.89       .29             2.56            2.85       (.18)          --          (.18)       16.56     20.74

Blue Chip Income and Growth Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $ 6.67      $.16           $ 1.71          $ 1.87      $(.17)       $  --         $(.17)      $ 8.37     28.18%
12/31/08    11.53       .22            (4.22)          (4.00)      (.21)        (.65)         (.86)        6.67    (36.30)
12/31/07    11.97       .24              .07             .31       (.36)        (.39)         (.75)       11.53      2.25
12/31/06    10.91       .20             1.63            1.83       (.16)        (.61)         (.77)       11.97     17.73
12/31/05    10.26       .18              .59             .77       (.12)          --          (.12)       10.91      7.57
CLASS 2
12/31/09     6.62       .14             1.70            1.84       (.15)          --          (.15)        8.31     27.97
12/31/08    11.45       .19            (4.18)          (3.99)      (.19)        (.65)         (.84)        6.62    (36.50)
12/31/07    11.87       .21              .07             .28       (.31)        (.39)         (.70)       11.45      2.03
12/31/06    10.83       .17             1.61            1.78       (.13)        (.61)         (.74)       11.87     17.42
12/31/05    10.20       .15              .58             .73       (.10)          --          (.10)       10.83      7.24







                       Ratio of   Ratio of    Ratio of
                       expenses   expenses      net
          Net assets, to average to average    income
            end of    net assets net assets  (loss) to
Period    period (in    before     after      average
ended      millions)    waiver   waiver/3/  net assets/3/


Growth Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09    $ 6,565       .35%       .35%        .91%
12/31/08      4,768       .33        .30        1.23
12/31/07      5,051       .33        .30        1.00
12/31/06      3,503       .34        .31        1.14
12/31/05      3,709       .35        .32         .87
CLASS 2
12/31/09     18,201       .60        .60         .66
12/31/08     13,383       .58        .55         .95
12/31/07     25,359       .58        .55         .74
12/31/06     23,122       .59        .56         .89
12/31/05     18,343       .60        .57         .64
CLASS 3
12/31/09        230       .53        .53         .72
12/31/08        198       .51        .48        1.02
12/31/07        425       .51        .48         .81
12/31/06        451       .52        .49         .95
12/31/05        499       .53        .50         .69

International Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09     $2,851       .54%       .54%       1.70%
12/31/08      1,864       .52        .48        2.42
12/31/07      1,708       .52        .47        1.82
12/31/06      1,648       .54        .49        1.99
12/31/05      1,599       .57        .52        1.92
CLASS 2
12/31/09      6,411       .79        .79        1.48
12/31/08      4,901       .77        .72        2.16
12/31/07      9,719       .77        .72        1.55
12/31/06      7,260       .79        .74        1.72
12/31/05      4,790       .82        .77        1.64
CLASS 3
12/31/09         68       .72        .72        1.54
12/31/08         57       .70        .65        2.25
12/31/07        123       .70        .65        1.64
12/31/06        120       .72        .67        1.81
12/31/05        116       .75        .70        1.74

New World Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09     $  500       .82%       .82%       2.02%
12/31/08        253       .81        .73        2.18
12/31/07        261       .82        .74        1.92
12/31/06        126       .88        .80        2.19
12/31/05         88       .92        .85        2.22
CLASS 2
12/31/09      1,492      1.07       1.07        1.78
12/31/08      1,044      1.06        .98        1.94
12/31/07      1,875      1.07        .99        1.69
12/31/06      1,175      1.13       1.05        1.93
12/31/05        677      1.17       1.10        1.97

Blue Chip Income and Growth Fund
---------------------------------------------------------------------------------
CLASS 1
12/31/09     $  408       .44%       .44%       2.26%
12/31/08        220       .43        .39        2.48
12/31/07        143       .42        .38        1.95
12/31/06        159       .43        .39        1.75
12/31/05        135       .45        .41        1.73
CLASS 2
12/31/09      3,344       .69         69        2.06
12/31/08      2,602       .68        .64        2.10
12/31/07      4,274       .67        .63        1.70
12/31/06      3,937       .68        .64        1.50
12/31/05      3,029       .70        .66        1.48




                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  73
                                                                             ---

<PAGE>




                       Income (loss) from investment operations/2/      Dividends and distributions
                       ------------------------------------------  -------------------------------------

                                       Net gains
             Net asset    Net         (losses) on                  Dividends                    Total
              value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period       beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended        of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Global Growth and Income Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 6.68      $.20           $ 2.47          $ 2.67      $(.21)      $   --         $(.21)      $ 9.14     40.11%
12/31/08       11.78       .28            (5.09)          (4.81)      (.22)        (.07)         (.29)        6.68    (41.06)
12/31/07       10.98       .28             1.14            1.42       (.22)        (.40)         (.62)       11.78     13.04
12/31/06/4/    10.00       .14              .91            1.05       (.07)          --          (.07)       10.98     10.49
CLASS 2
12/31/09        6.67       .18             2.46            2.64       (.19)          --          (.19)        9.12     39.72
12/31/08       11.75       .26            (5.07)          (4.81)      (.20)        (.07)         (.27)        6.67    (41.17)
12/31/07       10.97       .25             1.13            1.38       (.20)        (.40)         (.60)       11.75     12.67
12/31/06/4/    10.00       .11              .92            1.03       (.06)          --          (.06)       10.97     10.30

Growth-Income Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $24.25      $.49          $  7.13         $  7.62      $(.50)      $   --        $ (.50)      $31.37     31.54%
12/31/08       42.52       .69           (15.91)         (15.22)      (.69)       (2.36)        (3.05)       24.25    (37.68)
12/31/07       42.43       .80             1.51            2.31       (.77)       (1.45)        (2.22)       42.52      5.32
12/31/06       38.31       .77             5.03            5.80       (.72)        (.96)        (1.68)       42.43     15.51
12/31/05       36.81       .62             1.61            2.23       (.58)        (.15)         (.73)       38.31      6.08
CLASS 2
12/31/09       24.11       .42             7.09            7.51       (.44)          --          (.44)       31.18     31.24
12/31/08       42.26       .60           (15.80)         (15.20)      (.59)       (2.36)        (2.95)       24.11    (37.85)
12/31/07       42.19       .68             1.50            2.18       (.66)       (1.45)        (2.11)       42.26      5.04
12/31/06       38.12       .67             4.99            5.66       (.63)        (.96)        (1.59)       42.19     15.20
12/31/05       36.64       .53             1.60            2.13       (.50)        (.15)         (.65)       38.12      5.83
CLASS 3
12/31/09       24.27       .45             7.12            7.57       (.45)          --          (.45)       31.39     31.30
12/31/08       42.51       .64           (15.90)         (15.26)      (.62)       (2.36)        (2.98)       24.27    (37.78)
12/31/07       42.42       .73             1.50            2.23       (.69)       (1.45)        (2.14)       42.51      5.12
12/31/06       38.31       .70             5.01            5.71       (.64)        (.96)        (1.60)       42.42     15.30
12/31/05       36.80       .56             1.61            2.17       (.51)        (.15)         (.66)       38.31      5.88

International Growth and Income Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $10.92      $.36            $4.04           $4.40      $(.19)      $ (.21)        $(.40)      $14.92     40.38%
12/31/08/6/    10.00       .01              .92             .93       (.01)          --          (.01)       10.92      9.28
CLASS 2
12/31/09       10.92       .26             4.10            4.36       (.17)        (.21)         (.38)       14.90     40.04
12/31/08/6/    10.00       .01              .92             .93       (.01)          --          (.01)       10.92      9.27

Asset Allocation Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $12.16      $.35           $ 2.59          $ 2.94      $(.35)      $   --        $ (.35)      $14.75     24.27%
12/31/08       18.51       .47            (5.70)          (5.23)      (.45)        (.67)        (1.12)       12.16    (29.30)
12/31/07       18.34       .51              .75            1.26       (.45)        (.64)        (1.09)       18.51      6.82
12/31/06       16.56       .47             1.97            2.44       (.43)        (.23)         (.66)       18.34     14.96
12/31/05       15.49       .41             1.05            1.46       (.39)          --          (.39)       16.56      9.45
CLASS 2
12/31/09       12.08       .32             2.56            2.88       (.31)          --          (.31)       14.65     23.98
12/31/08       18.39       .43            (5.66)          (5.23)      (.41)        (.67)        (1.08)       12.08    (29.51)
12/31/07       18.23       .47              .74            1.21       (.41)        (.64)        (1.05)       18.39      6.55
12/31/06       16.47       .42             1.96            2.38       (.39)        (.23)         (.62)       18.23     14.66
12/31/05       15.42       .37             1.04            1.41       (.36)          --          (.36)       16.47      9.14
CLASS 3
12/31/09       12.17       .33             2.57            2.90       (.32)          --          (.32)       14.75     23.95
12/31/08       18.50       .44            (5.68)          (5.24)      (.42)        (.67)        (1.09)       12.17    (29.39)
12/31/07       18.34       .48              .74            1.22       (.42)        (.64)        (1.06)       18.50      6.56
12/31/06       16.56       .44             1.97            2.41       (.40)        (.23)         (.63)       18.34     14.75
12/31/05       15.49       .38             1.05            1.43       (.36)          --          (.36)       16.56      9.26

Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 9.45      $.42           $  .80          $ 1.22      $(.34)      $   --         $(.34)      $10.33     12.83%
12/31/08       11.14       .61            (1.64)          (1.03)      (.63)        (.03)         (.66)        9.45     (9.16)
12/31/07       11.64       .65             (.24)            .41       (.91)          --          (.91)       11.14      3.66
12/31/06       11.31       .63              .17             .80       (.47)          --          (.47)       11.64      7.31
12/31/05       11.57       .60             (.40)            .20       (.46)          --          (.46)       11.31      1.77
CLASS 2
12/31/09        9.36       .40              .79            1.19       (.32)          --          (.32)       10.23     12.61
12/31/08       11.03       .59            (1.63)          (1.04)      (.60)        (.03)         (.63)        9.36     (9.35)
12/31/07       11.53       .61             (.24)            .37       (.87)          --          (.87)       11.03      3.33
12/31/06       11.22       .60              .16             .76       (.45)          --          (.45)       11.53      6.99
12/31/05       11.48       .57             (.39)            .18       (.44)          --          (.44)       11.22      1.59







                          Ratio of   Ratio of    Ratio of
                          expenses   expenses      net
             Net assets, to average to average    income
               end of    net assets net assets  (loss) to
Period       period (in    before     after      average
ended         millions)    waiver   waiver/3/  net assets/3/


Global Growth and Income Fund
----------------------------------------------------------------------------------
CLASS 1
12/31/09        $  160      .63%       .63%        2.63%
12/31/08            95      .62        .56         3.00
12/31/07            79      .71        .58         2.37
12/31/06/4/         45      .72/5/     .65/5/      2.10/5/
CLASS 2
12/31/09         1,951      .88        .88         2.42
12/31/08         1,529      .86        .81         2.73
12/31/07         1,997      .96        .83         2.11
12/31/06/4/        638      .97/5/     .90/5/      1.64/5/

Growth-Income Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $ 8,142      .29%       .29%        1.83%
12/31/08         5,034      .28        .25         2.03
12/31/07         5,618      .27        .25         1.82
12/31/06         3,759      .28        .25         1.92
12/31/05         3,825      .29        .27         1.68
CLASS 2
12/31/09        16,220      .54        .54         1.60
12/31/08        13,046      .53        .50         1.75
12/31/07        23,243      .52        .50         1.57
12/31/06        22,688      .53        .50         1.67
12/31/05        17,608      .54        .52         1.44
CLASS 3
12/31/09           225      .47        .47         1.68
12/31/08           205      .46        .43         1.83
12/31/07           405      .45        .43         1.64
12/31/06           458      .46        .43         1.74
12/31/05           471      .47        .45         1.50

International Growth and Income Fund
----------------------------------------------------------------------------------
CLASS 1
12/31/09           $28      .74%       .74%        2.74%
12/31/08/6/         12      .09        .08          .14
CLASS 2
12/31/09            99      .99        .99         1.89
12/31/08/6/          4      .11        .11          .05

Asset Allocation Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09        $4,151      .32%       .32%        2.65%
12/31/08         2,243      .32        .29         2.98
12/31/07         1,927      .32        .29         2.69
12/31/06         1,079      .33        .30         2.67
12/31/05           879      .35        .32         2.57
CLASS 2
12/31/09         5,537      .58        .58         2.45
12/31/08         4,822      .57        .54         2.70
12/31/07         7,308      .57        .54         2.45
12/31/06         6,362      .58        .55         2.42
12/31/05         5,120      .60        .57         2.31
CLASS 3
12/31/09            44      .51        .51         2.53
12/31/08            41      .50        .47         2.77
12/31/07            71      .50        .47         2.52
12/31/06            76      .51        .48         2.49
12/31/05            76      .53        .50         2.39

Bond Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09        $3,775      .39%       .39%        4.19%
12/31/08         2,090      .40        .36         5.84
12/31/07           436      .41        .37         5.59
12/31/06           230      .43        .39         5.54
12/31/05           182      .44        .40         5.30
CLASS 2
12/31/09         4,635      .64        .64         4.00
12/31/08         3,432      .65        .61         5.53
12/31/07         4,679      .66        .62         5.34
12/31/06         3,374      .68        .64         5.29
12/31/05         2,312      .69        .65         5.06




----
74  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>




                       Income (loss) from investment operations/2/      Dividends and distributions
                       ------------------------------------------  -------------------------------------

                                       Net gains
             Net asset    Net         (losses) on                  Dividends                    Total
              value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period       beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended        of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Global Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $10.68      $.45            $ .62           $1.07       $(.18)       $ --         $(.18)      $11.57     10.04%
12/31/08       10.83       .48             (.09)            .39        (.54)         --/7/       (.54)       10.68      3.60
12/31/07       10.18       .49              .47             .96        (.31)         --          (.31)       10.83      9.54
12/31/06/8/    10.00       .10              .15             .25        (.07)         --          (.07)       10.18      2.52
CLASS 2
12/31/09       10.66       .42              .61            1.03        (.16)         --          (.16)       11.53      9.69
12/31/08       10.81       .44             (.07)            .37        (.52)         --/7/       (.52)       10.66      3.48
12/31/07       10.17       .47              .47             .94        (.30)         --          (.30)       10.81      9.23
12/31/06/9/    10.00       .06              .18             .24        (.07)         --          (.07)       10.17      1.99

High-Income Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 8.05      $.75           $ 2.41          $ 3.16      $ (.72)       $ --        $ (.72)      $10.49     39.45%
12/31/08       11.65       .87            (3.64)          (2.77)       (.83)         --          (.83)        8.05    (23.74)
12/31/07       12.90       .95             (.72)            .23       (1.48)         --         (1.48)       11.65      1.62
12/31/06       12.41       .92              .37            1.29        (.80)         --          (.80)       12.90     10.89
12/31/05       12.89       .85             (.55)            .30        (.78)         --          (.78)       12.41      2.46
CLASS 2
12/31/09        7.99       .71             2.39            3.10        (.70)         --          (.70)       10.39     38.94
12/31/08       11.55       .84            (3.60)          (2.76)       (.80)         --          (.80)        7.99    (23.84)
12/31/07       12.79       .91             (.72)            .19       (1.43)         --         (1.43)       11.55      1.33
12/31/06       12.32       .89              .36            1.25        (.78)         --          (.78)       12.79     10.59
12/31/05       12.81       .81             (.55)            .26        (.75)         --          (.75)       12.32      2.20
CLASS 3
12/31/09        8.07       .73             2.42            3.15        (.71)         --          (.71)       10.51     39.14
12/31/08       11.65       .86            (3.64)          (2.78)       (.80)         --          (.80)        8.07    (23.76)
12/31/07       12.88       .92             (.72)            .20       (1.43)         --         (1.43)       11.65      1.40
12/31/06       12.39       .90              .36            1.26        (.77)         --          (.77)       12.88     10.66
12/31/05       12.87       .82             (.55)            .27        (.75)         --          (.75)       12.39      2.25

U.S. Government/AAA-Rated Securities Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $12.29      $.37            $(.03)           $.34       $(.34)      $(.11)        $(.45)      $12.18      2.79%
12/31/08       11.73       .50              .41             .91        (.35)         --          (.35)       12.29      7.84
12/31/07       11.87       .58              .20             .78        (.92)         --          (.92)       11.73      6.83
12/31/06       11.91       .55             (.10)            .45        (.49)         --          (.49)       11.87      3.95
12/31/05       12.07       .48             (.16)            .32        (.48)         --          (.48)       11.91      2.70
CLASS 2
12/31/09       12.20       .34             (.03)            .31        (.32)       (.11)         (.43)       12.08      2.50
12/31/08       11.65       .47              .41             .88        (.33)         --          (.33)       12.20      7.63
12/31/07       11.79       .54              .19             .73        (.87)         --          (.87)       11.65      6.49
12/31/06       11.83       .51             (.09)            .42        (.46)         --          (.46)       11.79      3.75
12/31/05       12.00       .45             (.16)            .29        (.46)         --          (.46)       11.83      2.41
CLASS 3
12/31/09       12.30       .36             (.04)            .32        (.32)       (.11)         (.43)       12.19      2.58
12/31/08       11.74       .48              .41             .89        (.33)         --          (.33)       12.30      7.66
12/31/07       11.86       .55              .20             .75        (.87)         --          (.87)       11.74      6.63
12/31/06       11.89       .52             (.09)            .43        (.46)         --          (.46)       11.86      3.80
12/31/05       12.05       .46             (.16)            .30        (.46)         --          (.46)       11.89      2.50

Cash Management Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $11.44     $(.01)           $  --/7/        $(.01)      $(.03)       $ --/7/      $(.03)      $11.40      (.10)%
12/31/08       11.40       .24               --/7/          .24        (.20)         --          (.20)       11.44      2.15
12/31/07       11.62       .57               --/7/          .57        (.79)         --          (.79)       11.40      4.95
12/31/06       11.31       .54               --/7/          .54        (.23)         --          (.23)       11.62      4.81
12/31/05       11.09       .33               --/7/          .33        (.11)         --          (.11)       11.31      2.97
CLASS 2
12/31/09       11.38      (.04)              --/7/         (.04)       (.02)         --/7/       (.02)       11.32      (.33)
12/31/08       11.35       .20              .02             .22        (.19)         --          (.19)       11.38      1.90
12/31/07       11.56       .54               --/7/          .54        (.75)         --          (.75)       11.35      4.73
12/31/06       11.26       .51               --/7/          .51        (.21)         --          (.21)       11.56      4.59
12/31/05       11.05       .30               --/7/          .30        (.09)         --          (.09)       11.26      2.68
CLASS 3
12/31/09       11.44      (.03)            (.01)           (.04)       (.02)         --/7/       (.02)       11.38      (.31)
12/31/08       11.40       .22              .01             .23        (.19)         --          (.19)       11.44      1.99
12/31/07       11.60       .55               --/7/          .55        (.75)         --          (.75)       11.40      4.83
12/31/06       11.29       .52               --/7/          .52        (.21)         --          (.21)       11.60      4.64
12/31/05       11.07       .30               --/7/          .30        (.08)         --          (.08)       11.29      2.74







                          Ratio of   Ratio of    Ratio of
                          expenses   expenses      net
             Net assets, to average to average    income
               end of    net assets net assets  (loss) to
Period       period (in    before     after      average
ended         millions)    waiver   waiver/3/  net assets/3/


Global Bond Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $  162       .59%       .59%        4.06%
12/31/08          111       .59        .53         4.36
12/31/07           28       .61        .55         4.61
12/31/06/8/        12       .15        .13         1.00
CLASS 2
12/31/09        1,203       .84        .84         3.79
12/31/08          802       .84        .79         4.06
12/31/07          279       .86        .80         4.41
12/31/06/9/        15       .13        .12          .60

High-Income Bond Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $  635       .48%       .48%        7.86%
12/31/08          340       .48        .43         8.22
12/31/07          308       .48        .44         7.41
12/31/06          293       .49        .45         7.36
12/31/05          309       .50        .46         6.76
CLASS 2
12/31/09        1,063       .74        .74         7.62
12/31/08          780       .73        .68         7.92
12/31/07          996       .73        .69         7.17
12/31/06          832       .74        .70         7.12
12/31/05          590       .75        .71         6.55
CLASS 3
12/31/09           24       .67        .67         7.69
12/31/08           18       .66        .61         7.96
12/31/07           28       .66        .62         7.21
12/31/06           34       .67        .63         7.19
12/31/05           37       .68        .64         6.58

U.S. Government/AAA-Rated Securities Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $  999       .41%       .41%        2.99%
12/31/08          496       .43        .38         4.17
12/31/07          211       .46        .41         4.83
12/31/06          218       .47        .42         4.64
12/31/05          252       .47        .43         3.99
CLASS 2
12/31/09        1,561       .66        .66         2.79
12/31/08        1,219       .68        .64         3.93
12/31/07          597       .71        .66         4.58
12/31/06          402       .72        .67         4.40
12/31/05          341       .72        .68         3.75
CLASS 3
12/31/09           27       .59        .59         2.91
12/31/08           33       .61        .57         4.03
12/31/07           29       .64        .59         4.65
12/31/06           32       .65        .60         4.45
12/31/05           39       .65        .61         3.81

Cash Management Fund
------------------------------------------------------------------------------------
CLASS 1
12/31/09       $  105       .33%       .33%        (.08)%
12/31/08          158       .32        .29         2.07
12/31/07          112       .33        .30         4.88
12/31/06           98       .33        .30         4.74
12/31/05           75       .33        .30         2.91
CLASS 2
12/31/09          664       .58        .58         (.33)
12/31/08        1,023       .57        .54         1.73
12/31/07          452       .58        .55         4.61
12/31/06          282       .58        .55         4.52
12/31/05          153       .58        .55         2.71
CLASS 3
12/31/09           17       .51        .51         (.27)
12/31/08           25       .50        .47         1.91
12/31/07           20       .51        .48         4.70
12/31/06           18       .51        .48         4.53
12/31/05           16       .51        .48         2.70




                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  75
                                                                             ---

<PAGE>




                                                       Year ended December 31
                                                   -------------------------------
Portfolio turnover rate for all classes of shares  2009  2008  2007  2006    2005
-------------------------------------------------  ---- ----   ----  ----    ----

   Global Discovery Fund                            60%  46%     50%   31%     53%
   Global Growth Fund                               43   38      38    31      26
   Global Small Capitalization Fund                 55   47      49    50      47
   Growth Fund                                      37   26      40    35      29
   International Fund                               46   52      41    29      40
   New World Fund                                   25   32      34    32      26
   Blue Chip Income and Growth Fund                 22   24      27    21      33
   Global Growth and Income Fund                    47   36      36     8/4/   --
   Growth-Income Fund                               24   31      24    25      20
   International Growth and Income Fund             21   --/6/   --    --      --
   Asset Allocation Fund                            41   36      29    38      23
   Bond Fund                                       125   63      57    57      46
   Global Bond Fund                                 86  118      85     7/8/   --
   High-Income Bond Fund                            47   29      32    35      35
   U.S. Government/AAA-Rated Securities Fund       100  108      91    76      86
   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 Capital
   Research and Management Company. During some of the periods shown, Capital
   Research and Management Company reduced fees for investment advisory
   services.

/4/From May 1, 2006, commencement of operations.

/5/Annualized.

/6/From November 18, 2008, commencement of operations.

/7/Amount less than $.01.

/8/From October 4, 2006, commencement of operations.

/9/From November 6, 2006, when Class 2 shares were first issued.



----
76  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

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



OTHER FUND INFORMATION

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

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

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

The current SAI and the codes of ethics are on file with the Securities and
Exchange Commission (SEC). These and other related materials about the Series
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/551-8090) or on the EDGAR database on the SEC's website
at http://www.sec.gov or, after payment of a duplicating fee, via e-mail
request to publicinfo@sec.gov or by writing to the SEC's Public Reference
Section, 100 F Street, NE, Washington, D.C. 20549-1520.

The current SAI and annual/semi-annual reports to shareholders can be found
online at americanfunds.com/afis and may be available on the website of the
company that issued your insurance contract. You also may request a free copy
of these documents or the codes of ethics by calling American Funds at
800/421-9900, ext. 65413 or writing to the Secretary at 333 South Hope Street,
Los Angeles, California 90071.





INAFPR-998-0510P Printed in USA CGD/AFD/8024. Investment Company File No. 811-3857





The Capital Group Companies
American Funds   Capital Research and Management   Capital International    Capital Guardian   Capital Bank and Trust




<PLAINTEXT>
<PAGE>

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




AMERICAN FUNDS
INSURANCE SERIES(R)


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




PROSPECTUS


Class 2 shares


May 1, 2010





                TABLE OF CONTENTS

                    Summaries
                 1  Global Discovery Fund
                 4  Global Growth Fund
                 7  Global Small Capitalization Fund
                10  Growth Fund
                13  International Fund
                16  New World Fund
                20  Blue Chip Income and Growth Fund
                23  Global Growth and Income Fund
                26  Growth-Income Fund
                29  International Growth and Income Fund
                32  Asset Allocation Fund
                36  Bond Fund
                40  Global Bond Fund
                44  High-Income Bond Fund
                47  U.S. Government/AAA-Rated Securities Fund
                50  Cash Management Fund
                52  Investment objectives, strategies and risks
                67  Management and organization
                71  Purchases and redemptions of shares
                73  Plans of distribution
                73  Distributions and taxes
                74  Financial highlights



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

<PAGE>

GLOBAL DISCOVERY FUND


INVESTMENT OBJECTIVE

The investment objective of the fund is long-term growth of capital. Current
income is a secondary consideration.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
an interest in the fund. It does not reflect insurance contract fees and
expenses. If insurance contract fees and expenses were reflected, expenses
shown would be higher.



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.58%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.03
Total annual fund operating expenses...................................  0.86



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $88    $274    $477    $1,061



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 60% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund seeks to achieve its objective by investing in securities of companies
that can benefit from innovation, exploit new technologies or provide products
and services that meet the demands of an evolving global economy. In
implementing this strategy the fund may invest in any company, provided that
the fund's investment adviser determines that the company could participate and
thrive in the new economy.

In pursuing its investment objective, the fund invests primarily in common
stocks that the investment adviser believes have the potential for growth. The
fund also invests in common stocks with the potential to pay dividends. The
fund may invest a significant portion of its assets in securities of issuers
domiciled outside the United States, including securities of issuers in
countries with developing economies and/or markets. The fund expects to be
invested in numerous countries around the world.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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



                                                                             ---
        GLOBAL DISCOVERY FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  1
                                                                             ---

<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

GROWTH STOCK RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks.

CONCENTRATION RISKS -- The fund may be subject to additional risks because it
invests in a more limited group of sectors and industries than the broad market.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Multi-Cap Growth Funds Index includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund and the Global
Service and Information Index reflects the market sectors and securities in
which the fund primarily invests. This information provides some indication of
the risks of investing in the fund. Past results are not predictive of future
results. Figures shown reflect fees and expenses associated with an investment
in the fund, but do not reflect insurance contract fees and expenses. If
insurance contract fees and expenses were included, results would have been
lower.

Calendar year total returns.

                                     [CHART]

 2002      2003      2004       2005        2006       2007      2008      2009
------    ------    ------      ------     ------     ------    -------   ------
-21.67%    37.11%   10.43%      10.80%     17.41%     17.22%    -45.09%   50.91%



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


HIGHEST   24.72% (quarter ended June 30, 2009)
LOWEST   -24.93% (quarter ended December 31, 2008)



----
2   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL DISCOVERY FUND
----

<PAGE>


For periods ended December 31, 2009:





                                                                                       LIFETIME
                                                                                      (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                                           1 YEAR 5 YEARS INCEPTION)
------------------------------------------------------------------------------------------------

Fund (inception date -- 7/5/01)                                        50.91%  4.79%     4.03%
S&P 500 (reflects no deduction for fees, expenses or taxes)            26.47   0.42      0.87
Lipper Multi-Cap Growth Funds Index (reflects no deduction for fees
 or taxes)                                                             39.17   1.49      0.28
Global Service and Information Index (reflects no deduction for fees,
 expenses or taxes)                                                    30.13   0.15      0.77




MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

   GORDON CRAWFORD                      5 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
   MARK E. DENNING                      5 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
   CLAUDIA P. HUNTINGTON                9 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
        GLOBAL DISCOVERY FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  3
                                                                             ---

<PAGE>

GLOBAL GROWTH FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
capital.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
an interest in the fund. It does not reflect insurance contract fees and
expenses. If insurance contract fees and expenses were reflected, expenses
shown would be higher.



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.54%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.03
Total annual fund operating expenses...................................  0.82



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $84    $262    $455    $1,014



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 43% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks of companies located around the
world that the investment adviser believes have the potential for growth. The
fund may invest a portion of its assets in common stocks and other securities
of companies in countries with developing economies and/or markets. The fund
expects to be invested in numerous countries around the world.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.



----
4   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL GROWTH FUND
----

<PAGE>


GROWTH STOCK RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

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

Calendar year total returns.


                                     [CHART]

  2000    2001    2002    2003    2004    2005    2006    2007    2008     2009
  ----    ----    ----    ----    ----    ----    ----    ----   ------   ------
-18.87% -14.22% -14.64%  35.27%  13.49%  14.07%  20.43%  14.85%  -38.39%  42.30%




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


HIGHEST   22.11% (quarter ended June 30, 2009)
LOWEST   -20.43% (quarter ended September 30, 2001)



For periods ended December 31, 2009:



                                                                     LIFETIME
                                                                    (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS INCEPTION)
------------------------------------------------------------------------------
Fund (inception date -- 4/30/97)            42.30%  6.70%    2.35%     9.02%
MSCI World Index (reflects no deduction
 for fees, expenses or taxes)               30.79   2.57     0.23      4.72
Lipper Global Funds Index (reflects no
 deduction for fees or taxes)               31.06   3.20     1.03      5.11



                                                                             ---
           GLOBAL GROWTH FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  5
                                                                             ---

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-------------------------------------------------------------------------------------------------------------

    ROBERT W. LOVELACE                 13 years              Senior Vice President - Capital World Investors
    Vice President
-------------------------------------------------------------------------------------------------------------
    STEVEN T. WATSON                   8 years               Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
    PAUL A. WHITE                      5 years               Senior Vice President - Capital World Investors




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



----
6   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL GROWTH FUND
----

<PAGE>

GLOBAL SMALL CAPITALIZATION FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
capital.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.72%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.04
Total annual fund operating expenses...................................  1.01



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $103   $322    $558    $1,236



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 55% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

Normally, the fund invests at least 80% of its net assets in growth-oriented
common stocks and other equity type securities (such as preferred stocks,
convertible preferred stocks and convertible bonds) of companies with small
market capitalizations, measured at the time of purchase. However, the fund's
holdings of small capitalization stocks may fall below the 80% threshold due to
subsequent market action. 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 re-evaluated and
adjusted this definition and may continue to do so in the future.

Under normal circumstances, the fund invests a significant portion of its
assets outside the United States. The fund may also invest a portion of its
assets in common stocks and other securities of companies in countries with
developing economies and/or markets. The fund expects to be invested in
numerous countries around the world.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.





                                                                               ---
GLOBAL SMALL CAPITALIZATION FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  7
                                                                               ---


<PAGE>


MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

GROWTH STOCK RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks.

SMALL CAPITALIZATION RISKS -- Investing in smaller companies may pose
additional risks as it is often more difficult to value or dispose of small
company stocks, more difficult to obtain information about smaller companies,
and the prices of their stocks may be more volatile than stocks of larger, more
established companies.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The fund
has selected the MSCI All Country World Small Cap Index to replace the S&P
Global (less than)$3 Billion Index as its broad-based securities market index.
The fund's investment adviser believes that the MSCI All Country World Small
Cap Index better reflects the market sectors and securities in which the fund
primarily invests than the S&P Global (less than)$3 Billion Index. The Lipper
Global Small-Cap Funds Average includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.

Calendar year total returns.


                                    [CHART]

  2000    2001     2002    2003    2004    2005    2006   2007    2008    2009
 ------  ------   ------  ------  ------  ------  ------ ------ -------  ------
-16.53% -12.85%  -19.05%  53.53%  20.88%  25.35%  24.05% 21.43% -53.52%  61.30%



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


HIGHEST   29.12% (quarter ended June 30, 2009)
LOWEST   -31.28% (quarter ended December 31, 2008)





----

8   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS    GLOBAL SMALL CAPITALIZATION FUND
----


<PAGE>


For periods ended December 31, 2009:



                                                                  LIFETIME
                                                                 (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS             1 YEAR 5 YEARS 10 YEARS INCEPTION)
---------------------------------------------------------------------------
Fund (inception date -- 4/30/98)         61.30%  7.20%    4.46%     9.98%
MSCI All Country World Small Cap Index
 (reflects no deduction for fees,
 expenses or taxes)                      51.30   5.24     6.10      6.55
S&P Global (less than)$3 Billion Index
 (reflects no deduction for fees,
 expenses or taxes)                      50.67   5.43     7.36      7.06
Lipper Global Small-Cap Funds
 Average (reflects no deduction for
 fees or taxes)                          46.05   3.30     2.66      6.01



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

      GORDON CRAWFORD                  12 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
      MARK E. DENNING                  12 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
      J. BLAIR FRANK                   7 years               Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
      HAROLD H. LA                     2 years               Senior Vice President - Capital Research Global Investors




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.




                                                                                 ---
  GLOBAL SMALL CAPITALIZATION FUND   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 9
                                                                                 ---

<PAGE>

GROWTH FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with growth of capital.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.33%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.60



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $61    $192    $335     $750



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 37% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks and seeks to invest in companies
that appear to offer superior opportunities for growth of capital. The fund may
invest a portion of its assets in common stocks and other securities of issuers
domiciled outside the United States.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively
valued companies that, in its opinion, represent good, long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental analysis, which may include meeting with
company executives and employees, suppliers, customers and competitors.
Securities may be sold when the investment adviser believes that they no longer
represent relatively attractive investment opportunities.

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.



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

<PAGE>


GROWTH STOCK RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may also be affected by currency
controls; different accounting, auditing, financial reporting, and legal
standards and practices; 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.
Investments in securities issued by entities domiciled in the United States may
also be subject to many of these risks.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Capital Appreciation Funds Index and the Lipper Growth Funds Index include
mutual funds that disclose investment objectives that are reasonably comparable
to those of the fund. This information provides some indication of the risks of
investing in the fund. Past results are not predictive of future results.
Figures shown reflect fees and expenses associated with an investment in the
fund, but do not reflect insurance contract fees and expenses. If insurance
contract fees and expenses were included, results would have been lower.

Calendar year total returns.


                                    [CHART]

2000    2001     2002    2003    2004    2005    2006    2007     2008    2009
-----  ------  -------  ------  ------  ------  -----   -----   -------  ------
4.47%  -18.15% -24.46%  36.80%  12.50%  16.19%  10.22%  12.35%  -43.97%  39.41%



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


HIGHEST   22.75% (quarter ended December 31, 2001)
LOWEST   -27.17% (quarter ended September 30, 2001)



For periods ended December 31, 2009:



AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS LIFETIME*
-----------------------------------------------------------------------------
Fund                                        39.41%  2.36%    1.11%    12.10%
S&P 500 (reflects no deduction for fees,
 expenses or taxes)                         26.47   0.42    -0.95     10.63
Lipper Capital Appreciation Funds Index
 (reflects no deduction for fees or taxes)  37.36   3.05    -0.57      9.12
Lipper Growth Funds Index (reflects no
 deduction for fees or taxes)               35.91   0.02    -2.49      8.69



* Lifetime results are from February 8, 1984, the date the fund began
  investment operations. Class 2 shares were first offered on April 30, 1997;
  therefore, results for the fund prior to that date assume a hypothetical
  investment in Class 1 shares, reduced by the .25% annual expense that applies
  to Class 2 shares and is described in the "Plans of distribution" section of
  this prospectus. Results for Class 1 shares are comparable to those of Class
  2 shares because both classes invest in the same portfolio of securities.



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

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-------------------------------------------------------------------------------------------------------------

  DONNALISA PARKS BARNUM                7 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  GREGG E. IRELAND                      4 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  GREGORY D. JOHNSON                    3 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  MICHAEL T. KERR                       5 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  RONALD B. MORROW                      7 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



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

<PAGE>

INTERNATIONAL FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
capital.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.50%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.04
Total annual fund operating expenses...................................  0.79



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $81    $252    $439     $978



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 46% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks of companies located outside the
United States that the investment adviser believes have the potential for
growth. The fund may invest a portion of its assets in common stocks and other
securities of companies in countries with developing economies and/or markets.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.



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

<PAGE>


GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

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

Calendar year total returns.


                                     [CHART]

 2000     2001    2002    2003    2004    2005    2006    2007    2008    2009
------  -------  ------  ------  ------  ------  ------  ------  ------- ------
-22.06% -19.89%  -14.84% 34.85%  19.32%  21.50%  18.98%  20.02%  -42.12% 43.07%



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


HIGHEST   24.47% (quarter ended June 30, 2009)
LOWEST   -20.86% (quarter ended December 31, 2008)



For periods ended December 31, 2009:



AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS LIFETIME*
-----------------------------------------------------------------------------
Fund                                        43.07%  7.52%    2.09%    8.92%
MSCI All Country World ex USA Index
 (reflects no deduction for fees, expenses
 or taxes)                                  42.14   6.30     3.12     6.47
Lipper International Funds Index (reflects
 no deduction for fees or taxes)            35.30   4.88     1.95     6.70



* Lifetime results are from May 1, 1990, the date the fund began investment
  operations. Class 2 shares were first offered on April 30, 1997; therefore,
  results for the fund prior to that date assume a hypothetical investment in
  Class 1 shares, reduced by the .25% annual expense that applies to Class 2
  shares and is described in the "Plans of distribution" section of this
  prospectus. Results for Class 1 shares are comparable to those of Class 2
  shares because both classes invest in the same portfolio of securities.



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

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-----------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

  SUNG LEE                              4 years              Senior Vice President - Capital Research Global Investors
  Vice President
-----------------------------------------------------------------------------------------------------------------------
  JESPER LYCKEUS                        3 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
  CHRISTOPHER M. THOMSEN                4 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



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

<PAGE>

NEW WORLD FUND


INVESTMENT OBJECTIVE

The fund's investment objective is long-term capital appreciation.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.77%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.05
Total annual fund operating expenses...................................  1.07



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $109   $340    $590    $1,306



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 25% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks of companies with significant
exposure to countries with developing economies and/or markets and that the
investment adviser believes have potential of providing capital appreciation.
The fund may also invest in debt securities of issuers, including issuers of
lower rated bonds (rated Ba1 or below and BB+ or below by a nationally
recognized statistical rating organization or unrated but determined to be of
equivalent quality by the fund's investment adviser), with exposure to these
countries. Bonds rated Ba1 or BB+ or below are sometimes referred to as "junk
bonds."

Under normal market conditions, the fund invests at least 35% of its assets in
equity and debt securities of issuers primarily based in qualified countries
that have developing economies and/or markets.

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

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



----
16  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  NEW WORLD FUND
----

<PAGE>


The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss, particularly in the case of smaller
capitalization stocks.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure,
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

SMALL CAPITALIZATION RISKS -- Investing in smaller companies may pose
additional risks as it is often more difficult to value or dispose of small
company stocks, more difficult to obtain information about smaller companies
and the prices of their stocks may be more volatile than stocks of larger, more
established companies.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. There may be little trading in the secondary market for particular
debt securities, which may make them more difficult to value or sell.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.



                                                                             ---
               NEW WORLD FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  17
                                                                             ---

<PAGE>

INVESTMENT RESULTS


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

Calendar year total returns.


                                     [CHART]

 2000     2001    2002    2003    2004    2005    2006   2007   2008    2009
 ----     ----    ----    ----    ----    ----    ----   ----   ----    ----
-12.70%  -4.19%  -5.66%  39.18%  18.80%  20.74%  32.59% 32.21% -42.37%  49.65%



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


HIGHEST   23.92% (quarter ended June 30, 2009)
LOWEST   -22.30% (quarter ended December 31, 2008)



For periods ended December 31, 2009:



                                                                     LIFETIME
                                                                    (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS INCEPTION)
------------------------------------------------------------------------------
Fund (inception date -- 6/17/99)            49.65%  12.79%   9.06%    10.33%
MSCI All Country World Index (reflects no
 deduction for fees, expenses or taxes)     35.41    3.64    0.89      2.23
MSCI Emerging Markets Index (reflects no
 deduction for fees, expenses or taxes)     79.02   15.88   10.11     11.39



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

    CARL M. KAWAJA                     11 years              Senior Vice President - Capital World Investors
    Vice President
------------------------------------------------------------------------------------------------------------------------
    ROBERT W. LOVELACE                 11 years              Senior Vice President - Capital World Investors
    Vice President
------------------------------------------------------------------------------------------------------------------------
    DAVID C. BARCLAY                   11 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company




----
18  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  NEW WORLD FUND
----

<PAGE>


TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
               NEW WORLD FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  19
                                                                             ---

<PAGE>

BLUE CHIP INCOME AND GROWTH FUND


INVESTMENT OBJECTIVES

The fund's investment objectives are to produce income exceeding the average
yield on U.S. stocks generally and to provide an opportunity for growth of
principal consistent with sound common stock investing.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.43%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.69



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $70    $221    $384     $859



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 22% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in dividend-paying common stocks of larger, more
established companies domiciled in the United States with market
capitalizations of $4 billion and above. In seeking to provide you with a level
of current income that exceeds the average yield on U.S. stocks, the fund
generally looks to the average yield on stocks of companies listed on the S&P
500. The fund also ordinarily invests at least 90% of its equity assets in the
stock of companies whose debt securities are rated at least investment grade.
The fund may invest up to 10% of its assets in equity securities of larger
companies domiciled outside the United States, so long as they are listed or
traded in the United States. The fund invests, under normal market conditions,
at least 90% of its assets in equity securities. The fund is designed for
investors seeking both income and capital appreciation.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.




----
20  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  BLUE CHIP INCOME AND GROWTH FUND
----


<PAGE>


MARKET RISKS -- The prices of, and the income generated by, the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in the
United States may also be subject to many of these risks.

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, purchased by the fund may involve large price swings and
potential for loss.

INCOME STOCKS RISKS -- Income provided by the fund may be affected by changes
in the dividend policies of the companies in which the fund invests and the
capital resources available for such payments at such companies.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Growth & Income Funds Index includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.


Calendar year total returns.


                                       [CHART]

    2002      2003      2004      2005      2006      2007      2008       2009
  -------    ------    ------    ------    ------    ------    -------    ------
  -23.07%    30.73%     9.74%     7.24%    17.42%     2.03%    -36.50%    27.97%




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


HIGHEST   17.09% (quarter ended June 30, 2009)
LOWEST   -21.27% (quarter ended December 31, 2008)



For periods ended December 31, 2009:



                                                              LIFETIME
                                                             (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                  1 YEAR 5 YEARS INCEPTION)
-----------------------------------------------------------------------
Fund (inception date -- 7/5/01)               27.97%  0.86%     1.02%
S&P 500 (reflects no deduction for fees,
 expenses or taxes)                           26.47   0.42      0.87
Lipper Growth & Income Funds Index (reflects
 no deduction for fees or taxes)              29.10   0.75      1.76




                                                                                 ---
BLUE CHIP INCOME AND GROWTH FUND	AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 21
                                                                                 ---


<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-----------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE
Series title (if applicable)          IN THIS FUND            PRIMARY TITLE WITH INVESTMENT ADVISER
-----------------------------------------------------------------------------------------------------------------------

JAMES K. DUNTON                         9 years              Senior Vice President - Capital Research Global Investors
Vice Chairman of the Board
-----------------------------------------------------------------------------------------------------------------------
C. ROSS SAPPENFIELD                     9 years              Senior Vice President - Capital Research Global Investors
Senior Vice President
-----------------------------------------------------------------------------------------------------------------------
CHRISTOPHER D. BUCHBINDER               3 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
JAMES B. LOVELACE                       3 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.





----
22  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS	BLUE CHIP INCOME AND GROWTH FUND
----


<PAGE>

GLOBAL GROWTH AND INCOME FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
capital while providing current income.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.60%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.03
Total annual fund operating expenses...................................  0.88



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year, and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $90    $281    $488    $1,084



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 47% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks of well-established companies
located around the world, many of which the investment adviser believes have
the potential for growth and/or to pay dividends. Under normal market
circumstances, the fund invests a significant portion of its assets in
securities of issuers domiciled outside the United States, including in issuers
in countries with developing economies and/or markets. The fund expects to be
invested in numerous countries around the world.

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

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.




                                                                             ---
 GLOBAL GROWTH AND INCOME FUND AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  23
                                                                             ---

<PAGE>


MARKET RISKS -- The prices of, and the income generated by, the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, purchased by the fund may involve large price swings and
potential for loss.

INCOME STOCKS RISKS -- Income provided by the fund may be affected by changes
in the dividend policies of the companies in which the fund invests and the
capital resources available for such payments at such companies.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The fund
has selected the MSCI World Index to replace the MSCI All Country World Index
as its broad-based securities market index. The fund's investment adviser
believes that the MSCI World Index better reflects the market sectors and
securities in which the fund primarily invests than the MSCI All Country World
Index. The Lipper Global Funds Index includes mutual funds that disclose
investment objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.


Calendar year total returns.




                                        [CHART]

                                 2007    2008    2009
                                 ----    -----   -----
                                12.67%  -41.17%  39.72%



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


HIGHEST   19.48% (quarter ended September 30, 2009)
LOWEST   -20.43% (quarter ended December 31, 2008)



For periods ended December 31, 2009:





                                                                                          LIFETIME
                                                                                         (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                                                      1 YEAR INCEPTION)
---------------------------------------------------------------------------------------------------

Fund (inception date -- 5/1/06)                                                   39.72%    0.58%
MSCI World Index (reflects no deduction for fees, expenses or taxes)              30.79    -1.77
MSCI All Country World Index (reflects no deduction for fees, expenses or taxes)  35.41    -0.87
Lipper Global Funds Index (reflects no deduction for fees or taxes)               31.06    -1.34




----
24  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL GROWTH AND INCOME FUND
----

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-------------------------------------------------------------------------------------------------------------

     GREGG E. IRELAND                   4 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
     ANDREW B. SUZMAN                   1 year               Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
     STEVEN T. WATSON                   4 years              Senior Vice President - Capital World Investors




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
 GLOBAL GROWTH AND INCOME FUND AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  25
                                                                             ---

<PAGE>

GROWTH-INCOME FUND


INVESTMENT OBJECTIVE

The fund's investment objectives are to achieve long-term growth of capital and
income.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.28%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.54



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $55    $173    $302     $677



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 24% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks or other securities that
demonstrate the potential for appreciation and/or dividends. Although the fund
focuses on investments in medium to larger capitalization companies, the fund's
investments are not limited to a particular capitalization size. The fund may
invest up to 15% of its assets, at the time of purchase, in securities of
issuers domiciled outside the United States. The fund is designed for investors
seeking both capital appreciation and income.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of, and the income generated by, common stocks and
other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.



----
26  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GROWTH-INCOME FUND
----

<PAGE>


RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent and may also be affected by currency fluctuation and
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices in some countries; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, purchased by the fund may involve large price swings and
potential for loss.

INCOME STOCKS RISKS -- Income provided by the fund may be affected by changes
in the dividend policies of the companies in which the fund invests and the
capital resources available for such payments at such companies.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Growth & Income Funds Index includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.

Calendar year total returns.

                                    [CHART]

2000   2001    2002    2003    2004    2005    2006    2007    2008     2009
-----  -----  ------   ------  ------  -----   -----   -----   -------  ------
7.95%  2.56%  -18.34%  32.43%  10.37%  5.83%   15.20%  5.04%   -37.85%  31.24%



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

HIGHEST   16.90% (quarter ended June 30, 2003)
LOWEST   -21.98% (quarter ended December 31, 2008)


For periods ended December 31, 2009:



AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS LIFETIME*
-----------------------------------------------------------------------------
Fund                                        31.24%  0.88%    3.28%    10.63%
S&P 500 (reflects no deduction for fees,
 expenses or taxes)                         26.47   0.42    -0.95     10.63
Lipper Growth & Income Funds Index
 (reflects no deduction for fees or taxes)  29.10   0.75     1.20      9.45



* Lifetime results are from February 8, 1984, the date the fund began
  investment operations. Class 2 shares were first offered on April 30, 1997;
  therefore, lifetime results for the fund prior to that date assume a
  hypothetical investment in Class 1 shares, reduced by the .25% annual expense
  that applies to Class 2 shares and is described in the "Plans of
  distribution" section of this prospectus. Results for Class 1 shares are
  comparable to those of Class 2 shares because both classes invest in the same
  portfolio of securities.



                                                                             ---
           GROWTH-INCOME FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  27
                                                                             ---

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-----------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

JAMES K. DUNTON                        26 years              Senior Vice President - Capital Research Global Investors
Vice Chairman of the Board
-----------------------------------------------------------------------------------------------------------------------
DONALD D. O'NEAL                       5 years               Senior Vice President - Capital Research Global Investors
President and Trustee
-----------------------------------------------------------------------------------------------------------------------
C. ROSS SAPPENFIELD                    11 years              Senior Vice President - Capital Research Global Investors
Senior Vice President
-----------------------------------------------------------------------------------------------------------------------
J. BLAIR FRANK                         4 years               Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
CLAUDIA P. HUNTINGTON                  16 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
DYLAN J. YOLLES                        5 years               Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



----
28  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GROWTH-INCOME FUND
----

<PAGE>

INTERNATIONAL GROWTH AND INCOME FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
  capital while providing current income.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.69%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.05
Total annual fund operating expenses...................................  0.99



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $101   $315    $547    $1,213



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 21% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in stocks of larger, well-established companies
domiciled outside of the United States, including countries with developing
economies and/or markets, that the investment adviser believes have the
potential for growth and/or to pay dividends. 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. The fund therefore expects to be invested in
numerous countries outside the United States.

The fund is designed for investors seeking both capital appreciation and
income. In pursuing its objective, the fund focuses on stocks of companies with
strong earnings that pay dividends. We believe that these stocks will be more
resistant to market declines than stocks of companies that do not pay dividends.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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






                                                                                       ---
INTERNATIONAL GROWTH AND INCOME FUND	AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 29
                                                                                       ---


<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of and the income generated by the common stocks and
other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency and interest rate fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside of the United States may also be affected by 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, purchased by the fund may involve large price swings and
potential for loss.

INCOME STOCKS RISKS -- Income provided by the fund may be affected by changes
in the dividend policies of the companies in which the fund invests and the
capital resources available for such payments at such companies.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

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


Calendar year total returns.



                                    [CHART]

                                     2009
                                    ------
                                    40.04%

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



HIGHEST  22.56% (quarter ended June 30, 2009)
LOWEST   -7.42% (quarter ended March 31, 2009)




----
30  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS	INTERNATIONAL GROWTH AND INCOME FUND
----


<PAGE>


For periods ended December 31, 2009:



                                                                     LIFETIME
                                                                    (FROM FUND
AVERAGE ANNUAL TOTAL RETURNS                                 1 YEAR INCEPTION)
------------------------------------------------------------------------------
Fund (inception date -- 11/18/08)                            40.04%   46.31%
MSCI World ex USA Index (reflects no deduction for fees,
 expenses or taxes)                                          34.39    40.17
Lipper International Funds Index (reflects no deduction for
 fees or taxes)                                              35.30    43.14



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





--------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
--------------------------------------------------------------------------------------------------------------------

      SUNG LEE                          2 years              Senior Vice President - Capital Research Global
      Vice President                                         Investors
--------------------------------------------------------------------------------------------------------------------
      JESPER LYCKEUS                    2 years              Senior Vice President - Capital Research Global
                                                             Investors
--------------------------------------------------------------------------------------------------------------------
      DAVID M. RILEY                    2 years              Senior Vice President - Capital Research Global
                                                             Investors
--------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.




                                                                                       ---
INTERNATIONAL GROWTH AND INCOME FUND	AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS 31
                                                                                       ---


<PAGE>

ASSET ALLOCATION FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with high total return
(including income and capital gains) consistent with preservation of capital
over the long term.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.31%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.58



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $59    $186    $324     $726



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 41% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

In seeking to pursue its investment objective, the fund varies its mix of
equity securities, debt securities and money market instruments. Under normal
market conditions, the fund's investment adviser expects (but is not required)
to maintain an investment mix falling within the following ranges: 40%-80% in
equity securities, 20%-50% in debt securities and 0%-40% in money market
instruments. As of December 31, 2009, the fund was approximately 70% invested
in equity securities, 23% invested in debt securities and 7% invested in money
market instruments. The proportion of equities, debt and money market
securities held by the fund varies with market conditions and the investment
adviser's assessment of their relative attractiveness as investment
opportunities.

The fund invests in a diversified portfolio of common stocks and other equity
securities, bonds and other intermediate and long-term debt securities, and
money market instruments (debt securities maturing in one year or less). The
fund may invest up to 15% of its assets in common stocks and other equity
securities of issuers domiciled outside the United States and up to 5% of its
assets in debt securities of issuers domiciled outside the United States. In
addition, the fund may invest up to 25% of its debt assets in lower quality
debt securities (rated Ba1 or below by Moody's Investors Service and BB+ or
below by Standard & Poor's Corporation or unrated but determined to be of
equivalent quality). Such securities are sometimes referred to as "junk bonds."

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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



----
32  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  ASSET ALLOCATION FUND
----

<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of, and the income generated by, the common stocks,
bonds and other securities held by the fund may decline in response to certain
events taking place around the world, including those directly involving the
issuers whose securities are owned by the fund; conditions affecting the
general economy; overall market changes; local, regional or global political,
social or economic instability; governmental or governmental agency responses
to economic conditions; and currency, interest rate and commodity price
fluctuations.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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. A security backed by the U.S. Treasury
or the full faith and credit of the U.S. government is guaranteed only as to
the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. There may be little trading in the secondary market for particular
debt securities, which may make them more difficult to value or sell.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
fluctuations and controls; different accounting, auditing, financial reporting,
disclosure, regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

ASSET ALLOCATION RISK -- The fund's percentage allocation to equity securities,
debt securities and money market instruments could cause the fund to
underperform relative to relevant benchmarks and other funds with similar
investment objectives.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The
Citigroup Broad Investment-Grade (BIG) Bond Index reflect market sectors and
securities in which the fund primarily invests. This information provides some
indication of the risks of investing in the fund. Past results are not
predictive of future results. Figures shown reflect fees and expenses
associated with an investment in the fund, but do not reflect insurance
contract fees and expenses. If insurance contract fees and expenses were
included, results would have been lower.



                                                                             ---
        ASSET ALLOCATION FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  33
                                                                             ---

<PAGE>


Calendar year total returns.


                                    [CHART]

2000   2001     2002    2003    2004    2005    2006    2007    2008      2009
-----  -----  -------  ------  -----   -----   -----   -----   -------   ------
4.40%  0.52%  -12.38%  21.74%  8.34%   9.14%   14.66%   6.55%  -29.51%   23.98%



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


HIGHEST   12.15% (quarter ended June 30, 2003)
LOWEST   -16.35% (quarter ended December 31, 2008)



For periods ended December 31, 2009:



AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS LIFETIME*
-----------------------------------------------------------------------------
Fund                                        23.98%  3.11%    3.52%    7.59%
S&P 500 (reflects no deduction for fees,
 expenses or taxes)                         26.47   0.42    -0.95     8.25
Barclays Capital U.S. Aggregate Index
 (reflects no deduction for fees, expenses
 or taxes)                                   5.93   4.97     6.33     6.98
Citigroup Broad Investment-Grade (BIG)
 Bond Index (reflects no deduction for
 fees, expenses or taxes)                    5.06   5.22     6.47     7.09



* Lifetime results are from August 1, 1989, the date the fund began investment
  operations. Class 2 shares were first offered on April 30, 1997; therefore,
  results for the fund prior to that date assume a hypothetical investment in
  Class 1 shares, reduced by the .25% annual expense that applies to Class 2
  shares and is described in the "Plans of distribution" section of this
  prospectus. Results for Class 1 shares are comparable to those of Class 2
  shares because both classes invest in the same portfolio of securities.

MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

   ALAN N. BERRO                       10 years              Senior Vice President - Capital World Investors
   Senior Vice President
------------------------------------------------------------------------------------------------------------------------
   JEFFREY T. LAGER                    3 years               Senior Vice President - Capital World Investors
------------------------------------------------------------------------------------------------------------------------
   JAMES R. MULALLY                    4 years               Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
   EUGENE P. STEIN                     2 years               Senior Vice President - Capital World Investors
------------------------------------------------------------------------------------------------------------------------




----
34  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  ASSET ALLOCATION FUND
----

<PAGE>


TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
        ASSET ALLOCATION FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  35
                                                                             ---

<PAGE>

BOND FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide as high a level of current income
as is consistent with the preservation of capital.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.38%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.64



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $65    $205    $357     $798



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 125% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund seeks to maximize your level of current income and preserve your
capital by investing primarily in bonds. Normally, the fund invests at least
80% of its assets in bonds and other debt securities. The fund invests at least
65% of its assets in investment-grade debt securities (including cash and cash
equivalents), including securities issued and guaranteed by the U.S. and other
governments, and securities backed by mortgage and other assets. The fund may
invest up to 35% of its assets in debt securities rated Ba1 or below by Moody's
Investors Service and BB+ or below by Standard & Poor's Corporation or unrated
but determined by the fund's investment adviser to be of equivalent quality.
Such securities are sometimes referred to as "junk bonds." The fund may invest
in debt securities of issuers domiciled outside the United States. The fund may
also invest up to 20% of its assets in preferred stocks, including convertible
and nonconvertible preferred stocks. The fund is designed for investors seeking
income and more price stability than stocks, and capital preservation over the
long term.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively
priced securities that, in its opinion, represent above-average, long-term
investment opportunities. The investment adviser believes that an important way
to accomplish this is through fundamental research, which may include analysis
of credit quality, general economic conditions and various quantitative
measures and, in the case of corporate obligations, meeting with company
executives and employees, suppliers, customers and competitors. Securities may
be sold when the investment adviser believes that they no longer represent
relatively attractive investment opportunities.



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

<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

MARKET RISKS -- The prices of, and the income generated by, the bonds and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. There may be little trading in the secondary market for particular
debt securities, which may make them more difficult to value or sell.

PREPAYMENT RISKS RELATED TO ASSET-BACKED SECURITIES -- Many types of debt
securities, including mortgage-related securities, are subject to pre-payment
risk. For example, when interest rates fall, homeowners are more likely to
refinance their home mortgages and "prepay" their principal earlier than
expected. The fund must then reinvest the prepaid principal in new securities
when interest rates on new mortgage investments are falling, thus reducing the
fund's income. Conversely, if interest rates increase, homeowners may not make
prepayments to the extent expected, resulting in an extension of the term of
the security backed by such mortgages.

SECURITIES BACKED BY THE U.S. TREASURY -- A security backed by the U.S.
Treasury or the full faith and credit of the U.S. government is guaranteed only
as to the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates. The fund may also invest in debt securities and
mortgage-backed securities issued by federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government. These
securities are neither issued nor guaranteed by the U.S. Treasury.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
fluctuations and controls; different accounting, auditing, financial reporting,
disclosure, regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. Lipper
Corporate Debt A-Rated Bond Funds Average includes mutual funds that disclose
investment objectives reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.



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

<PAGE>


Calendar year total returns.


                                     [CHART]

  2000    2001    2002   2003    2004   2005   2006   2007    2008    2009
  -----   -----   -----  -----   -----  -----  -----  -----   -----   -----
  4.99%   8.15%   4.05%  12.80%  5.72%  1.59%  6.99%  3.33%  -9.35%   12.61%




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


HIGHEST   5.96% (quarter ended June 30, 2009)
LOWEST   -5.52% (quarter ended September 30, 2008)



For periods ended December 31, 2009:



AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS LIFETIME*
-----------------------------------------------------------------------------
Fund                                        12.61%  2.77%    4.91%    5.08%
Barclays Capital U.S. Aggregate Index
 (reflects no deduction for fees, expenses
 or taxes)                                   5.93   4.97     6.33     6.01
Lipper Corporate Debt A-Rated Bond Funds
 Average (reflects no deduction for fees
 or taxes)                                  15.18   3.52     5.48     5.21



* Lifetime results are from January 2, 1996, the date the fund began investment
  operations. Class 2 shares were first offered on April 30, 1997; therefore,
  results for the fund prior to that date assume a hypothetical investment in
  Class 1 shares, reduced by the .25% annual expense that applies to Class 2
  shares and is described in the "Plans of distribution" section of this
  prospectus. Results for Class 1 shares are comparable to those of Class 2
  shares because both classes invest in the same portfolio of securities.

MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





------------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

     DAVID C. BARCLAY                  12 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
     MARK H. DALZELL                   5 years               Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
     DAVID A. HOAG                     3 years               Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------

     THOMAS H. HOGH                    3 years               Senior Vice President - Fixed Income, Capital Research
                                                             Company
------------------------------------------------------------------------------------------------------------------------




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

<PAGE>


TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



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

<PAGE>

GLOBAL BOND FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you, over the long term, with a
high level of total return consistent with prudent investment management.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.56%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.03
Total annual fund operating expenses...................................  0.84



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $86    $268    $466    $1,037



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 86% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

Under normal market circumstances, the fund invests at least 80% of its assets
in bonds. The fund invests primarily in debt securities of governmental,
supranational and corporate issuers denominated in various currencies,
including U.S. dollars. The fund may invest substantially in securities of
issuers domiciled outside the United States, including issuers domiciled in
developing countries. Normally, the fund's debt obligations consist
substantially of investment-grade bonds (rated Baa3 or better or BBB- or better
by a nationally recognized statistical rating organization or unrated but
determined to be of equivalent quality by the fund's investment adviser). The
fund may also invest a portion of its assets in lower quality, higher yielding
debt securities (rated Ba1 or below and BB+ or below by a nationally recognized
statistical rating organization or unrated but determined to be of equivalent
quality by the fund's investment adviser). Such securities are sometimes
referred to as "junk bonds." The total return of the fund will be the result of
interest income, changes in the market value of the fund's investments and
changes in the values of other currencies relative to the U.S. dollar.

The fund is non-diversified, which allows it to invest a greater percentage of
its assets in any one issuer than would otherwise be the case. However, the
fund intends to limit its investments in the securities of any single issuer.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively
valued securities that, in its opinion, represent above-average, long-term
investment opportunities. The investment adviser believes that an important way
to accomplish this is through fundamental analysis, which may include meeting
with government officials, central banks and company executives. Securities may
be sold when the investment adviser believes that they no longer represent
relatively attractive investment opportunities.



----
40  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL BOND FUND
----

<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

MARKET RISKS -- The prices of, and the income generated by, the bonds and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. There may be little trading in the secondary market for particular
debt securities, which may make them more difficult to value or sell.

CURRENCY RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may also be affected by changes in relative
currency values. If the U.S. dollar appreciates against foreign currencies, the
value in U.S. dollars of the fund's securities denominated in such currencies
would generally fall and vice versa. U.S. dollar-denominated securities of
foreign issuers may also be affected by changes in relative currency values.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

NON-DIVERSIFICATION RISKS -- As a non-diversified fund, the fund has the
ability to invest a larger percentage of its assets in the securities of a
smaller number of issuers than a diversified fund. Although the fund does not
intend to limit its investments to the securities of a small number of issuers,
if it were to do so, poor performance by a single large holding would adversely
impact the fund's investment results more than if the fund were invested in a
larger number of issuers.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Global Income Funds Average includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.



                                                                             ---
             GLOBAL BOND FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  41
                                                                             ---

<PAGE>



Calendar year total returns



                                    [CHART]

                                 2007    2008     2009
                                 ----    ----     -----
                                 9.23%   3.48%    9.69%




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


HIGHEST   7.16% (quarter ended September 30, 2009)
LOWEST   -4.20% (quarter ended September 30, 2008)



For periods ended December 31, 2009:



AVERAGE ANNUAL TOTAL RETURNS             1 YEAR LIFETIME*
---------------------------------------------------------
Fund                                      9.69%   7.64%
Barclays Capital Global Aggregate Index
 (reflects no deduction for fees,
 expenses or taxes)                       6.93    7.10
Lipper Global Income Funds Average
 (reflects no deduction for fees or
 taxes)                                  15.23    5.57



* Lifetime results are from October 4, 2006, the date the fund began investment
  operations. Class 2 shares were first offered on November 6, 2006. Results
  prior to that date assume a hypothetical investment in Class 1 shares,
  reduced by the .25% annual expense that applies to Class 2 shares and is
  described in the "Plans of distribution" section of this prospectus. Results
  for Class 1 shares are comparable to those of Class 2 shares because both
  classes invest in the same portfolio of securities.

MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





------------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

     MARK H. DALZELL                    4 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
     THOMAS H. HOGH                     4 years              Senior Vice President - Fixed Income, Capital Research
                                                             Company
------------------------------------------------------------------------------------------------------------------------
     JAMES R. MULALLY                   2 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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



----
42  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GLOBAL BOND FUND
----

<PAGE>


PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
             GLOBAL BOND FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  43
                                                                             ---

<PAGE>

HIGH-INCOME BOND FUND


INVESTMENT OBJECTIVE

The fund's primary investment objective is to provide you with a high level of
current income. Its secondary investment objective is capital appreciation.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.47%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.74



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $76    $237    $411     $918



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 47% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in higher yielding and generally lower quality debt
securities (rated Ba1 or below or BB+ or below by a nationally recognized
statistical rating organization or unrated but determined by the fund's
investment adviser to be of equivalent quality), including corporate loan
obligations. Such securities are sometimes referred to as "junk bonds." The
fund may also invest a portion of its assets in securities of issuers domiciled
outside the United States.

The fund is designed for investors seeking a high level of current income and
who are able to tolerate greater credit risk and price fluctuations than those
that exist in funds investing in higher quality debt securities.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may



----
44  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  HIGH-INCOME BOND FUND
----

<PAGE>


fluctuate more than higher quality securities and may decline significantly in
periods of general economic difficulty. There may be little trading in the
secondary market for particular debt securities, which may make them more
difficult to value or sell.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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.

MARKET RISKS -- The prices of, and the income generated by, the bonds and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The fund
has selected the Barclays Capital U.S. Corporate High Yield Index 2% Issuer Cap
to replace the Credit Suisse High Yield Index as its broad-based securities
market index. The fund's investment adviser believes that the Barclays Capital
U.S. Corporate High Yield Index 2% Issuer Cap better reflects the market
sectors and securities in which the fund primarily invests than the Credit
Suisse High Yield Index. The Citigroup Broad Investment-Grade (BIG) Bond Index
reflects the market sectors and securities in which the fund primarily invests
and the Lipper High Current Yield Funds Index includes mutual funds that
disclose investment objectives that are reasonably comparable to those of the
fund. This information provides some indication of the risks of investing in
the fund. Past results are not predictive of future results. Figures shown
reflect fees and expenses associated with an investment in the fund, but do not
reflect insurance contract fees and expenses. If insurance contract fees and
expenses were included, results would have been lower.

Calendar year total returns.


                                     [CHART]

 2000   2001    2002    2003    2004    2005    2006    2007     2008     2009
------  -----  ------  ------   -----   -----   -----   -----   -------  ------
-3.31%  7.73%  -1.83%  29.51%   9.59%   2.20%   10.59%  1.33%   -23.84%  38.94%



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


HIGHEST   16.18% (quarter ended June 30, 2009)
LOWEST   -16.05% (quarter ended December 31, 2008)



                                                                             ---
        HIGH-INCOME BOND FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  45
                                                                             ---

<PAGE>


For periods ended December 31, 2009:





AVERAGE ANNUAL TOTAL RETURNS                                           1 YEAR 5 YEARS 10 YEARS LIFETIME*
--------------------------------------------------------------------------------------------------------

Fund                                                                   38.94%  3.92%    5.81%    9.15%
Barclays Capital U.S. Corporate High Yield Index 2% Issuer Cap
 (reflects no deduction for fees, expenses or taxes)                   58.76   6.49     6.87      N/A
Credit Suisse High Yield Index (reflects no deduction for fees,
 expenses or taxes)                                                    54.22   5.99     7.07      N/A
Citigroup Broad Investment-Grade (BIG) Bond Index (reflects no
 deduction for fees, expenses or taxes)                                 5.06   5.22     6.47     8.35
Lipper High Current Yield Funds Index (reflects no deduction for fees
 or taxes)                                                             49.49   4.27     4.13     7.48




* Lifetime results are from February 8, 1984, the date the fund began
  investment operations. Class 2 shares were first offered on April 30, 1997;
  therefore, lifetime results for the fund prior to that date assume a
  hypothetical investment in Class 1 shares, reduced by the .25% annual expense
  that applies to Class 2 shares and is described in the "Plans of
  distribution" section of this prospectus. Results for Class 1 shares are
  comparable to those of Class 2 shares because both classes invest in the same
  portfolio of securities.

MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

   ABNER D. GOLDSTINE                  12 years              Senior Vice President - Fixed Income, Capital Research and
   Senior Vice President                                     Management Company
------------------------------------------------------------------------------------------------------------------------
   DAVID C. BARCLAY                    17 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
   DAVID A. DAIGLE                      1 year               Senior Vice President - Fixed Income, Capital Research
                                                             Company
------------------------------------------------------------------------------------------------------------------------
   MARCUS B. LINDEN                    3 years               Senior Vice President - Fixed Income, Capital Research
                                                             Company




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



----
46  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  HIGH-INCOME BOND FUND
----

<PAGE>

U.S. GOVERNMENT/AAA-RATED SECURITIES FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide a high level of current income
consistent with preservation of capital.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.39%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.66



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $67    $211    $368     $822



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 100% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

Normally, the fund invests at least 80% of its assets in securities that are
guaranteed or sponsored by the U.S. government or debt securities that are
rated Aaa by Moody's Investors Service or AAA by Standard & Poor's Corporation
or unrated but determined to be of equivalent quality by the fund's investment
adviser. The fund is designed for investors seeking income and more price
stability than from investing in stocks and lower quality debt securities, and
capital preservation over the long term.

The fund may also invest a significant portion of its assets in mortgage-backed
securities. Certain of these securities may not be backed by the full faith and
credit of the U.S. government and are supported only by the credit of the
issuer.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively
valued securities that, in its opinion, represent above-average, long-term
investment opportunities. The investment adviser believes that an important way
to accomplish this is by analyzing various factors, which may include the
credit strength of the issuer, prices of similar securities issued by
comparable issuers and anticipated changes in interest rates, general market
conditions and other factors pertinent to the particular security being
evaluated. Securities may be sold when the investment adviser believes that
they no longer represent relatively attractive investment opportunities.





                                                                                         ---
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  47
                                                                                         ---


<PAGE>


PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

INTEREST RATE RISKS -- While the fund invests primarily in securities that are
guaranteed or sponsored by the U.S. government, these securities are subject to
interest rate and prepayment risks. The prices of, and the income generated by,
most debt securities held by the fund may be affected by changing interest
rates and by changes in the effective maturities and credit ratings of these
securities. For example, the prices of debt securities in the fund's portfolio
generally will decline when interest rates rise and increase when interest
rates fall. In addition, falling interest rates may cause an issuer to redeem,
"call" or refinance a security before its stated maturity, which may result in
the fund having to reinvest the proceeds in lower yielding securities. Longer
maturity debt securities generally have higher rates of interest and may be
subject to greater price fluctuations than shorter maturity debt securities.

SECURITIES BACKED BY THE U.S. TREASURY -- A security backed by the U.S.
Treasury or the full faith and credit of the U.S. government is guaranteed only
as to the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates. The fund may also invest in debt securities and
mortgage-backed securities issued by federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government. These
securities are neither issued nor guaranteed by the U.S. Treasury.

PREPAYMENT RISKS RELATED TO ASSET-BACKED SECURITIES -- Many types of debt
securities, including mortgage-related securities, are subject to prepayment
risk. For example, when interest rates fall, homeowners are more likely to
refinance their home mortgages and "prepay" their principal earlier than
expected. The fund must then reinvest the prepaid principal in new securities
when interest rates on new mortgage investments are falling, thus reducing the
fund's income. Conversely, if interest rates increase, homeowners may not make
prepayments to the extent expected, resulting in an extension of the term of
the security backed by such mortgages.

CREDIT RISKS -- 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.

MARKET RISKS -- The prices of, and the income generated by, the bonds and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

It is important to note that neither your investment in the fund nor the fund's
yield is guaranteed by the U.S. government. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
General U.S. Government Funds Average includes mutual funds that disclose
investment objectives that are reasonably comparable to those of the fund. The
Consumer Price Index provides a comparison of the fund's results to inflation.
This information provides some indication of the risks of investing in the
fund. Past results are not predictive of future results. Figures shown reflect
fees and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.

Calendar year total returns.

                                       [CHART]

   2000   2001   2002    2003   2004    2005    2006    2007    2008   2009
  ------  -----  -----   -----  -----   -----   -----   -----   -----  ------
  11.39%  7.02%  9.15%   2.28%  3.30%   2.41%   3.75%   6.49%   7.63%  2.50%



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

HIGHEST   5.12% (quarter ended December 31, 2008)
LOWEST   -1.73% (quarter ended June 30, 2004)




----
48  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
----


<PAGE>


For periods ended December 31, 2009:





AVERAGE ANNUAL TOTAL RETURNS                            1 YEAR 5 YEARS 10 YEARS LIFETIME*
-----------------------------------------------------------------------------------------

Fund                                                     2.50%  4.53%    5.55%    6.55%
Citigroup Treasury/Govt. Sponsored/Mortgage Index
 (reflects no deduction for fees, expenses or taxes)     1.63   5.35     6.35     7.57
Lipper General U.S. Government Funds Average (reflects
 no deduction for fees or taxes)                         1.25   3.82     5.28     6.30
CPI                                                      2.72   2.56     2.52     2.88




* Lifetime results are from December 1, 1985, the date the fund began
  investment operations. Class 2 shares were first offered on April 30, 1997;
  therefore, lifetime results for the fund prior to that date assume a
  hypothetical investment in Class 1 shares, reduced by the .25% annual expense
  that applies to Class 2 shares and is described in the "Plans of
  distribution" section of this prospectus. Results for Class 1 shares are
  comparable to those of Class 2 shares because both classes invest in the same
  portfolio of securities.

MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
----------------------------------------------------------------------------------------------------------------------------

   JOHN H. SMET                        18 years              Senior Vice President - Fixed Income, Capital Research and
   Senior Vice President                                     Management Company
----------------------------------------------------------------------------------------------------------------------------
   THOMAS H. HOGH                      13 years              Senior Vice President - Fixed Income, Capital Research Company
----------------------------------------------------------------------------------------------------------------------------
   FERGUS N. MACDONALD             Less than 1 year          Vice President - Fixed Income, Capital Research Company
----------------------------------------------------------------------------------------------------------------------------

   WESLEY K.-S. PHOA               Less than 1 year          Senior Vice President - Fixed Income, Capital Research Company
----------------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.





                                                                                         ---
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  49
                                                                                         ---


<PAGE>

CASH MANAGEMENT FUND


INVESTMENT OBJECTIVE

The investment objective of the fund is to provide you with a way to earn
income on your cash reserves while preserving capital and maintaining liquidity.

FEES AND EXPENSES OF THE FUND

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



ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 2
-------------------------------------------------------------------------------
Management fee.........................................................  0.32%
Distribution and/or service (12b-1) fees...............................  0.25
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.58



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 2                                          $59    $186    $324     $726



PRINCIPAL INVESTMENT STRATEGIES

Normally, the fund invests substantially in high-quality money market
instruments such as commercial paper, commercial bank obligations, savings
association obligations, U.S. or Canadian government securities, and short-term
corporate bonds and notes. These securities may have credit and liquidity
support features, including guarantees and letters of credit.

The fund may invest in securities issued by entities domiciled outside the
United States and securities with credit and liquidity support features
provided by entities domiciled outside of the United States. The fund may also
invest in securities of U.S. issuers with substantial operations outside the
United States.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to provide current income while
preserving capital and maintaining liquidity. The investment adviser believes
that an important way to accomplish this is by analyzing various factors,
including the credit strength of the issuer, prices of similar securities
issued by comparable issuers, current and anticipated changes in interest
rates, general market conditions and other factors pertinent to the particular
security being evaluated.

PRINCIPAL RISKS

THE FUND IS NOT MANAGED TO MAINTAIN A STABLE ASSET VALUE OF $1.00 PER SHARE AND
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.

INTEREST RATE RISKS -- The value and liquidity of the securities held by the
fund may be affected by changing interest rates and by changes in credit
ratings of the securities. For example, the values of these securities may
decline when interest rates rise and increase when interest rates fall.

CREDIT AND LIQUIDITY SUPPORT RISKS -- Some of the securities held by the fund
may have credit and liquidity support features. Changes in the credit quality
of the issuer or provider of these support features could cause the fund to
experience a loss and may affect its share price.

MARKET RISKS -- Additionally, the securities held by the fund may be affected
by certain events taking place around the world, including those directly
involving the issuers whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; governmental or governmental
agency responses to economic conditions; and currency, interest rate and
commodity price fluctuations.



----
50  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  CASH MANAGEMENT FUND
----

<PAGE>


RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices;
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.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.


INVESTMENT RESULTS


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

Calendar year total returns.

                                    [CHART]

2000    2001    2002    2003    2004    2005   2006    2007     2008    2009
----    ----    ----    ----    ----    ----   ----   -----    -----   ------
5.83%   3.43%   1.00%   0.47%   0.70%   2.68%  4.59%  4.73%    1.90%   -0.33%



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


HIGHEST   1.51% (quarter ended September 30, 2000)
LOWEST   -0.09% (quarter ended September 30, 2009)



For periods ended December 31, 2009:



AVERAGE ANNUAL TOTAL RETURNS  1 YEAR 5 YEARS 10 YEARS LIFETIME*
---------------------------------------------------------------
           Fund               -0.33%  2.70%    2.48%    4.32%



* Lifetime results are from February 8, 1984, the date the fund began
  investment operations. Class 2 shares were first offered on April 30, 1997;
  therefore, lifetime results for the fund prior to that date assume a
  hypothetical investment in Class 1 shares, reduced by the .25% annual expense
  that applies to Class 2 shares and is described in the "Plans of
  distribution" section of this prospectus. Results for Class 1 shares are
  comparable to those of Class 2 shares because both classes invest in the same
  portfolio of securities.

MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

TAX INFORMATION

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



                                                                             ---
         CASH MANAGEMENT FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  51
                                                                             ---

<PAGE>


PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

GLOBAL DISCOVERY FUND

The investment objective of the fund is long-term growth of capital. Current
income is a secondary consideration.

The fund is designed for investors seeking capital appreciation through
investments in stocks of issuers based around the world. Investors in the fund
should have a long-term perspective and, for example, be able to tolerate
potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

NEW ECONOMY -- The fund seeks to achieve its objective by investing in
securities of companies that can benefit from innovation, exploit new
technologies or provide products and services that meet the demands of an
evolving global economy. In implementing this strategy, the fund may invest in
any company, provided that the investment adviser determines that the company
could participate and thrive in the new economy. As it is inherently difficult
to articulate a precise formula for what constitutes the new economy at any
given time, the investment adviser's definition of what constitutes the new
economy may change over time.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
common stocks that the investment adviser believes have the potential for
growth. The fund also invests in common stocks with the potential to pay
dividends.

The prices of the common stocks and other securities held by the fund may
decline in response to certain events taking place around the world, including
those directly involving the issuers whose securities are owned by the fund;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations. The growth-oriented common stocks and
other equity-type securities, such as preferred stocks, convertible preferred
stocks and convertible bonds, generally purchased by the fund may involve large
price swings and potential for loss, particularly in the case of smaller
capitalization stocks. The fund may be subject to additional risks because it
invests in a more limited group of sectors and industries than the broad market.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest a significant
portion of its assets in securities of issuers domiciled outside the United
States. Investments in securities issued by entities based outside the United
States may be subject to the risks described above to a greater extent. These
investments may also be affected by currency controls; different accounting,
auditing, financial reporting, disclosure, and regulatory and legal standards
and practices; 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. These risks may be
heightened in connection with investments in developing countries. Investments
in securities issued by entities domiciled in the United States may also be
subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
likely to impose capital controls, nationalize a company or industry, place
restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.



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

<PAGE>


FUND COMPARATIVE INDEXES -- Standard & Poor's 500 Composite Index is a market
capitalization-weighted index based on the average weighted performance of 500
widely held common stocks. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes. Lipper Multi-Cap Growth Funds
Index is an equally weighted index of funds that invest in a variety of market
capitalization ranges without concentrating 75% of their equity assets in any
one market capitalization range over an extended period of time. Multi-cap
growth funds typically have an above-average price-to-earnings ratio,
price-to-book ratio, and three-year sales-per-share growth value, compared to
the S&P SuperComposite 1500 Index (a broad-based index representing the
large-cap, mid-cap and small-cap segments of the U.S. equity market). The
results of the underlying funds in the index include the reinvestment of
dividends and capital gain distributions, as well as brokerage commissions paid
by the funds for portfolio transactions and other fund expenses, but do not
reflect the effect of sales charges or taxes. Global Service and Information
Index is a subset of the unmanaged MSCI World Index, which is a free
float-adjusted market capitalization-weighted index that measures the returns
of companies in more than 20 developed countries. This subset is 70%
U.S.-weighted and consists specifically of companies in the service and
information industries that together represent approximately 60% of the MSCI
World Index. The index is compiled by the fund's investment adviser, Capital
Research and Management Company, is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes.

GLOBAL GROWTH FUND

The fund's investment objective is to provide you with long-term growth of
capital.

The fund is designed for investors seeking capital appreciation through
investments in stocks. Investors in the fund should have a long-term
perspective and, for example, be able to tolerate potentially sharp declines in
value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund invests primarily in common stocks of companies located around the
world that the investment adviser believes have the potential for growth.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations. The
growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, generally
purchased by the fund may involve large price swings and potential for loss.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
likely to impose capital controls, nationalize a company or industry, place
restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI World Index is a free float-adjusted market
capitalization-weighted index that is designed to measure equity market
performance of developed markets. The index consists of more than 20 developed
market country indexes, including an



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

<PAGE>


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

GLOBAL SMALL CAPITALIZATION FUND

The fund's investment objective is to provide you with long-term growth of
capital.

The fund is designed for investors seeking capital appreciation through
investments in stocks. Investors in the fund should have a long-term
perspective and, for example, be able to tolerate potentially sharp declines in
value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

SMALL CAPITALIZATION ISSUERS -- Normally, the fund invests at least 80% of its
net assets in growth-oriented common stocks and other equity-type securities
(such as preferred stocks, convertible preferred stocks and convertible bonds)
of companies with small market capitalizations, measured at the time of
purchase. However, the fund's holdings of small capitalization stocks may fall
below the 80% threshold due to subsequent market action. This policy is subject
to change only upon 60 days' written notice to shareholders. 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 re-evaluated and adjusted this definition and may
continue to do so in the future.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations. The
growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, generally
purchased by the fund may involve large price swings and potential for loss,
particularly in the case of smaller capitalization stocks.

Investing in smaller companies may pose additional risks as it is often more
difficult to value or dispose of small company stocks, more difficult to obtain
information about smaller companies, and the prices of their stocks may be more
volatile than stocks of larger, more established companies.

INVESTING OUTSIDE THE UNITED STATES -- Under normal circumstances, the fund
invests a significant portion of its assets outside the United States.
Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent. These
investments may also be affected by currency controls; different accounting,
auditing, financial reporting, disclosure, and regulatory and legal standards
and practices; 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. These risks may be
heightened in connection with investments in developing countries. Investments
in securities issued by entities domiciled in the United States may also be
subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
more likely to impose capital controls, nationalize a company or industry,
place restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI All Country World Small Cap Index is a free
float-adjusted market capitalization-weighted index that is designed to measure
equity market performance of smaller capitalization companies in both developed
and emerging markets. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges,



----
54  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


commissions, expenses or taxes. S&P Global (less than)$3 Billion Index has been
used since May 2006. Cumulative returns for periods beginning before May 2006
also include results from the comparative indexes used in those periods as
follows: S&P Global (less than)$2 Billion (May 2004 to April 2006), S&P
Developed (less than)$1.5 Billion (January 2000 to April 2004), and S&P
Developed (less than)$1.2 Billion (1990 to 1999). The S&P Global indexes
include both developed and developing countries. The S&P Developed indexes
(used prior to May 2004) only include stocks in developed countries. Indexes
are unmanaged and their results include reinvested dividends and/or
distributions, but do not reflect the effect of sales charges, commissions,
expenses or taxes. Lipper Global Small-Cap Funds Average is composed of funds
that invest at least 25% of their portfolios in securities with primary trading
markets outside the United States, and that limit at least 65% of their
investments to companies with market capitalizations of less than $1 billion at
the time of purchase. The results of the underlying funds in the average
include the reinvestment of dividends and capital gain distributions, as well
as brokerage commissions paid by the funds for portfolio transactions and other
fund expenses, but do not reflect the effect of sales charges or taxes.

GROWTH FUND

The fund's investment objective is to provide you with growth of capital.

The fund is designed for investors seeking capital appreciation through
investments in stocks. Investors in the fund should have a long-term
perspective and, for example, be able to tolerate potentially sharp declines in
value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
common stocks and seeks to invest in companies that appear to offer superior
opportunities for growth of capital.

The prices of the common stocks and other securities held by the fund may
decline in response to certain events taking place around the world, including
those directly involving the issuers whose securities are owned by the fund;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations. The growth-oriented common stocks and
other equity-type securities, such as preferred stocks, convertible preferred
stocks and convertible bonds, generally purchased by the fund may involve large
price swings and potential for loss, particularly in the case of smaller
capitalization stocks.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest a portion of its
assets in securities of issuers domiciled outside the United States. In
addition to the risks described above, investments in securities issued by
entities based outside the United States may be affected by currency controls;
different accounting, auditing, financial reporting, and legal standards and
practices; 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. These risks may be
heightened in connection with investments in developing countries. Investments
in securities issued by entities domiciled in the United States may also be
subject to many of these risks.

DEBT SECURITIES -- The fund may invest in debt securities, including a portion
of its assets in lower quality nonconvertible debt securities (rated Ba1 or
below by Moody's Investors Service and BB+ or below by Standard & Poor's
Corporation or unrated but determined by the fund's investment adviser to be of
equivalent quality). Such securities are sometimes referred to as "junk bonds."
The values of debt securities may be affected by changing interest rates and by
changes in effective maturities and credit ratings of these securities. For
example, the values of debt securities generally decline when interest rates
rise and increase when interest rates fall. 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 debt securities generally have higher rates of interest and may be
subject to greater price fluctuations than higher quality debt securities. In
addition, longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than shorter maturity
debt securities.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Standard & Poor's 500 Composite Index is a market
capitalization-weighted index based on the average weighted performance of 500
widely held common stocks. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes. Lipper Capital Appreciation
Funds Index is an equally weighted index of funds that aim for maximum capital
appreciation. The results of the underlying funds in the index include the
reinvestment of dividends and capital gain distributions, as well as brokerage
commissions paid by the funds for portfolio transactions



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  55
                                                                             ---

<PAGE>


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

INTERNATIONAL FUND

The fund's investment objective is to provide you with long-term growth of
capital.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund invests primarily in common stocks of companies located outside the
United States.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations. The
growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, generally
purchased by the fund may involve large price swings and potential for loss.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
likely to impose capital controls, nationalize a company or industry, place
restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI All Country World ex USA Index is a free
float-adjusted market capitalization-weighted index that is designed to measure
equity market performance in the global developed and emerging markets,
excluding the United States. The index consists of more than 40 developed and
emerging market country indexes. This index is unmanaged and its results
include reinvested dividends and/or distributions, but do not reflect the
effect of sales charges, commissions, expenses or taxes. Lipper International
Funds Index is an equally weighted index of funds that invest assets in
securities with primary trading markets outside the United States. The results
of the underlying funds in the index include the reinvestment of dividends and
capital gain distributions, as well as brokerage commissions paid by the funds
for portfolio transactions and other fund expenses, but do not reflect the
effect of sales charges or taxes.

NEW WORLD FUND

The fund's investment objective is long-term capital appreciation.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.



----
56  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

DEVELOPING COUNTRIES -- The fund invests primarily in common stocks of
companies with significant exposure to countries with developing economies
and/or markets and that the investment adviser believes have potential of
providing capital appreciation. The fund may also invest in debt securities of
issuers, including issuers of lower rated bonds (rated Ba1 or below and BB+ or
below by a nationally recognized statistical rating organization or unrated but
determined to be of equivalent quality by the fund's investment adviser), with
exposure to these countries. Bonds rated Ba1 or BB+ or below are sometimes
referred to as "junk bonds."

Under normal market conditions, the fund invests at least 35% of its assets in
equity and debt securities of issuers primarily based in qualified countries
that have developing economies and/or markets.

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

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

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

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations. The
growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, generally
purchased by the fund may involve large price swings and potential for loss,
particularly in the case of smaller capitalization stocks.

SMALL CAPITALIZATION COMPANIES -- Investing in smaller companies may pose
additional risks as its is often more difficult to value or dispose of small
company stocks, more difficult to obtain information about smaller companies
and the prices of these stocks may be more volatile than stocks of larger, more
established companies.

DEBT SECURITIES -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance 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. Longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than shorter maturity
debt securities.

HIGH YIELD BONDS -- Lower rated debt securities generally have higher rates of
interest and involve greater risk of default or price changes due to changes in
the issuer's creditworthiness than higher rated debt securities. The market
prices of these securities may fluctuate more than higher quality securities
and may decline significantly in periods of general economic difficulty. There
may be little trading in the secondary market for particular debt securities,
which may make them more difficult to value or sell.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure,
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  57
                                                                             ---

<PAGE>


CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI All Country World Index is a free
float-adjusted market capitalization-weighted index that measures equity market
performance in the global developed and emerging markets, consisting of more
than 40 developed and emerging market country indexes. This index is unmanaged
and its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. MSCI
Emerging Markets Index is a free float-adjusted market capitalization-weighted
index that is designed to measure equity market performance in the global
emerging markets, consisting of more than 20 emerging market country indexes.
This index is unmanaged and its results include reinvested dividends and/or
distributions, but do not reflect the effect of sales charges, commissions,
expenses or taxes.

BLUE CHIP INCOME AND GROWTH FUND

The fund's investment objectives are to produce income exceeding the average
yield on U.S. stocks generally and to provide an opportunity for growth of
principal consistent with sound common stock investing.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
dividend-paying common stocks of larger, more established companies domiciled
in the United States with market capitalizations of $4 billion and above. In
seeking to provide you with a level of current income that exceeds the average
yield on U.S. stocks, the fund generally looks to the average yield on stocks
of companies listed on the S&P 500. The fund also ordinarily invests at least
90% of its equity assets in the stock of companies whose debt securities are
rated at least investment grade. The fund may invest up to 10% of its assets in
equity securities of larger companies domiciled outside the United States, so
long as they are listed or traded in the United States. The fund invests, under
normal market conditions, at least 90% of its assets in equity securities. The
fund is designed for investors seeking both income and capital appreciation.

The prices of, and the income generated by, the common stocks and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

The growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, purchased
by the fund may involve large price swings and potential for loss. Income
provided by the fund may be affected by changes in the dividend policies of the
companies in which the fund invests and the capital resources available for
such payments at such companies.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- Investments in securities issued
by entities based outside the United States may be subject to the risks
described above to a greater extent. These investments may also be affected by
currency controls; different accounting, auditing, financial reporting,
disclosure, and regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.



----
58  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


FUND COMPARATIVE INDEXES -- Standard & Poor's 500 Composite Index is a market
capitalization-weighted index based on the average weighted performance of 500
widely held common stocks. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes. Lipper Growth & Income Funds
Index is an equally weighted index of funds that combine a growth-of-earnings
orientation and an income requirement for level and/or rising dividends. The
results of the underlying funds in the index include the reinvestment of
dividends and capital gain distributions, as well as brokerage commissions paid
by the funds for portfolio transactions and other fund expenses, but do not
reflect the effect of sales charges or taxes.

GLOBAL GROWTH AND INCOME FUND

The fund's investment objective is to provide you with long-term growth of
capital while providing current income.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
common stocks of well-established companies located around the world, many of
which have the potential for growth and/or to pay dividends. The fund invests,
on a global basis, in common stocks that are denominated in U.S. dollars or
other currencies.

The prices of, and the income generated by, the common stocks and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

The growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, purchased
by the fund may involve large price swings and potential for loss. Income
provided by the fund may be affected by changes in the dividend policies of the
companies in which the fund invests and the capital resources available for
such payments at such companies.

INVESTING OUTSIDE THE UNITED STATES -- Under normal market circumstances the
fund invests a significant portion of its assets in securities of issuers
domiciled outside the United States. Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
likely to impose capital controls, nationalize a company or industry, place
restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI World Index is a free float-adjusted market
capitalization-weighted index that is designed to measure equity market
performance of developed markets. The index consists of more than 20 developed
market country indexes, including an index for the United States. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
MSCI All Country World Index is a free float-adjusted market
capitalization-weighted index that measures equity market performance in the
global developed and emerging markets, consisting of more than 40 developed and
emerging market country indexes. This index is unmanaged and its results
include reinvested dividends and/or



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  59
                                                                             ---

<PAGE>


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

GROWTH-INCOME FUND

The fund's investment objectives are to achieve long-term growth of capital and
income.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
common stocks or other securities that demonstrate the potential for
appreciation and/or dividends. Although the fund focuses on investments in
medium to larger capitalization companies, the fund's investments are not
limited to a particular capitalization size. The fund is designed for investors
seeking both capital appreciation and income.

The prices of, and the income generated by, common stocks and other securities
held by the fund may decline in response to certain events taking place around
the world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

The growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, purchased
by the fund may involve large price swings and potential for loss. Income
provided by the fund may be affected by changes in the dividend policies of the
companies in which the fund invests and the capital resources available for
such payments at such companies.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest up to 15% of its
assets, at the time of purchase, in securities of issuers domiciled outside the
United States. Investments in securities issued by entities based outside the
United States may be subject to the risks described above to a greater extent
and may also be affected by currency fluctuation and controls; different
accounting, auditing, financial reporting, disclosure, and regulatory 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. Investments in securities issued by entities domiciled in the
United States may also be subject to many of these risks.

DEBT SECURITIES -- The fund may also invest in bonds and other debt securities.
The prices of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the prices of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem, "call" or refinance 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. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Standard & Poor's 500 Composite Index is a market
capitalization-weighted index based on the average weighted performance of 500
widely held common stocks. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes. Lipper Growth & Income Funds
Index is an equally weighted index of funds that combine a growth-of-earnings
orientation and an income requirement for level and/or rising dividends. The
results of the underlying funds in the index include the reinvestment of
dividends and capital gain distributions, as well as brokerage commissions paid
by the funds for portfolio transactions and other fund expenses, but do not
reflect the effect of sales charges or taxes.



----
60  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


INTERNATIONAL GROWTH AND INCOME FUND

The fund's investment objective is to provide you with long-term growth of
capital while providing current income.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund invests primarily in stocks of larger, well-established companies
domiciled outside the United States, including countries with developing
economies and/or markets, that the investment adviser believes have the
potential for growth and/or to pay dividends. 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. The fund therefore expects to be invested in
numerous countries outside the United States. The fund is designed for
investors seeking both capital appreciation and income. In pursuing its
objective, the fund focuses on stocks of companies with strong earnings that
pay dividends. We believe that these stocks will be more resistant to market
declines than stocks of companies that do not pay dividends.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of, and the income
generated by, the common stocks and other securities held by the fund may
decline in response to certain events taking place around the world, including
those directly involving the issuers whose securities are owned by the fund;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations. Income provided by the fund may be
affected by changes in the dividend policies of the companies in which the fund
invests and the capital resources available for such payments at such
companies. The growth-oriented common stocks and other equity-type securities,
such as preferred stocks, convertible preferred stocks and convertible bonds,
purchased by the fund may involve large price swings and potential for loss.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI World ex USA Index is a free float-adjusted
market capitalization-weighted index that is designed to measure equity market
performance of developed markets, excluding the United States. The index
consists of more than 20 developed market country indexes. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
Lipper International Funds Index is an equally weighted index of funds that
invest assets in securities with primary trading markets outside the United
States. The results of the underlying funds in the index include the
reinvestment of dividends and capital gain distributions, as well as brokerage
commissions paid by the funds for portfolio transactions and other fund
expenses, but do not reflect the effect of sales charges or taxes.

ASSET ALLOCATION FUND

The fund's investment objective is to provide you with high total return
(including income and capital gains) consistent with preservation of capital
over the long term.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  61
                                                                             ---

<PAGE>


The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund invests in a diversified portfolio of common stocks and other equity
securities, bonds and other intermediate and long-term debt securities, and
money market instruments (debt securities maturing in one year or less). In
seeking to pursue its investment objective, the fund varies its mix of equity
securities, debt securities and money market instruments. Under normal market
conditions, the fund's investment adviser expects (but is not required) to
maintain an investment mix falling within the following ranges: 40%-80% in
equity securities, 20%-50% in debt securities and 0%-40% in money market
instruments. As of December 31, 2009, the fund was approximately 70% invested
in equity securities, 23% invested in debt securities and 7% invested in money
market instruments. The proportion of equities, debt and money market
securities held by the fund varies with market conditions and the investment
adviser's assessment of their relative attractiveness as investment
opportunities. The fund's percentage allocation to equity securities, debt
securities and money market instruments could cause the fund to underperform
relative to relevant benchmarks and other funds with similar investment
objectives.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of, and the income
generated by, the common stocks, bonds and other securities held by the fund
may decline in response to certain events taking place around the world,
including those directly involving the issuers whose securities are owned by
the fund; conditions affecting the general economy; overall market changes;
local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

DEBT SECURITIES -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt 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. A security backed by the U.S. Treasury or the full faith
and credit of the U.S. government is guaranteed only as to the timely payment
of interest and principal when held to maturity. Accordingly, the current
market values for these securities will fluctuate with changes in interest
rates.

HIGH YIELD BONDS -- The fund may invest up to 25% of its debt assets in lower
quality debt securities (rated Ba1 or below by Moody's Investors Service and
BB+ or below by Standard & Poor's Corporation or unrated but determined to be
of equivalent quality). Such securities are sometimes referred to as "junk
bonds." Lower rated debt securities generally have higher rates of interest and
involve greater risk of default or price changes due to changes in the issuer's
creditworthiness than higher rated debt securities. The market prices of these
securities may fluctuate more than higher quality securities and may decline
significantly in periods of general economic difficulty. There may be little
trading in the secondary market for particular debt securities, which may make
them more difficult to value or sell.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest up to 15% of its
assets in common stocks and other equity securities of issuers domiciled
outside the United States and up to 5% of its assets in debt securities of
issuers domiciled outside the United States. Investments in securities issued
by entities based outside the United States may be subject to the risks
described above to a greater extent. These investments may also be affected by
currency fluctuations and controls; different accounting, auditing, financial
reporting, disclosure, regulatory and legal standards and practices;
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. Investments in securities
issued by entities domiciled in the United States may also be subject to many
of these risks.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Barclays Capital U.S. Aggregate Index represents
the U.S. investment-grade fixed-rate bond market. This index is unmanaged and
its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. Standard &
Poor's 500 Composite Index is a market capitalization-weighted index based on
the average weighted performance of 500 widely held common stocks. This index
is unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
Citigroup Broad Investment-Grade (BIG) Bond Index is a market
capitalization-weighted index that includes fixed-rate U.S. Treasury,
government-sponsored, mortgage-backed, asset-backed and investment-grade
corporate securities with maturities of one year or longer. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.



----
62  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
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<PAGE>


BOND FUND

The fund's investment objective is to provide as high a level of current income
as is consistent with the preservation of capital.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund seeks to maximize your level of current income and preserve your
capital by investing primarily in bonds. Normally, the fund invests at least
80% of its assets in bonds and other debt securities. This policy is subject to
change only upon 60 days' written notice to shareholders. The fund invests at
least 65% of its assets in investment-grade debt securities (including cash and
cash equivalents), including securities issued and guaranteed by the U.S. and
other governments, and securities backed by mortgage and other assets. The fund
may invest up to 35% of its assets in debt securities rated Ba1 or below by
Moody's Investors Service and BB+ or below by Standard & Poor's Corporation or
unrated but determined by the fund's investment adviser to be of equivalent
quality. Such securities are sometimes referred to as "junk bonds." The fund
may invest in debt securities of issuers domiciled outside the United States.
The fund may also invest up to 20% of its assets in preferred stocks, including
convertible and nonconvertible preferred stocks. The fund is designed for
investors seeking income and more price stability than stocks, and capital
preservation over the long term.

DEBT SECURITIES -- The prices of, and the income generated by, the bonds and
other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

The prices of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the prices of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem, "call" or refinance 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. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

HIGH YIELD BONDS -- Lower rated debt securities generally have higher rates of
interest and involve greater risk of default or price changes due to changes in
the issuer's creditworthiness than higher rated debt securities. The market
prices of these securities may fluctuate more than higher quality securities
and may decline significantly in periods of general economic difficulty. There
may be little trading in the secondary market for particular debt securities,
which may make them more difficult to value or sell.

MORTGAGE-BACKED SECURITIES -- Many types of debt securities, including
mortgage-related securities, are subject to pre-payment risk. For example, when
interest rates fall, homeowners are more likely to refinance their home
mortgages and "prepay" their principal earlier than expected. The fund must
then reinvest the prepaid principal in new securities when interest rates on
new mortgage investments are falling, thus reducing the fund's income.
Conversely, if interest rates increase, homeowners may not make prepayments to
the extent expected, resulting in an extension of the term of the security
backed by such mortgages.

SECURITIES BACKED BY THE U.S. TREASURY -- A security backed by the U.S.
Treasury or the full faith and credit of the U.S. government is guaranteed only
as to the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates. The fund may also invest in debt securities and
mortgage-backed securities issued by federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government. These
securities are neither issued nor guaranteed by the U.S. Treasury.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
fluctuations and controls; different accounting, auditing, financial reporting,
disclosure, regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Barclays Capital U.S. Aggregate Index represents
the U.S. investment-grade fixed-rate bond market. This index is unmanaged and
its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges,



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  63
                                                                             ---

<PAGE>


commissions, expenses or taxes. Lipper Corporate Debt A-Rated Bond Funds
Average is composed of funds that invest primarily in corporate debt issues
rated A or better or government issues. The results of the underlying funds in
the average include the reinvestment of dividends and capital gain
distributions, as well as expenses and brokerage commissions paid by the fund
for portfolio transactions and other fund expenses, but do not reflect the
effect of sales charges or taxes.

GLOBAL BOND FUND

The fund's investment objective is to provide you, over the long term, with a
high level of total return consistent with prudent investment management.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

DEBT SECURITIES -- Under normal market circumstances, the fund invests at least
80% of its assets in bonds. This policy is subject to change only upon 60 days'
written notice to shareholders. The fund invests primarily in debt securities
of governmental, supranational and corporate issuers denominated in various
currencies, including U.S. dollars. The fund may invest substantially in
securities of issuers domiciled outside the United States, including issuers
domiciled in developing countries. Normally, the fund's debt obligations
consist substantially of investment-grade bonds (rated Baa3 or better or BBB-
or better by a nationally recognized statistical rating organization or unrated
but determined to be of equivalent quality by the fund's investment adviser).
The total return of the fund will be the result of interest income, changes in
the market value of the fund's investments and changes in the values of other
currencies relative to the U.S. dollar. Generally, the fund may invest in debt
securities of any maturity or duration.

The prices of, and the income generated by, the bonds and other securities held
by the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

The prices of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the prices of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem, "call" or refinance 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. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

The prices of, and the income generated by, most debt securities held by the
fund may also be affected by changes in relative currency values. If the U.S.
dollar appreciates against foreign currencies, the value in U.S. dollars of the
fund's securities denominated in such currencies would generally fall and vice
versa. U.S. dollar-denominated securities of foreign issuers may also be
affected by changes in relative currency values.

HIGH YIELD BONDs -- The fund may invest a portion of its assets in lower
quality, higher yielding debt securities (rated Ba1 or below and BB+ or below
by a nationally recognized statistical rating organization or unrated but
determined to be of equivalent quality by the fund's investment adviser). Such
securities are sometimes referred to as "junk bonds." Lower rated debt
securities generally have higher rates of interest and involve greater risk of
default or price changes due to changes in the issuer's creditworthiness than
higher rated debt securities. The market prices of these securities may
fluctuate more than higher quality securities and may decline significantly in
periods of general economic difficulty. There may be little trading in the
secondary market for particular debt securities, which may make them more
difficult to value or sell.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

NON-DIVERSIFICATION -- The fund is non-diversified, which allows it to invest a
greater percentage of its assets in any one issuer than would otherwise be the
case. However, the fund intends to limit its investments in the securities of
any single issuer. As a non-diversified



----
64  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


fund, the fund has the ability to invest a larger percentage of its assets in
the securities of a smaller number of issuers than a diversified fund. Although
the fund does not intend to limit its investments to the securities of a small
number of issuers, if it were to do so, poor performance by a single large
holding would adversely impact the fund's investment results more than if the
fund were invested in a larger number of issuers.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Barclays Capital Global Aggregate Index represents
the global investment-grade fixed-income markets. This index is unmanaged and
its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. Lipper
Global Income Funds Average is composed of funds that invest primarily in U.S.
dollar and non-U.S. dollar debt securities located in at least three countries,
one of which may be the United States. The results of the underlying funds in
the average include the reinvestment of dividends and capital gain
distributions, as well as brokerage commissions paid by the funds for portfolio
transactions and other fund expenses, but do not reflect the effect of sales
charges or taxes.

HIGH-INCOME BOND FUND

The fund's primary investment objective is to provide you with a high level of
current income. Its secondary investment objective is capital appreciation.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

HIGH YIELD BONDs -- The fund invests primarily in higher yielding and generally
lower quality debt securities (rated Ba1 or below or BB+ or below by a
nationally recognized statistical rating organization or unrated but determined
by the fund's investment adviser to be of equivalent quality), including
corporate loan obligations. Such securities are sometimes referred to as "junk
bonds."

Lower rated debt securities generally have higher rates of interest and involve
greater risk of default or price changes due to changes in the issuer's
creditworthiness than higher rated debt securities. The market prices of these
securities may fluctuate more than higher quality securities and may decline
significantly in periods of general economic difficulty. There may be little
trading in the secondary market for particular debt securities, which may make
them more difficult to value or sell. See the appendix in this prospectus for
credit rating descriptions.

DEBT SECURITIES -- Generally, the fund may invest in debt securities of any
maturity or duration. The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance 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. Longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than shorter maturity
debt securities.

The fund may also invest in common stocks and other equity-type securities,
such as preferred stocks, convertible preferred stocks, convertible bonds and
warrants, that provide an opportunity for income and/or capital appreciation.
The prices of, and the income generated by, the bonds and other securities held
by the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

INVESTING OUTSIDE THE UNITED STATES -- The fund may also invest a portion of
its assets in securities of issuers domiciled outside the United States.
Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent. These
investments may also be affected by currency controls; different accounting,
auditing, financial reporting, disclosure, and regulatory and legal standards
and practices; 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. These risks may be
heightened in connection with investments in developing countries. Investments
in securities issued by entities domiciled in the United States may also be
subject to many of these risks. The fund's investment adviser attempts to
reduce these risks through diversification of the portfolio and ongoing credit
analysis, as well as by monitoring economic and legislative developments, but
there can be no assurance that it will be successful at doing so.



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  65
                                                                             ---

<PAGE>


CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Barclays Capital U.S. Corporate High Yield Index 2%
Issuer Cap covers the universe of fixed rate, non-investment grade debt. The
index limits the maximum exposure of any one issuer to 2%. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
This index was not in existence on the date the fund began investment
operations; therefore, lifetime results are not shown. Credit Suisse High Yield
Index is designed to mirror the investable universe of the U.S.
dollar-denominated high-yield debt market. This index is unmanaged and its
results include reinvested dividends and/or distributions, but do not reflect
the effect of sales charges, commissions, expenses or taxes. This index was not
in existence on the date the fund began investment operations; therefore,
lifetime results are not shown. Citigroup Broad Investment-Grade (BIG) Bond
Index is a market capitalization-weighted index that includes fixed-rate U.S.
Treasury, government-sponsored, mortgage-backed, asset-backed and
investment-grade corporate securities with maturities of one year or longer.
This index is unmanaged and its results include reinvested dividends and/or
distributions, but do not reflect the effect of sales charges, commissions,
expenses or taxes. Lipper High Current Yield Funds Index is an equally weighted
index of funds that aim at high (relative) current yield from fixed-income
securities, have no quality or maturity restrictions and tend to invest in
lower grade debt issues. The results of the underlying funds in the index
include reinvestment of dividends and capital gain distributions, as well as
brokerage commissions paid by the funds for portfolio transactions and other
fund expenses, but do not reflect the effect of sales charges or taxes.

U.S. GOVERNMENT/AAA-RATED SECURITIES FUND

The fund's investment objective is to provide a high level of current income
consistent with preservation of capital.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

Normally, the fund invests at least 80% of its assets in securities that are
guaranteed or sponsored by the U.S. government or debt securities that are
rated Aaa by Moody's Investors Service or AAA by Standard & Poor's Corporation
or unrated but determined to be of equivalent quality by the fund's investment
adviser. This policy is subject to change only upon 60 days' written notice to
shareholders. The fund is designed for investors seeking income and more price
stability than from investing in stocks and lower quality debt securities, and
capital preservation over the long term.

MORTGAGE-BACKED SECURITIES -- The fund may also invest a significant portion of
its assets in mortgage-backed securities. Certain of these securities may not
be backed by the full faith and credit of the U.S. government and are supported
only by the credit of the issuer. Many types of debt securities, including
mortgage-related securities, are subject to prepayment risk. For example, when
interest rates fall, homeowners are more likely to refinance their home
mortgages and "prepay" their principal earlier than expected. The fund must
then reinvest the prepaid principal in new securities when interest rates on
new mortgage investments are falling, thus reducing the fund's income.
Conversely, if interest rates increase, homeowners may not make prepayments to
the extent expected resulting in an extension of the term of the security
backed by such mortgages.

DEBT SECURITIES -- While the fund invests primarily in securities that are
guaranteed or sponsored by the U.S. government, these securities are subject to
interest rate and prepayment risks. The prices of, and the income generated by,
most debt securities held by the fund may be affected by changing interest
rates and by changes in the effective maturities and credit ratings of these
securities. For example, the prices of debt securities in the fund's portfolio
generally will decline when interest rates rise and increase when interest
rates fall. In addition, falling interest rates may cause an issuer to redeem,
"call" or refinance 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. Longer maturity debt securities generally have higher
rates of interest and may be subject to greater price fluctuations than shorter
maturity debt securities.

The prices of, and the income generated by, the bonds and other securities held
by the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

SECURITIES BACKED BY THE U.S. TREASURY -- A security backed by the U.S.
Treasury or the full faith and credit of the U.S. government is guaranteed only
as to the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates. The fund may also invest in debt securities and
mortgage-backed securities issued by federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government. These
securities are neither issued nor guaranteed by the U.S. Treasury.



----
66  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

It is important to note that neither your investment in the fund nor the fund's
yield is guaranteed by the U.S. government.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Citigroup Treasury/Government Sponsored/Mortgage
Index is a market capitalization-weighted index that includes U.S. Treasury and
agency securities, as well as FNMAs, FHLMCs and GNMAs. This index is unmanaged
and its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. Lipper
General U.S. Government Funds Average is composed of funds that invest
primarily in U.S. government and agency issues. The results of the underlying
funds in the average include the reinvestment of dividends and capital gain
distributions, as well as brokerage commissions paid by the fund for portfolio
transactions and other fund expenses, but do not reflect the effect of sales
charges or taxes. Consumer Price Index (CPI) is a measure of the average change
over time in the prices paid by urban consumers for a market basket of consumer
goods and services. Widely used as a measure of inflation, the CPI is computed
by the U.S. Department of Labor, Bureau of Labor Statistics.

CASH MANAGEMENT FUND

The investment objective of the fund is to provide you with a way to earn
income on your cash reserves while preserving capital and maintaining liquidity.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

MONEY MARKET INSTRUMENTS -- Normally, the fund invests substantially in
high-quality money market instruments such as commercial paper, commercial bank
obligations, savings association obligations, U.S. or Canadian government
securities, and short-term corporate bonds and notes. Some of the securities
held by the fund may have credit and liquidity support features, including
guarantees and letters of credit. Changes in the credit quality of the issuer
or provider of these support features could cause the fund to experience a loss
and may affect its share price.

The value and liquidity of the securities held by the fund may be affected by
changing interest rates and by changes in credit ratings of the securities. For
example, the values of these securities may decline when interest rates rise
and increase when interest rates fall.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest in securities issued
by entities domiciled outside the United States and securities with credit and
liquidity support features provided by entities domiciled outside of the United
States. The fund may also invest in securities of U.S. issuers with substantial
operations outside the United States. Additionally, the securities held by the
fund may be affected by certain events taking place around the world, including
those directly involving the issuers whose securities are owned by the fund;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations. Investments in securities issued by
entities based outside the United States may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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.

The fund is not managed to maintain a stable asset value of $1.00 per share and
it is possible to lose money by investing in the fund.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

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 this prospectus.

INVESTMENT RESULTS

All fund results in the "Investment results" section of this prospectus reflect
the reinvestment of dividends and capital gains distributions, if any. Unless
otherwise noted, fund results reflect any fee waivers and/or expense
reimbursements in effect during the period presented.



                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  67
                                                                             ---

<PAGE>

MANAGEMENT AND ORGANIZATION

INVESTMENT ADVISER


Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the Series and
other mutual funds, including the American Funds. Capital Research and
Management Company is a wholly owned subsidiary of The Capital Group Companies,
Inc. and is located at 333 South Hope Street, Los Angeles, California 90071,
and 6455 Irvine Center Drive, Irvine, California 92618. Capital Research and
Management Company manages the investment portfolios and business affairs of
the Series. The total management fee paid by each fund for the previous fiscal
year (or, in the case of International Growth and Income Fund, the management
fee to be paid for the current fiscal year), expressed as a percentage of
average net assets of that fund, appear in the Annual Fund Operating Expenses
table for each fund. A more detailed description of the investment advisory and
service agreement between the Series and the investment adviser is included in
the Series' statement of additional information. A discussion regarding the
basis for the approval of the Series' investment advisory and service agreement
by the Series' board of trustees is contained in the Series' annual report to
shareholders for the fiscal year ended December 31, 2009.


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. Capital Research and Management Company and
the funds it advises have applied to the 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' boards, 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. Each fund's shareholders pre-approved
this arrangement at a meeting of 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.

In addition, shareholders approved a proposal to reorganize the series into a
Delaware statutory trust. The reorganization may be completed in 2010 or early
2011; however, the series reserves the right to delay the implementation.


EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the funds'
portfolio transactions. In selecting broker-dealers, the investment adviser
strives to obtain "best execution" (the most favorable total price reasonably
attainable under the circumstances) for the funds' portfolio transactions,
taking into account a variety of factors. Subject to best execution, the
investment adviser may consider investment research and/or brokerage services
provided to the adviser in placing orders for the funds' portfolio
transactions. The investment adviser may place orders for the funds' portfolio
transactions with broker-dealers who have sold shares of funds managed by the
investment adviser or its affiliated companies; however, the investment adviser
does not give consideration to 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 funds' portfolio transactions. A more detailed
description of the investment adviser's policies is included in the statement
of additional information.

PORTFOLIO MANAGEMENT

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

PORTFOLIO HOLDINGS

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

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

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



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68  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


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






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

JAMES K. DUNTON             Serves as an equity portfolio  Senior Vice
VICE CHAIRMAN OF THE BOARD  counselor for: GROWTH-INCOME   President --
                            FUND -- 26 years (since the    Capital Research
                            fund's inception) BLUE CHIP    Global Investors
                            INCOME AND GROWTH FUND -- 9    Investment
                            years (since the fund's        professional for 48
                            inception)                     years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
DONALD D. O'NEAL            Serves as an equity portfolio  Senior Vice
PRESIDENT AND TRUSTEE       counselor for: GROWTH-INCOME   President --
                            FUND -- 5 years                Capital Research
                                                           Global Investors
                                                           Investment
                                                           professional for 25
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
ALAN N. BERRO               Serves as an equity portfolio  Senior Vice
SENIOR VICE PRESIDENT       counselor for: ASSET           President --
                            ALLOCATION FUND -- 10 years    Capital World
                                                           Investors
                                                           Investment
                                                           professional for 24
                                                           years in total; 19
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
ABNER D. GOLDSTINE          Serves as a fixed-income       Senior Vice
SENIOR VICE PRESIDENT       portfolio counselor for:       President -- Fixed
                            HIGH-INCOME BOND FUND -- 12    Income, Capital
                            years                          Research and
                                                           Management Company
                                                           Investment
                                                           professional for 58
                                                           years in total; 43
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
C. ROSS SAPPENFIELD         Serves as an equity portfolio  Senior Vice
SENIOR VICE PRESIDENT       counselor for:                 President --
                            GROWTH-INCOME FUND -- 11       Capital Research
                            years BLUE CHIP INCOME AND     Global Investors
                            GROWTH FUND -- 9 years (since  Investment
                            the fund's inception)          professional for 18
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
JOHN H. SMET                Serves as a fixed-income       Senior Vice
SENIOR VICE PRESIDENT       portfolio counselor for: U.S.  President -- Fixed
                            GOVERNMENT/AAA-RATED           Income, Capital
                            SECURITIES FUND -- 18 years    Research and
                                                           Management Company
                                                           Investment
                                                           professional for 28
                                                           years in total; 27
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
CARL M. KAWAJA              Serves as an equity portfolio  Senior Vice
VICE PRESIDENT              counselor for:  NEW WORLD      President --
                            FUND -- 11 years (since the    Capital World
                            fund's inception)              Investors
                                                           Investment
                                                           professional for 22
                                                           years in total; 19
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
SUNG LEE                    Serves as an equity portfolio  Senior Vice
VICE PRESIDENT              counselor for:                 President --
                            INTERNATIONAL FUND -- 4        Capital Research
                            years INTERNATIONAL GROWTH     Global Investors
                            AND INCOME FUND -- 2 years     Investment
                            (since the fund's inception)   professional for 16
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
ROBERT W. LOVELACE          Serves as an equity portfolio  Senior Vice
VICE PRESIDENT              counselor for: GLOBAL GROWTH   President --
                            FUND -- 13 years (since the    Capital World
                            fund's inception) NEW WORLD    Investors
                            FUND -- 11 years (since the    Investment
                            fund's inception)              professional for 25
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
DAVID C. BARCLAY            Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President -- Fixed
                            HIGH-INCOME BOND FUND -- 17    Income, Capital
                            years NEW WORLD FUND -- 11     Research and
                            years (since the fund's        Management Company
                            inception) BOND FUND -- 12     Investment
                            years                          professional for 29
                                                           years in total; 22
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
DONNALISA PARKS BARNUM      Serves as an equity portfolio  Senior Vice
                            counselor for: GROWTH          President --
                            FUND -- 7 years                Capital World
                                                           Investors
                                                           Investment
                                                           professional for 29
                                                           years in total; 24
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
CHRISTOPHER D. BUCHBINDER   Serves as an equity portfolio  Senior Vice
                            counselor for: BLUE CHIP       President --
                            INCOME AND GROWTH FUND -- 3    Capital Research
                            years                          Global Investors
                                                           Investment
                                                           professional for 15
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
GORDON CRAWFORD             Serves as an equity portfolio  Senior Vice
                            counselor for: GLOBAL SMALL    President --
                            CAPITALIZATION FUND -- 12      Capital Research
                            years (since the fund's        Global Investors
                            inception) GLOBAL DISCOVERY    Investment
                            FUND -- 5 years                professional for 39
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
DAVID A. DAIGLE             Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President - Fixed
                             HIGH-INCOME BOND FUND -- 1    Income, Capital
                            year (plus 9 years of prior    Research Company
                            experience as an investment    Investment
                            analyst for the fund)          professional for 16
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate




                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  69
                                                                             ---

<PAGE>





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

MARK H. DALZELL             Serves as a fixed-income       Senior Vice
                            portfolio counselor            President -- Fixed
                            for: BOND FUND -- 5            Income, Capital
                            years GLOBAL BOND FUND -- 4    Research and
                            years (since the fund's        Management Company
                            inception)                     Investment
                                                           professional for 32
                                                           years in total; 22
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
MARK E. DENNING             Serves as an equity portfolio  Senior Vice
                            counselor for: GLOBAL SMALL    President --
                            CAPITALIZATION FUND --  12     Capital Research
                            years (since the fund's        Global Investors
                            inception) GLOBAL DISCOVERY    Investment
                            FUND -- 5 years                professional for 28
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
J. BLAIR FRANK              Serves as an equity portfolio  Senior Vice
                            counselor for: GLOBAL SMALL    President --
                            CAPITALIZATION FUND --  7      Capital Research
                            years GROWTH-INCOME FUND -- 4  Global Investors
                            years                          Investment
                                                           professional for 17
                                                           years in total; 16
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
DAVID A. HOAG               Serves as a fixed-income       Senior Vice
                            portfolio counselor for: BOND  President -- Fixed
                            FUND -- 3 years                Income, Capital
                                                           Research and
                                                           Management Company
                                                           Investment
                                                           professional for 22
                                                           years in total; 19
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
THOMAS H. HOGH              Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President -- Fixed
                            GLOBAL BOND FUND -- 4 years    Income, Capital
                            (since the fund's              Research Company
                            inception) U.S.                Investment
                            GOVERNMENT/AAA-RATED           professional for 23
                            SECURITIES FUND --13           years in total; 20
                            years BOND FUND -- 3 years     years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
CLAUDIA P. HUNTINGTON       Serves as an equity portfolio  Senior Vice
                            counselor for: GROWTH-INCOME   President --
                            FUND -- 16 years (plus 5       Capital Research
                            years of prior experience as   Global Investors
                            an investment analyst for the  Investment
                            fund) GLOBAL DISCOVERY         professional for 37
                            FUND -- 9 years (since the     years in total; 35
                            fund's inception)              years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
GREGG E. IRELAND            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH AND INCOME       Capital World
                            FUND -- 4 years (since the     Investors
                            fund's inception) GROWTH       Investment
                            FUND -- 4 years                professional for 38
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
GREGORY D. JOHNSON          Serves as an equity portfolio  Senior Vice
                            counselor for: GROWTH          President --
                            FUND -- 3 years                Capital World
                                                           Investors
                                                           Investment
                                                           professional for 17
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
MICHAEL T. KERR             Serves as an equity portfolio  Senior Vice
                            counselor for:  GROWTH         President --
                            FUND -- 5 years                Capital World
                                                           Investors
                                                           Investment
                                                           professional for 27
                                                           years in total; 25
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
HAROLD H. LA                Serves as an equity portfolio  Senior Vice
                            counselor for: GLOBAL SMALL    President --
                            CAPITALIZATION FUND -- 2       Capital Research
                            years (plus 4 years of prior   Global Investors
                            experience as an investment    Investment
                            analyst for the fund)          professional for 12
                                                           years in total; 11
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
JEFFREY T. LAGER            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            ASSET ALLOCATION FUND -- 3     Capital World
                            years                          Investors
                                                           Investment
                                                           professional for 15
                                                           years in total; 14
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
MARCUS B. LINDEN            Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President -- Fixed
                            HIGH-INCOME BOND FUND -- 3     Income, Capital
                            years                          Research Company
                                                           Investment
                                                           professional for 15
                                                           years in total; 14
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
JAMES B. LOVELACE           Serves as an equity portfolio  Senior Vice
                            counselor for: BLUE CHIP       President --
                            INCOME AND GROWTH FUND -- 3    Capital Research
                            years                          Global Investors
                                                           Investment
                                                           professional for 28
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
JESPER LYCKEUS              Serves as an equity portfolio  Senior Vice
                            counselor for: INTERNATIONAL   President --
                            FUND -- 3 years (plus 8 years  Capital Research
                            of prior experience as an      Global Investors
                            investment analyst for the     Investment
                            fund) INTERNATIONAL GROWTH     professional for 15
                            AND INCOME FUND -- 2 years     years in total; 14
                            (since the fund's inception)   years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate




----
70  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>





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

FERGUS N. MACDONALD         Serves as a fixed-income       Vice President,
                            portfolio counselor for:       Fixed-Income,
                            U.S. GOVERNMENT/AAA-RATED      Capital Research
                            SECURITIES FUND --Less than 1  Company
                            year                           Investment
                                                           professional for 18
                                                           years in total; 7
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
RONALD B. MORROW            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GROWTH FUND -- 7 years (plus   Capital World
                            6 years of prior experience    Investors
                            as an investment analyst for   Investment
                            the fund)                      professional for 42
                                                           years in total; 13
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
JAMES R. MULALLY            Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President -- Fixed
                            ASSET ALLOCATION FUND -- 4     Income, Capital
                            years                          Research and
                            GLOBAL BOND FUND -- 2 years    Management Company
                                                           Investment
                                                           professional for 34
                                                           years in total; 30
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
WESLEY K.-S. PHOA           Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President,
                            U.S. GOVERNMENT/AAA-RATED      Fixed-Income,
                            SECURITIES FUND --Less than 1  Capital Research
                            year                           Company
                                                           Investment
                                                           professional for 17
                                                           years in total; 11
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
DAVID M. RILEY              Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            INTERNATIONAL GROWTH AND       Capital Research
                            INCOME FUND --                 Global Investors
                            2 years (since the fund's      Investment
                            inception)                     professional for 16
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
EUGENE P. STEIN             Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            ASSET ALLOCATION FUND -- 2     Capital World
                            years                          Investors
                                                           Investment
                                                           professional for 39
                                                           years in total; 38
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
ANDREW B. SUZMAN            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH AND INCOME       Capital World
                            FUND -- 1 year                 Investors
                                                           Investment
                                                           professional for 17
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
CHRISTOPHER M. THOMSEN      Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            INTERNATIONAL FUND -- 4 years  Capital Research
                                                           Global Investors
                                                           Investment
                                                           professional for 13
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
STEVEN T. WATSON            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH FUND -- 8 years  Capital World
                            (plus 4 years of prior         Investors
                            experience as an investment    Investment
                            analyst for the fund) GLOBAL   professional for 23
                            GROWTH AND INCOME              years in total; 20
                            FUND -- 4 years (since the     years with Capital
                            fund's inception)              Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
PAUL A. WHITE               Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH FUND -- 5 years  Capital World
                            (plus 5 years of prior         Investors
                            experience as an investment    Investment
                            analyst for the fund)          professional for 21
                                                           years in total; 11
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
DYLAN J. YOLLES             Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GROWTH-INCOME FUND -- 5 years  Capital Research
                            (plus 5 years of prior         Global Investors
                            experience as an investment    Investment
                            analyst for the fund)          professional for 13
                                                           years in total; 10
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate



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

PURCHASES AND REDEMPTIONS OF SHARES


Shares of the Series are currently offered only to insurance company separate
accounts as well as so-called "feeder funds" under master-feeder arrangements
sponsored by insurance companies. All such shares may be purchased or redeemed
by the separate accounts (or feeder funds) at net asset value without any sales
or redemption charges. These purchases and redemptions are made at the price
next determined after such purchases and redemptions of units of the separate
accounts (or feeder funds).


FREQUENT TRADING OF FUND SHARES

The Series and American Funds Distributors, Inc., the Series' distributor,
reserve the right to reject any purchase order for any reason. The funds are
not designed to serve as vehicles for frequent trading. Frequent trading of
fund shares may lead to increased costs to the


                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  71
                                                                             ---

<PAGE>

funds and less efficient management of the funds' portfolios, potentially
resulting in dilution of the value of the shares held by long-term
shareholders. Accordingly, purchases, including those that are part of exchange
activity, that the Series or American Funds Distributors, Inc. has determined
could involve actual or potential harm to a fund may be rejected.


The Series, through its transfer agent, American Funds Service Company, has
agreements with the Series' insurance relationships to maintain its
surveillance procedures that are designed to detect frequent trading in fund
shares. Under these procedures, various analytics are used to evaluate factors
that may be indicative of frequent trading. For example, transactions in fund
shares that exceed certain monetary thresholds may be scrutinized. American
Funds Service Company may work with the insurance company separate accounts or
feeder funds to apply their procedures that American Funds Service Company
believes are reasonably designed to enforce the frequent trading policies of
the Series. You should refer to disclosures provided by the insurance company
with which you have a contract to determine the specific trading restrictions
that apply to you.

Under its procedures, American Funds Service Company also may review
transactions that occur close in time to other transactions in the same account
or in multiple accounts under common ownership or influence. Trading activity
that is identified through these procedures or as a result of any other
information available to the funds will be evaluated to determine whether such
activity might constitute frequent trading. These procedures may be modified
from time to time as appropriate to improve the detection of frequent trading,
to facilitate monitoring for frequent trading in particular retirement plans or
other accounts, and to comply with applicable laws.


In addition to the Series' broad ability to restrict potentially harmful
trading as described previously, the Series' board of trustees has adopted a
"purchase blocking policy" under which any contract owner redeeming units
representing a beneficial interest in any fund other than Cash Management Fund
(including redemptions that are part of an exchange transaction) having a value
of $5,000 or more will be precluded from investing units of beneficial interest
in that fund (including investments that are part of an exchange transaction)
for 30 calendar days after the redemption transaction. Under this purchase
blocking policy, certain purchases will not be prevented and certain
redemptions will not trigger a purchase block, such as: systematic redemptions
and purchases where the entity maintaining the contract owner's account is able
to identify the transaction as a systematic redemption or purchase; purchases
and redemptions of units representing a beneficial interest in a fund having a
value of less than $5,000; retirement plan contributions, loans and
distributions (including hardship withdrawals) identified as such on the
retirement plan recordkeeper's system; and purchase transactions involving
transfers of assets, where the entity maintaining the contract owner's account
is able to identify the transaction as one of these types of transactions.

The Series reserves the right to waive the purchase blocking policy in those
instances where American Funds Service Company determines that its surveillance
procedures are adequate to detect frequent trading in fund shares.


If American Funds Service Company identifies any activity that may constitute
frequent trading, it reserves the right to contact the insurance company
separate account or feeder fund and request that the separate account or feeder
fund either provide information regarding an account owner's transactions or
restrict the account owner's trading. If American Funds Service Company is not
satisfied that insurance company separate account or feeder fund has taken
appropriate action, American Funds Service Company may terminate the separate
account's or feeder fund's ability to transact in fund shares.


There is no guarantee that all instances of frequent trading in fund shares
will be prevented.

NOTWITHSTANDING THE SERIES' SURVEILLANCE PROCEDURES AND PURCHASE BLOCKING
POLICY, ALL TRANSACTIONS IN FUND SHARES REMAIN SUBJECT TO THE SERIES' AND
AMERICAN FUNDS DISTRIBUTORS, INC.'S RIGHT TO RESTRICT POTENTIALLY ABUSIVE
TRADING GENERALLY (INCLUDING THE TYPES OF TRANSACTIONS DESCRIBED ABOVE THAT
WILL NOT BE PREVENTED OR TRIGGER A BLOCK UNDER THE PURCHASE BLOCKING POLICY).
SEE THE STATEMENT OF ADDITIONAL INFORMATION FOR MORE INFORMATION ABOUT HOW
AMERICAN FUNDS SERVICE COMPANY MAY ADDRESS OTHER POTENTIALLY ABUSIVE TRADING
ACTIVITY IN THE SERIES.

VALUING SHARES


Each fund calculates its share price, also called net asset value, each day the
New York Stock Exchange is open for trading as of approximately 4 p.m. New York
time, the normal close of regular trading. The funds will not calculate net
asset values on days that the New York Stock Exchange is closed for trading.
Assets are valued primarily on the basis of market quotations. However, the
funds have adopted procedures for making "fair value" determinations if market
quotations are not readily available or are not considered reliable. For
example, if events occur between the close of markets outside the United States
and the close of regular trading on the New York Stock Exchange that, in the
opinion of the investment adviser, materially affect the value of any of the
securities in the funds' portfolios that principally trade in those
international markets, those securities will be valued in accordance with fair
value procedures. Use of these procedures is intended to result in more
appropriate net asset values. In addition, such use will reduce, if not
eliminate, potential arbitrage opportunities otherwise available to short-term
investors.


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

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


----
72  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>


PLANS OF DISTRIBUTION

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


DISTRIBUTIONS AND TAXES

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

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

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


                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  73
                                                                             ---

<PAGE>


FINANCIAL HIGHLIGHTS/1/

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





                    Income (loss) from investment operations/2/      Dividends and distributions
                    ------------------------------------------  -------------------------------------

                                    Net gains
          Net asset    Net         (losses) on                  Dividends                    Total
           value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period    beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended     of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Global Discovery Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $ 7.45      $.05           $ 3.78          $ 3.83      $(.08)       $  --        $ (.08)      $11.20     51.49%
12/31/08    14.09       .15            (6.37)          (6.22)      (.12)        (.30)         (.42)        7.45    (45.02)
12/31/07    13.05       .17             2.07            2.24       (.16)       (1.04)        (1.20)       14.09     17.55
12/31/06    11.63       .15             1.89            2.04       (.13)        (.49)         (.62)       13.05     17.66
12/31/05    10.79       .14             1.05            1.19       (.11)        (.24)         (.35)       11.63     11.07
CLASS 2
12/31/09     7.43       .03             3.74            3.77       (.05)          --          (.05)       11.15     50.91
12/31/08    14.02       .12            (6.32)          (6.20)      (.09)        (.30)         (.39)        7.43    (45.09)
12/31/07    13.00       .14             2.05            2.19       (.13)       (1.04)        (1.17)       14.02     17.22
12/31/06    11.59       .11             1.89            2.00       (.10)        (.49)         (.59)       13.00     17.41
12/31/05    10.76       .11             1.05            1.16       (.09)        (.24)         (.33)       11.59     10.80

Global Growth Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $13.96      $.26           $ 5.67          $ 5.93      $(.28)       $  --        $ (.28)      $19.61     42.58%
12/31/08    25.15       .47            (9.50)          (9.03)      (.41)       (1.75)        (2.16)       13.96    (38.23)
12/31/07    23.44       .51             2.98            3.49       (.76)       (1.02)        (1.78)       25.15     15.16
12/31/06    19.63       .41             3.62            4.03       (.22)          --          (.22)       23.44     20.73
12/31/05    17.31       .28             2.19            2.47       (.15)          --          (.15)       19.63     14.37
CLASS 2
12/31/09    13.88       .22             5.64            5.86       (.24)          --          (.24)       19.50     42.30
12/31/08    25.00       .42            (9.43)          (9.01)      (.36)       (1.75)        (2.11)       13.88    (38.39)
12/31/07    23.29       .45             2.95            3.40       (.67)       (1.02)        (1.69)       25.00     14.85
12/31/06    19.52       .36             3.59            3.95       (.18)          --          (.18)       23.29     20.43
12/31/05    17.23       .23             2.18            2.41       (.12)          --          (.12)       19.52     14.07

Global Small Capitalization Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $11.18      $.09           $ 6.80          $ 6.89      $(.07)       $  --        $ (.07)      $18.00     61.63%
12/31/08    27.20       .19           (13.33)         (13.14)        --        (2.88)        (2.88)       11.18    (53.39)
12/31/07    24.87       .12             5.27            5.39       (.90)       (2.16)        (3.06)       27.20     21.73
12/31/06    21.29       .19             4.74            4.93       (.14)       (1.21)        (1.35)       24.87     24.35
12/31/05    17.14       .13             4.23            4.36       (.21)          --          (.21)       21.29     25.66
CLASS 2
12/31/09    11.03       .05             6.70            6.75       (.04)          --          (.04)       17.74     61.30
12/31/08    26.95       .14           (13.18)         (13.04)        --        (2.88)        (2.88)       11.03    (53.52)
12/31/07    24.64       .05             5.22            5.27       (.80)       (2.16)        (2.96)       26.95     21.43
12/31/06    21.12       .14             4.70            4.84       (.11)       (1.21)        (1.32)       24.64     24.05
12/31/05    17.02       .09             4.19            4.28       (.18)          --          (.18)       21.12     25.35







                       Ratio of   Ratio of    Ratio of
                       expenses   expenses      net
          Net assets, to average to average    income
            end of    net assets net assets  (loss) to
Period    period (in    before     after      average
ended      millions)    waiver   waiver/3/  net assets/3/


Global Discovery Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 31        .61%       .61%        .59%
12/31/08        18        .60        .55        1.33
12/31/07        35        .60        .54        1.25
12/31/06        28        .62        .56        1.19
12/31/05        22        .61        .56        1.27
CLASS 2
12/31/09       192        .86        .86         .36
12/31/08       131        .85        .80        1.08
12/31/07       240        .85        .79         .98
12/31/06       151        .87        .81         .94
12/31/05        89        .86        .81        1.04

Global Growth Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09    $1,037        .56%       .56%       1.59%
12/31/08       675        .55        .50        2.37
12/31/07       684        .55        .50        2.06
12/31/06       278        .58        .53        1.95
12/31/05       206        .62        .57        1.56
CLASS 2
12/31/09     4,100        .82        .82        1.36
12/31/08     3,198        .80        .75        2.12
12/31/07     5,180        .80        .75        1.84
12/31/06     4,015        .83        .78        1.71
12/31/05     2,617        .87        .82        1.30

Global Small Capitalization Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09    $  604        .76%       .76%        .61%
12/31/08       306        .74        .67        1.01
12/31/07       369        .73        .66         .45
12/31/06       247        .77        .69         .82
12/31/05       231        .79        .73         .72
CLASS 2
12/31/09     2,678       1.01       1.01         .36
12/31/08     1,748        .99        .92         .70
12/31/07     3,975        .98        .91         .20
12/31/06     2,927       1.02        .94         .61
12/31/05     1,977       1.04        .97         .49




----
74  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>




                    Income (loss) from investment operations/2/      Dividends and distributions
                    ------------------------------------------  -------------------------------------

                                    Net gains
          Net asset    Net         (losses) on                  Dividends                    Total
           value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period    beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended     of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Growth Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $33.51      $.35          $ 12.94         $ 13.29      $(.35)      $   --        $ (.35)      $46.45     39.74%
12/31/08    67.22       .63           (27.52)         (26.89)      (.56)       (6.26)        (6.82)       33.51    (43.83)
12/31/07    64.51       .68             7.44            8.12       (.68)       (4.73)        (5.41)       67.22     12.64
12/31/06    59.36       .70             5.46            6.16       (.63)        (.38)        (1.01)       64.51     10.48
12/31/05    51.39       .46             8.00            8.46       (.49)          --          (.49)       59.36     16.50
CLASS 2
12/31/09    33.27       .25            12.84           13.09       (.26)          --          (.26)       46.10     39.41
12/31/08    66.72       .50           (27.27)         (26.77)      (.42)       (6.26)        (6.68)       33.27    (43.97)
12/31/07    64.08       .50             7.39            7.89       (.52)       (4.73)        (5.25)       66.72     12.35
12/31/06    58.98       .54             5.43            5.97       (.49)        (.38)         (.87)       64.08     10.22
12/31/05    51.10       .34             7.92            8.26       (.38)          --          (.38)       58.98     16.19
CLASS 3
12/31/09    33.54       .28            12.95           13.23       (.28)          --          (.28)       46.49     39.51
12/31/08    67.21       .54           (27.50)         (26.96)      (.45)       (6.26)        (6.71)       33.54    (43.93)
12/31/07    64.50       .55             7.45            8.00       (.56)       (4.73)        (5.29)       67.21     12.44
12/31/06    59.34       .59             5.46            6.05       (.51)        (.38)         (.89)       64.50     10.29
12/31/05    51.38       .37             7.98            8.35       (.39)          --          (.39)       59.34     16.28

International Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $12.22      $.24           $ 5.04          $ 5.28      $(.25)      $ (.08)       $ (.33)      $17.17     43.50%
12/31/08    24.81       .43            (9.88)          (9.45)      (.40)       (2.74)        (3.14)       12.22    (42.01)
12/31/07    22.01       .43             3.95            4.38       (.41)       (1.17)        (1.58)       24.81     20.30
12/31/06    18.96       .41             3.21            3.62       (.38)        (.19)         (.57)       22.01     19.33
12/31/05    15.82       .32             3.11            3.43       (.29)          --          (.29)       18.96     21.75
CLASS 2
12/31/09    12.19       .21             5.01            5.22       (.22)        (.08)         (.30)       17.11     43.07
12/31/08    24.72       .41            (9.85)          (9.44)      (.35)       (2.74)        (3.09)       12.19    (42.12)
12/31/07    21.94       .36             3.94            4.30       (.35)       (1.17)        (1.52)       24.72     20.02
12/31/06    18.92       .35             3.20            3.55       (.34)        (.19)         (.53)       21.94     18.98
12/31/05    15.79       .28             3.11            3.39       (.26)          --          (.26)       18.92     21.50
CLASS 3
12/31/09    12.23       .22             5.04            5.26       (.23)        (.08)         (.31)       17.18     43.25
12/31/08    24.80       .43            (9.90)          (9.47)      (.36)       (2.74)        (3.10)       12.23    (42.10)
12/31/07    22.00       .39             3.94            4.33       (.36)       (1.17)        (1.53)       24.80     20.10
12/31/06    18.96       .37             3.20            3.57       (.34)        (.19)         (.53)       22.00     19.07
12/31/05    15.82       .29             3.11            3.40       (.26)          --          (.26)       18.96     21.54

New World Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $13.57      $.34          $  6.42         $  6.76      $(.29)      $   --        $ (.29)      $20.04     49.95%
12/31/08    25.88       .43           (10.68)         (10.25)      (.36)       (1.70)        (2.06)       13.57    (42.20)
12/31/07    21.56       .46             6.25            6.71       (.83)       (1.56)        (2.39)       25.88     32.53
12/31/06    16.67       .41             4.95            5.36       (.32)        (.15)         (.47)       21.56     32.88
12/31/05    13.96       .33             2.58            2.91       (.20)          --          (.20)       16.67     21.10
CLASS 2
12/31/09    13.47       .29             6.38            6.67       (.25)          --          (.25)       19.89     49.65
12/31/08    25.69       .40           (10.62)         (10.22)      (.30)       (1.70)        (2.00)       13.47    (42.37)
12/31/07    21.40       .40             6.20            6.60       (.75)       (1.56)        (2.31)       25.69     32.21
12/31/06    16.56       .36             4.92            5.28       (.29)        (.15)         (.44)       21.40     32.59
12/31/05    13.89       .29             2.56            2.85       (.18)          --          (.18)       16.56     20.74

Blue Chip Income and Growth Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $ 6.67      $.16           $ 1.71          $ 1.87      $(.17)       $  --         $(.17)      $ 8.37     28.18%
12/31/08    11.53       .22            (4.22)          (4.00)      (.21)        (.65)         (.86)        6.67    (36.30)
12/31/07    11.97       .24              .07             .31       (.36)        (.39)         (.75)       11.53      2.25
12/31/06    10.91       .20             1.63            1.83       (.16)        (.61)         (.77)       11.97     17.73
12/31/05    10.26       .18              .59             .77       (.12)          --          (.12)       10.91      7.57
CLASS 2
12/31/09     6.62       .14             1.70            1.84       (.15)          --          (.15)        8.31     27.97
12/31/08    11.45       .19            (4.18)          (3.99)      (.19)        (.65)         (.84)        6.62    (36.50)
12/31/07    11.87       .21              .07             .28       (.31)        (.39)         (.70)       11.45      2.03
12/31/06    10.83       .17             1.61            1.78       (.13)        (.61)         (.74)       11.87     17.42
12/31/05    10.20       .15              .58             .73       (.10)          --          (.10)       10.83      7.24







                       Ratio of   Ratio of    Ratio of
                       expenses   expenses      net
          Net assets, to average to average    income
            end of    net assets net assets  (loss) to
Period    period (in    before     after      average
ended      millions)    waiver   waiver/3/  net assets/3/


Growth Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09    $ 6,565       .35%       .35%        .91%
12/31/08      4,768       .33        .30        1.23
12/31/07      5,051       .33        .30        1.00
12/31/06      3,503       .34        .31        1.14
12/31/05      3,709       .35        .32         .87
CLASS 2
12/31/09     18,201       .60        .60         .66
12/31/08     13,383       .58        .55         .95
12/31/07     25,359       .58        .55         .74
12/31/06     23,122       .59        .56         .89
12/31/05     18,343       .60        .57         .64
CLASS 3
12/31/09        230       .53        .53         .72
12/31/08        198       .51        .48        1.02
12/31/07        425       .51        .48         .81
12/31/06        451       .52        .49         .95
12/31/05        499       .53        .50         .69

International Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09     $2,851       .54%       .54%       1.70%
12/31/08      1,864       .52        .48        2.42
12/31/07      1,708       .52        .47        1.82
12/31/06      1,648       .54        .49        1.99
12/31/05      1,599       .57        .52        1.92
CLASS 2
12/31/09      6,411       .79        .79        1.48
12/31/08      4,901       .77        .72        2.16
12/31/07      9,719       .77        .72        1.55
12/31/06      7,260       .79        .74        1.72
12/31/05      4,790       .82        .77        1.64
CLASS 3
12/31/09         68       .72        .72        1.54
12/31/08         57       .70        .65        2.25
12/31/07        123       .70        .65        1.64
12/31/06        120       .72        .67        1.81
12/31/05        116       .75        .70        1.74

New World Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09     $  500       .82%       .82%       2.02%
12/31/08        253       .81        .73        2.18
12/31/07        261       .82        .74        1.92
12/31/06        126       .88        .80        2.19
12/31/05         88       .92        .85        2.22
CLASS 2
12/31/09      1,492      1.07       1.07        1.78
12/31/08      1,044      1.06        .98        1.94
12/31/07      1,875      1.07        .99        1.69
12/31/06      1,175      1.13       1.05        1.93
12/31/05        677      1.17       1.10        1.97

Blue Chip Income and Growth Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09     $  408       .44%       .44%       2.26%
12/31/08        220       .43        .39        2.48
12/31/07        143       .42        .38        1.95
12/31/06        159       .43        .39        1.75
12/31/05        135       .45        .41        1.73
CLASS 2
12/31/09      3,344       .69         69        2.06
12/31/08      2,602       .68        .64        2.10
12/31/07      4,274       .67        .63        1.70
12/31/06      3,937       .68        .64        1.50
12/31/05      3,029       .70        .66        1.48




                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  75
                                                                             ---

<PAGE>




                       Income (loss) from investment operations/2/      Dividends and distributions
                       ------------------------------------------  -------------------------------------

                                       Net gains
             Net asset    Net         (losses) on                  Dividends                    Total
              value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period       beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended        of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Global Growth and Income Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 6.68      $.20           $ 2.47          $ 2.67      $(.21)      $   --         $(.21)      $ 9.14     40.11%
12/31/08       11.78       .28            (5.09)          (4.81)      (.22)        (.07)         (.29)        6.68    (41.06)
12/31/07       10.98       .28             1.14            1.42       (.22)        (.40)         (.62)       11.78     13.04
12/31/06/4/    10.00       .14              .91            1.05       (.07)          --          (.07)       10.98     10.49
CLASS 2
12/31/09        6.67       .18             2.46            2.64       (.19)          --          (.19)        9.12     39.72
12/31/08       11.75       .26            (5.07)          (4.81)      (.20)        (.07)         (.27)        6.67    (41.17)
12/31/07       10.97       .25             1.13            1.38       (.20)        (.40)         (.60)       11.75     12.67
12/31/06/4/    10.00       .11              .92            1.03       (.06)          --          (.06)       10.97     10.30

Growth-Income Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $24.25      $.49          $  7.13         $  7.62      $(.50)      $   --        $ (.50)      $31.37     31.54%
12/31/08       42.52       .69           (15.91)         (15.22)      (.69)       (2.36)        (3.05)       24.25    (37.68)
12/31/07       42.43       .80             1.51            2.31       (.77)       (1.45)        (2.22)       42.52      5.32
12/31/06       38.31       .77             5.03            5.80       (.72)        (.96)        (1.68)       42.43     15.51
12/31/05       36.81       .62             1.61            2.23       (.58)        (.15)         (.73)       38.31      6.08
CLASS 2
12/31/09       24.11       .42             7.09            7.51       (.44)          --          (.44)       31.18     31.24
12/31/08       42.26       .60           (15.80)         (15.20)      (.59)       (2.36)        (2.95)       24.11    (37.85)
12/31/07       42.19       .68             1.50            2.18       (.66)       (1.45)        (2.11)       42.26      5.04
12/31/06       38.12       .67             4.99            5.66       (.63)        (.96)        (1.59)       42.19     15.20
12/31/05       36.64       .53             1.60            2.13       (.50)        (.15)         (.65)       38.12      5.83
CLASS 3
12/31/09       24.27       .45             7.12            7.57       (.45)          --          (.45)       31.39     31.30
12/31/08       42.51       .64           (15.90)         (15.26)      (.62)       (2.36)        (2.98)       24.27    (37.78)
12/31/07       42.42       .73             1.50            2.23       (.69)       (1.45)        (2.14)       42.51      5.12
12/31/06       38.31       .70             5.01            5.71       (.64)        (.96)        (1.60)       42.42     15.30
12/31/05       36.80       .56             1.61            2.17       (.51)        (.15)         (.66)       38.31      5.88

International Growth and Income Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $10.92      $.36            $4.04           $4.40      $(.19)      $ (.21)        $(.40)      $14.92     40.38%
12/31/08/6/    10.00       .01              .92             .93       (.01)          --          (.01)       10.92      9.28
CLASS 2
12/31/09       10.92       .26             4.10            4.36       (.17)        (.21)         (.38)       14.90     40.04
12/31/08/6/    10.00       .01              .92             .93       (.01)          --          (.01)       10.92      9.27

Asset Allocation Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $12.16      $.35           $ 2.59          $ 2.94      $(.35)      $   --        $ (.35)      $14.75     24.27%
12/31/08       18.51       .47            (5.70)          (5.23)      (.45)        (.67)        (1.12)       12.16    (29.30)
12/31/07       18.34       .51              .75            1.26       (.45)        (.64)        (1.09)       18.51      6.82
12/31/06       16.56       .47             1.97            2.44       (.43)        (.23)         (.66)       18.34     14.96
12/31/05       15.49       .41             1.05            1.46       (.39)          --          (.39)       16.56      9.45
CLASS 2
12/31/09       12.08       .32             2.56            2.88       (.31)          --          (.31)       14.65     23.98
12/31/08       18.39       .43            (5.66)          (5.23)      (.41)        (.67)        (1.08)       12.08    (29.51)
12/31/07       18.23       .47              .74            1.21       (.41)        (.64)        (1.05)       18.39      6.55
12/31/06       16.47       .42             1.96            2.38       (.39)        (.23)         (.62)       18.23     14.66
12/31/05       15.42       .37             1.04            1.41       (.36)          --          (.36)       16.47      9.14
CLASS 3
12/31/09       12.17       .33             2.57            2.90       (.32)          --          (.32)       14.75     23.95
12/31/08       18.50       .44            (5.68)          (5.24)      (.42)        (.67)        (1.09)       12.17    (29.39)
12/31/07       18.34       .48              .74            1.22       (.42)        (.64)        (1.06)       18.50      6.56
12/31/06       16.56       .44             1.97            2.41       (.40)        (.23)         (.63)       18.34     14.75
12/31/05       15.49       .38             1.05            1.43       (.36)          --          (.36)       16.56      9.26

Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 9.45      $.42           $  .80          $ 1.22      $(.34)      $   --         $(.34)      $10.33     12.83%
12/31/08       11.14       .61            (1.64)          (1.03)      (.63)        (.03)         (.66)        9.45     (9.16)
12/31/07       11.64       .65             (.24)            .41       (.91)          --          (.91)       11.14      3.66
12/31/06       11.31       .63              .17             .80       (.47)          --          (.47)       11.64      7.31
12/31/05       11.57       .60             (.40)            .20       (.46)          --          (.46)       11.31      1.77
CLASS 2
12/31/09        9.36       .40              .79            1.19       (.32)          --          (.32)       10.23     12.61
12/31/08       11.03       .59            (1.63)          (1.04)      (.60)        (.03)         (.63)        9.36     (9.35)
12/31/07       11.53       .61             (.24)            .37       (.87)          --          (.87)       11.03      3.33
12/31/06       11.22       .60              .16             .76       (.45)          --          (.45)       11.53      6.99
12/31/05       11.48       .57             (.39)            .18       (.44)          --          (.44)       11.22      1.59







                          Ratio of   Ratio of    Ratio of
                          expenses   expenses      net
             Net assets, to average to average    income
               end of    net assets net assets  (loss) to
Period       period (in    before     after      average
ended         millions)    waiver   waiver/3/  net assets/3/


Global Growth and Income Fund
----------------------------------------------------------------------------------
CLASS 1
12/31/09        $  160      .63%       .63%        2.63%
12/31/08            95      .62        .56         3.00
12/31/07            79      .71        .58         2.37
12/31/06/4/         45      .72/5/     .65/5/      2.10/5/
CLASS 2
12/31/09         1,951      .88        .88         2.42
12/31/08         1,529      .86        .81         2.73
12/31/07         1,997      .96        .83         2.11
12/31/06/4/        638      .97/5/     .90/5/      1.64/5/

Growth-Income Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $ 8,142      .29%       .29%        1.83%
12/31/08         5,034      .28        .25         2.03
12/31/07         5,618      .27        .25         1.82
12/31/06         3,759      .28        .25         1.92
12/31/05         3,825      .29        .27         1.68
CLASS 2
12/31/09        16,220      .54        .54         1.60
12/31/08        13,046      .53        .50         1.75
12/31/07        23,243      .52        .50         1.57
12/31/06        22,688      .53        .50         1.67
12/31/05        17,608      .54        .52         1.44
CLASS 3
12/31/09           225      .47        .47         1.68
12/31/08           205      .46        .43         1.83
12/31/07           405      .45        .43         1.64
12/31/06           458      .46        .43         1.74
12/31/05           471      .47        .45         1.50

International Growth and Income Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09           $28      .74%       .74%        2.74%
12/31/08/6/         12      .09        .08          .14
CLASS 2
12/31/09            99      .99        .99         1.89
12/31/08/6/          4      .11        .11          .05

Asset Allocation Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09        $4,151      .32%       .32%        2.65%
12/31/08         2,243      .32        .29         2.98
12/31/07         1,927      .32        .29         2.69
12/31/06         1,079      .33        .30         2.67
12/31/05           879      .35        .32         2.57
CLASS 2
12/31/09         5,537      .58        .58         2.45
12/31/08         4,822      .57        .54         2.70
12/31/07         7,308      .57        .54         2.45
12/31/06         6,362      .58        .55         2.42
12/31/05         5,120      .60        .57         2.31
CLASS 3
12/31/09            44      .51        .51         2.53
12/31/08            41      .50        .47         2.77
12/31/07            71      .50        .47         2.52
12/31/06            76      .51        .48         2.49
12/31/05            76      .53        .50         2.39

Bond Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09        $3,775      .39%       .39%        4.19%
12/31/08         2,090      .40        .36         5.84
12/31/07           436      .41        .37         5.59
12/31/06           230      .43        .39         5.54
12/31/05           182      .44        .40         5.30
CLASS 2
12/31/09         4,635      .64        .64         4.00
12/31/08         3,432      .65        .61         5.53
12/31/07         4,679      .66        .62         5.34
12/31/06         3,374      .68        .64         5.29
12/31/05         2,312      .69        .65         5.06




----
76  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>




                       Income (loss) from investment operations/2/      Dividends and distributions
                       ------------------------------------------  -------------------------------------

                                       Net gains
             Net asset    Net         (losses) on                  Dividends                    Total
              value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period       beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended        of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Global Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $10.68      $.45            $ .62           $1.07       $(.18)      $  --         $(.18)      $11.57     10.04%
12/31/08       10.83       .48             (.09)            .39        (.54)         --/7/       (.54)       10.68      3.60
12/31/07       10.18       .49              .47             .96        (.31)         --          (.31)       10.83      9.54
12/31/06/8/    10.00       .10              .15             .25        (.07)         --          (.07)       10.18      2.52
CLASS 2
12/31/09       10.66       .42              .61            1.03        (.16)         --          (.16)       11.53      9.69
12/31/08       10.81       .44             (.07)            .37        (.52)         --/7/       (.52)       10.66      3.48
12/31/07       10.17       .47              .47             .94        (.30)         --          (.30)       10.81      9.23
12/31/06/9/    10.00       .06              .18             .24        (.07)         --          (.07)       10.17      1.99

High-Income Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 8.05      $.75           $ 2.41          $ 3.16      $ (.72)       $ --        $ (.72)      $10.49     39.45%
12/31/08       11.65       .87            (3.64)          (2.77)       (.83)         --          (.83)        8.05    (23.74)
12/31/07       12.90       .95             (.72)            .23       (1.48)         --         (1.48)       11.65      1.62
12/31/06       12.41       .92              .37            1.29        (.80)         --          (.80)       12.90     10.89
12/31/05       12.89       .85             (.55)            .30        (.78)         --          (.78)       12.41      2.46
CLASS 2
12/31/09        7.99       .71             2.39            3.10        (.70)         --          (.70)       10.39     38.94
12/31/08       11.55       .84            (3.60)          (2.76)       (.80)         --          (.80)        7.99    (23.84)
12/31/07       12.79       .91             (.72)            .19       (1.43)         --         (1.43)       11.55      1.33
12/31/06       12.32       .89              .36            1.25        (.78)         --          (.78)       12.79     10.59
12/31/05       12.81       .81             (.55)            .26        (.75)         --          (.75)       12.32      2.20
CLASS 3
12/31/09        8.07       .73             2.42            3.15        (.71)         --          (.71)       10.51     39.14
12/31/08       11.65       .86            (3.64)          (2.78)       (.80)         --          (.80)        8.07    (23.76)
12/31/07       12.88       .92             (.72)            .20       (1.43)         --         (1.43)       11.65      1.40
12/31/06       12.39       .90              .36            1.26        (.77)         --          (.77)       12.88     10.66
12/31/05       12.87       .82             (.55)            .27        (.75)         --          (.75)       12.39      2.25

U.S. Government/AAA-Rated Securities Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $12.29      $.37            $(.03)           $.34       $(.34)      $(.11)        $(.45)      $12.18      2.79%
12/31/08       11.73       .50              .41             .91        (.35)         --          (.35)       12.29      7.84
12/31/07       11.87       .58              .20             .78        (.92)         --          (.92)       11.73      6.83
12/31/06       11.91       .55             (.10)            .45        (.49)         --          (.49)       11.87      3.95
12/31/05       12.07       .48             (.16)            .32        (.48)         --          (.48)       11.91      2.70
CLASS 2
12/31/09       12.20       .34             (.03)            .31        (.32)       (.11)         (.43)       12.08      2.50
12/31/08       11.65       .47              .41             .88        (.33)         --          (.33)       12.20      7.63
12/31/07       11.79       .54              .19             .73        (.87)         --          (.87)       11.65      6.49
12/31/06       11.83       .51             (.09)            .42        (.46)         --          (.46)       11.79      3.75
12/31/05       12.00       .45             (.16)            .29        (.46)         --          (.46)       11.83      2.41
CLASS 3
12/31/09       12.30       .36             (.04)            .32        (.32)       (.11)         (.43)       12.19      2.58
12/31/08       11.74       .48              .41             .89        (.33)         --          (.33)       12.30      7.66
12/31/07       11.86       .55              .20             .75        (.87)         --          (.87)       11.74      6.63
12/31/06       11.89       .52             (.09)            .43        (.46)         --          (.46)       11.86      3.80
12/31/05       12.05       .46             (.16)            .30        (.46)         --          (.46)       11.89      2.50

Cash Management Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $11.44     $(.01)           $  --/7/        $(.01)      $(.03)      $  --/7/      $(.03)      $11.40      (.10)%
12/31/08       11.40       .24               --/7/          .24        (.20)         --          (.20)       11.44      2.15
12/31/07       11.62       .57               --/7/          .57        (.79)         --          (.79)       11.40      4.95
12/31/06       11.31       .54               --/7/          .54        (.23)         --          (.23)       11.62      4.81
12/31/05       11.09       .33               --/7/          .33        (.11)         --          (.11)       11.31      2.97
CLASS 2
12/31/09       11.38      (.04)              --/7/         (.04)       (.02)         --/7/       (.02)       11.32      (.33)
12/31/08       11.35       .20              .02             .22        (.19)         --          (.19)       11.38      1.90
12/31/07       11.56       .54               --/7/          .54        (.75)         --          (.75)       11.35      4.73
12/31/06       11.26       .51               --/7/          .51        (.21)         --          (.21)       11.56      4.59
12/31/05       11.05       .30               --/7/          .30        (.09)         --          (.09)       11.26      2.68
CLASS 3
12/31/09       11.44      (.03)            (.01)           (.04)       (.02)         --/7/       (.02)       11.38      (.31)
12/31/08       11.40       .22              .01             .23        (.19)         --          (.19)       11.44      1.99
12/31/07       11.60       .55               --/7/          .55        (.75)         --          (.75)       11.40      4.83
12/31/06       11.29       .52               --/7/          .52        (.21)         --          (.21)       11.60      4.64
12/31/05       11.07       .30               --/7/          .30        (.08)         --          (.08)       11.29      2.74







                          Ratio of   Ratio of    Ratio of
                          expenses   expenses      net
             Net assets, to average to average    income
               end of    net assets net assets  (loss) to
Period       period (in    before     after      average
ended         millions)    waiver   waiver/3/  net assets/3/


Global Bond Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $  162       .59%       .59%        4.06%
12/31/08          111       .59        .53         4.36
12/31/07           28       .61        .55         4.61
12/31/06/8/        12       .15        .13         1.00
CLASS 2
12/31/09        1,203       .84        .84         3.79
12/31/08          802       .84        .79         4.06
12/31/07          279       .86        .80         4.41
12/31/06/9/        15       .13        .12          .60

High-Income Bond Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $  635       .48%       .48%        7.86%
12/31/08          340       .48        .43         8.22
12/31/07          308       .48        .44         7.41
12/31/06          293       .49        .45         7.36
12/31/05          309       .50        .46         6.76
CLASS 2
12/31/09        1,063       .74        .74         7.62
12/31/08          780       .73        .68         7.92
12/31/07          996       .73        .69         7.17
12/31/06          832       .74        .70         7.12
12/31/05          590       .75        .71         6.55
CLASS 3
12/31/09           24       .67        .67         7.69
12/31/08           18       .66        .61         7.96
12/31/07           28       .66        .62         7.21
12/31/06           34       .67        .63         7.19
12/31/05           37       .68        .64         6.58

U.S. Government/AAA-Rated Securities Fund
------------------------------------------------------------------------------------
CLASS 1
12/31/09       $  999       .41%       .41%        2.99%
12/31/08          496       .43        .38         4.17
12/31/07          211       .46        .41         4.83
12/31/06          218       .47        .42         4.64
12/31/05          252       .47        .43         3.99
CLASS 2
12/31/09        1,561       .66        .66         2.79
12/31/08        1,219       .68        .64         3.93
12/31/07          597       .71        .66         4.58
12/31/06          402       .72        .67         4.40
12/31/05          341       .72        .68         3.75
CLASS 3
12/31/09           27       .59        .59         2.91
12/31/08           33       .61        .57         4.03
12/31/07           29       .64        .59         4.65
12/31/06           32       .65        .60         4.45
12/31/05           39       .65        .61         3.81

Cash Management Fund
------------------------------------------------------------------------------------
CLASS 1
12/31/09       $  105       .33%       .33%        (.08)%
12/31/08          158       .32        .29         2.07
12/31/07          112       .33        .30         4.88
12/31/06           98       .33        .30         4.74
12/31/05           75       .33        .30         2.91
CLASS 2
12/31/09          664       .58        .58         (.33)
12/31/08        1,023       .57        .54         1.73
12/31/07          452       .58        .55         4.61
12/31/06          282       .58        .55         4.52
12/31/05          153       .58        .55         2.71
CLASS 3
12/31/09           17       .51        .51         (.27)
12/31/08           25       .50        .47         1.91
12/31/07           20       .51        .48         4.70
12/31/06           18       .51        .48         4.53
12/31/05           16       .51        .48         2.70




                                                                             ---
                               AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  77
                                                                             ---

<PAGE>




                                                       Year ended December 31
                                                   -------------------------------
Portfolio turnover rate for all classes of shares  2009  2008  2007  2006    2005
-------------------------------------------------  ---- ----   ----  ----    ----

   Global Discovery Fund                            60%  46%     50%   31%     53%
   Global Growth Fund                               43   38      38    31      26
   Global Small Capitalization Fund                 55   47      49    50      47
   Growth Fund                                      37   26      40    35      29
   International Fund                               46   52      41    29      40
   New World Fund                                   25   32      34    32      26
   Blue Chip Income and Growth Fund                 22   24      27    21      33
   Global Growth and Income Fund                    47   36      36     8/4/   --
   Growth-Income Fund                               24   31      24    25      20
   International Growth and Income Fund             21   --/6/   --    --      --
   Asset Allocation Fund                            41   36      29    38      23
   Bond Fund                                       125   63      57    57      46
   Global Bond Fund                                 86  118      85     7/8/   --
   High-Income Bond Fund                            47   29      32    35      35
   U.S. Government/AAA-Rated Securities Fund       100  108      91    76      86
   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 Capital
   Research and Management Company. During some of the periods shown, Capital
   Research and Management Company reduced fees for investment advisory
   services.

/4/From May 1, 2006, commencement of operations.

/5/Annualized.

/6/From November 18, 2008, commencement of operations.

/7/Amount less than $.01.

/8/From October 4, 2006, commencement of operations.

/9/From November 6, 2006, when Class 2 shares were first issued.



----
78  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS
----

<PAGE>

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




OTHER FUND INFORMATION

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

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

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

The current SAI and the codes of ethics are on file with the Securities and
Exchange Commission (SEC). These and other related materials about the Series
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/551-8090) or on the EDGAR database on the SEC's website
at http://www.sec.gov or, after payment of a duplicating fee, via e-mail
request to publicinfo@sec.gov or by writing to the SEC's Public Reference
Section, 100 F Street, NE, Washington, D.C. 20549-1520.

The current SAI and annual/semi-annual reports to shareholders can be found
online at americanfunds.com/afis and may be available on the website of the
company that issued your insurance contract. You also may request a free copy
of these documents or the codes of ethics by calling American Funds at
800/421-9900, ext.65413 or writing to the Secretary at 333 South Hope Street,
Los Angeles, California 90071.





INAFPR-995-0510P Printed in USA CGD/AFD/8024. Investment Company File No. 811-3857





The Capital Group Companies
American Funds   Capital Research and Management   Capital International    Capital Guardian   Capital Bank and Trust





<PLAINTEXT>
<PAGE>

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

AMERICAN FUNDS
INSURANCE SERIES(R)


Growth Fund                        High-Income Bond Fund
International Fund                 U.S. Government/AAA-Rated Securities Fund
Growth-Income Fund                 Cash Management Fund
Asset Allocation Fund



PROSPECTUS


Class 3 shares

May 1, 2010





               TABLE OF CONTENTS

                   Summaries
                1  Growth Fund
                4  International Fund
                7  Growth-Income Fund
               10  Asset Allocation Fund
               13  High-Income Bond Fund
               16  U.S. Government/AAA-Rated Securities Fund
               19  Cash Management Fund
               21  Investment objectives, strategies and risks
               27  Management and organization
               31  Purchases and redemptions of shares
               32  Plans of distribution
               32  Distributions and taxes
               33  Financial highlights



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

<PAGE>

GROWTH FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with growth of capital.

FEES AND EXPENSES OF THE FUND

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

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 3
-------------------------------------------------------------------------------
Management fee.........................................................  0.33%
Distribution and/or service (12b-1) fees...............................  0.18
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.53



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 3                                          $54    $170    $296     $665



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 37% of the average value of its portfolio.



PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks and seeks to invest in companies
that appear to offer superior opportunities for growth of capital. The fund may
invest a portion of its assets in common stocks and other securities of issuers
domiciled outside the United States.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively
valued companies that, in its opinion, represent good, long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental analysis, which may include meeting with
company executives and employees, suppliers, customers and competitors.
Securities may be sold when the investment adviser believes that they no longer
represent relatively attractive investment opportunities.

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.



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

<PAGE>


GROWTH STOCK RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may also be affected by currency
controls; different accounting, auditing, financial reporting, and legal
standards and practices; 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.
Investments in securities issued by entities domiciled in the United States may
also be subject to many of these risks.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Capital Appreciation Funds Index and the Lipper Growth Funds Index include
mutual funds that disclose investment objectives that are reasonably comparable
to those of the fund. This information provides some indication of the risks of
investing in the fund. Past results are not predictive of future results.
Figures shown reflect fees and expenses associated with an investment in the
fund, but do not reflect insurance contract fees and expenses. If insurance
contract fees and expenses were included, results would have been lower.


Calendar year total returns.*

                                    [CHART]

 2000     2001    2002    2003    2004   2005   2006    2007    2008     2009
 ----     ----    ----    ----    ----   ----   ----    ----    ----     ----
 4.53%  -18.08%  -24.41% 36.90%  12.56% 16.28% 10.29%  12.44%  -43.93%  39.51%



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


HIGHEST   22.79% (quarter ended December 31, 2001)
LOWEST   -27.15% (quarter ended September 30, 2001)



For periods ended December 31, 2009:

AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS* LIFETIME*
------------------------------------------------------------------------------
Fund                                        39.51%  2.44%     1.19%    12.21%
S&P 500 (reflects no deduction for fees,
 expenses or taxes)                         26.47   0.42     -0.95     10.63
Lipper Capital Appreciation Funds Index
 (reflects no deduction for fees or taxes)  37.36   3.05     -0.57      9.12
Lipper Growth Funds Index (reflects no
 deduction for fees or taxes)               35.91   0.02     -2.49      8.69



* Lifetime results are from February 8, 1984, the date the fund began
  investment operations. Class 3 shares were first offered on January 16, 2004;
  therefore, results for the fund prior to that date assume a hypothetical
  investment in Class 1 shares, but reflect the .18% annual expense that
  applies to Class 3 shares and is described in the "Plans of distribution"
  section of this prospectus. Results for Class 1 shares are comparable to
  those of Class 3 shares because both classes invest in the same portfolio of
  securities.



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

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company


PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-------------------------------------------------------------------------------------------------------------

  DONNALISA PARKS BARNUM                7 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  GREGG E. IRELAND                      4 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  GREGORY D. JOHNSON                    3 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  MICHAEL T. KERR                       5 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------
  RONALD B. MORROW                      7 years              Senior Vice President - Capital World Investors
-------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



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

<PAGE>

INTERNATIONAL FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with long-term growth of
capital.

FEES AND EXPENSES OF THE FUND

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


ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 3
-------------------------------------------------------------------------------
Management fee.........................................................  0.50%
Distribution and/or service (12b-1) fees...............................  0.18
Other expenses.........................................................  0.04
Total annual fund operating expenses...................................  0.72



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 3                                          $74    $230    $401     $894



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 46% of the average value of its portfolio.


PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks of companies located outside the
United States that the investment adviser believes have the potential for
growth. The fund may invest a portion of its assets in common stocks and other
securities of companies in countries with developing economies and/or markets.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of the common stocks and other securities held by
the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.



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

<PAGE>


GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, generally purchased by the fund may involve large price
swings and potential for loss.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

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

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

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


Calendar year total returns.*


                                    [CHART]

 2000    2001     2002    2003   2004   2005    2006    2007    2008   2009
 -----   -----    -----   -----  -----  -----   -----  ------  ------ ------
-21.99% -19.88%  -14.73% 34.88%  19.48% 21.54%  19.07% 20.10%  -42.10% 43.25%


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


HIGHEST   24.48% (quarter ended June 30, 2009)
LOWEST   -20.85% (quarter ended December 31, 2008)



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

<PAGE>


For periods ended December 31, 2009:





AVERAGE ANNUAL TOTAL RETURNS                   1 YEAR 5 YEARS 10 YEARS* LIFETIME*
---------------------------------------------------------------------------------

Fund                                           43.25%  7.59%    2.16%     9.00%
MSCI All Country World ex USA Index (reflects
 no deduction for fees, expenses or taxes)     42.14   6.30     3.12      6.47
Lipper International Funds Index (reflects no
 deduction for fees or taxes)                  35.30   4.88     1.95      6.70




* Lifetime results are from May 1, 1990, the date the fund began investment
  operations. Class 3 shares were first offered on January 16, 2004; therefore,
  results for the fund prior to that date assume a hypothetical investment in
  Class 1 shares, but reflect the .18% annual expense that applies to Class 3
  shares and is described in the "Plans of distribution" section of this
  prospectus. Results for Class 1 shares are comparable to those of Class 3
  shares because both classes invest in the same portfolio of securities.



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company


PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-----------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

  SUNG LEE                              4 years              Senior Vice President - Capital Research Global Investors
  Vice President
-----------------------------------------------------------------------------------------------------------------------
  JESPER LYCKEUS                        3 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
  CHRISTOPHER M. THOMSEN                4 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



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

<PAGE>

GROWTH-INCOME FUND


INVESTMENT OBJECTIVE

The fund's investment objectives are to achieve long-term growth of capital and
income.

FEES AND EXPENSES OF THE FUND

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


ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 3
-------------------------------------------------------------------------------
Management fee.........................................................  0.28%
Distribution and/or service (12b-1) fees...............................  0.18
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.47



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 3                                          $48    $151    $263     $591



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 24% of the average value of its portfolio.


PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in common stocks or other securities that
demonstrate the potential for appreciation and/or dividends. Although the fund
focuses on investments in medium to larger capitalization companies, the fund's
investments are not limited to a particular capitalization size. The fund may
invest up to 15% of its assets, at the time of purchase, in securities of
issuers domiciled outside the United States. The fund is designed for investors
seeking both capital appreciation and income.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

MARKET RISKS -- The prices of, and the income generated by, common stocks and
other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the



                                                                             ---
           GROWTH-INCOME FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  7
                                                                             ---

<PAGE>


fund; conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent and may also be affected by currency fluctuation and
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices in some countries; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

GROWTH STOCKS RISKS -- The growth-oriented common stocks and other equity-type
securities, such as preferred stocks, convertible preferred stocks and
convertible bonds, purchased by the fund may involve large price swings and
potential for loss.

INCOME STOCKS RISKS -- Income provided by the fund may be affected by changes
in the dividend policies of the companies in which the fund invests and the
capital resources available for such payments at such companies.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
Growth & Income Funds Index includes mutual funds that disclose investment
objectives that are reasonably comparable to those of the fund. This
information provides some indication of the risks of investing in the fund.
Past results are not predictive of future results. Figures shown reflect fees
and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.


Calendar year total returns.*


                                    [CHART]

 2000   2001     2002    2003    2004   2005    2006   2007    2008     2009
 ----   ----     ----    ----    ----   ----    ----   ----    ----     ----
 8.05%  2.59%   -18.29%  32.52% 10.46%  5.88%  15.30%  5.12%  -37.78%  31.30%



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

HIGHEST   16.91% (quarter ended June 30, 2003)
LOWEST   -21.96% (quarter ended December 31, 2008)


For periods ended December 31, 2009:





AVERAGE ANNUAL TOTAL RETURNS                  1 YEAR 5 YEARS 10 YEARS* LIFETIME*
--------------------------------------------------------------------------------

Fund                                          31.30%  0.95%     3.35%    10.74%
S&P 500 (reflects no deduction for fees,
 expenses or taxes)                           26.47   0.42     -0.95     10.63
Lipper Growth & Income Funds Index (reflects
 no deduction for fees or taxes)              29.10   0.75      1.20      9.45




* Lifetime results are from February 8, 1984, the date the fund began
  investment operations. Class 3 shares were first offered on January 16, 2004;
  therefore, results for the fund prior to that date assume a hypothetical
  investment in Class 1 shares, but reflect the .18% annual expense that
  applies to Class 3 shares and is described in the "Plans of distribution"
  section of this prospectus. Results for Class 1 shares are comparable to
  those of Class 3 shares because both classes invest in the same portfolio of
  securities.



----
8   AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  GROWTH-INCOME FUND
----

<PAGE>


MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company


PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





-----------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
-----------------------------------------------------------------------------------------------------------------------

JAMES K. DUNTON                        26 years              Senior Vice President - Capital Research Global Investors
Vice Chairman of the Board
-----------------------------------------------------------------------------------------------------------------------
DONALD D. O'NEAL                       5 years               Senior Vice President - Capital Research Global Investors
President and Trustee
-----------------------------------------------------------------------------------------------------------------------
C. ROSS SAPPENFIELD                    11 years              Senior Vice President - Capital Research Global Investors
Senior Vice President
-----------------------------------------------------------------------------------------------------------------------
J. BLAIR FRANK                         4 years               Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
CLAUDIA P. HUNTINGTON                  16 years              Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------
DYLAN J. YOLLES                        5 years               Senior Vice President - Capital Research Global Investors
-----------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
           GROWTH-INCOME FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  9
                                                                             ---

<PAGE>

ASSET ALLOCATION FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide you with high total return
(including income and capital gains) consistent with preservation of capital
over the long term.

FEES AND EXPENSES OF THE FUND

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

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                             CLASS 3
-------------------------------------------------------------------------------
Management fee.........................................................  0.31%
Distribution and/or service (12b-1) fees...............................  0.18
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.51



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 3                                          $52    $164    $285     $640



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 41% of the average value of its portfolio.


PRINCIPAL INVESTMENT STRATEGIES

In seeking to pursue its investment objective, the fund varies its mix of
equity securities, debt securities and money market instruments. Under normal
market conditions, the fund's investment adviser expects (but is not required)
to maintain an investment mix falling within the following ranges: 40%-80% in
equity securities, 20%-50% in debt securities and 0%-40% in money market
instruments. As of December 31, 2009, the fund was approximately 70% invested
in equity securities, 23% invested in debt securities and 7% invested in money
market instruments. The proportion of equities, debt and money market
securities held by the fund varies with market conditions and the investment
adviser's assessment of their relative attractiveness as investment
opportunities.

The fund invests in a diversified portfolio of common stocks and other equity
securities, bonds and other intermediate and long-term debt securities, and
money market instruments (debt securities maturing in one year or less). The
fund may invest up to 15% of its assets in common stocks and other equity
securities of issuers domiciled outside the United States and up to 5% of its
assets in debt securities of issuers domiciled outside the United States. In
addition, the fund may invest up to 25% of its debt assets in lower quality
debt securities (rated Ba1 or below by Moody's Investors Service and BB+ or
below by Standard & Poor's Corporation or unrated but determined to be of
equivalent quality). Such securities are sometimes referred to as "junk bonds."

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.



----
10  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  ASSET ALLOCATION FUND
----

<PAGE>


MARKET RISKS -- The prices of, and the income generated by, the common stocks,
bonds and other securities held by the fund may decline in response to certain
events taking place around the world, including those directly involving the
issuers whose securities are owned by the fund; conditions affecting the
general economy; overall market changes; local, regional or global political,
social or economic instability; governmental or governmental agency responses
to economic conditions; and currency, interest rate and commodity price
fluctuations.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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. A security backed by the U.S. Treasury
or the full faith and credit of the U.S. government is guaranteed only as to
the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. There may be little trading in the secondary market for particular
debt securities, which may make them more difficult to value or sell.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
fluctuations and controls; different accounting, auditing, financial reporting,
disclosure, regulatory and legal standards and practices; 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. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

ASSET ALLOCATION RISK -- The fund's percentage allocation to equity securities,
debt securities and money market instruments could cause the fund to
underperform relative to relevant benchmarks and other funds with similar
investment objectives.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The
Citigroup Broad Investment-Grade (BIG) Bond Index reflect market sectors and
securities in which the fund primarily invests. This information provides some
indication of the risks of investing in the fund. Past results are not
predictive of future results. Figures shown reflect fees and expenses
associated with an investment in the fund, but do not reflect insurance
contract fees and expenses. If insurance contract fees and expenses were
included, results would have been lower.


Calendar year total returns.*


                                    [CHART]

2000   2001     2002    2003   2004   2005   2006  2007   2008   2009
----   ----     ----    ----   ----   ----   ----  ----   ----   ----
4.43%  0.59%  -12.35%  21.92%  8.34%  9.26% 14.75% 6.56% -29.39% 23.95%



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

HIGHEST   12.19% (quarter ended June 30, 2003)
LOWEST   -16.31% (quarter ended December 31, 2008)


                                                                             ---
        ASSET ALLOCATION FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  11
                                                                             ---

<PAGE>


For periods ended December 31, 2009:





AVERAGE ANNUAL TOTAL RETURNS                1 YEAR 5 YEARS 10 YEARS* LIFETIME*
------------------------------------------------------------------------------

Fund                                        23.95%  3.18%     3.58%    7.68%
S&P 500 (reflects no deduction for fees,
 expenses or taxes)                         26.47   0.42     -0.95     8.25
Barclays Capital U.S. Aggregate Index
 (reflects no deduction for fees, expenses
 or taxes)                                   5.93   4.97      6.33     6.98
Citigroup Broad Investment-Grade (BIG)
 Bond Index (reflects no deduction for
 fees, expenses or taxes)                    5.06   5.22      6.47     7.09




* Lifetime results are from August 1, 1989, the date the fund began investment
  operations. Class 3 shares were first offered on January 16, 2004; therefore,
  results for the fund prior to that date assume a hypothetical investment in
  Class 1 shares, but reflect the .18% annual expense that applies to Class 3
  shares and is described in the "Plans of distribution" section of this
  prospectus. Results for Class 1 shares are comparable to those of Class 3
  shares because both classes invest in the same portfolio of securities.



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company


PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

   ALAN N. BERRO                       10 years              Senior Vice President - Capital World Investors
   Senior Vice President
------------------------------------------------------------------------------------------------------------------------
   JEFFREY T. LAGER                    3 years               Senior Vice President - Capital World Investors
------------------------------------------------------------------------------------------------------------------------
   JAMES R. MULALLY                    4 years               Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
   EUGENE P. STEIN                     2 years               Senior Vice President - Capital World Investors
------------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



----
12  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  ASSET ALLOCATION FUND
----

<PAGE>

HIGH-INCOME BOND FUND


INVESTMENT OBJECTIVE

The fund's primary investment objective is to provide you with a high level of
current income. Its secondary investment objective is capital appreciation.

FEES AND EXPENSES OF THE FUND

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


ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 3
-------------------------------------------------------------------------------
Management fee.........................................................  0.47%
Distribution and/or service (12b-1) fees...............................  0.18
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.67



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 3                                          $68    $214    $373     $835



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 47% of the average value of its portfolio.


PRINCIPAL INVESTMENT STRATEGIES

The fund invests primarily in higher yielding and generally lower quality debt
securities (rated Ba1 or below or BB+ or below by a nationally recognized
statistical rating organization or unrated but determined by the fund's
investment adviser to be of equivalent quality), including corporate loan
obligations. Such securities are sometimes referred to as "junk bonds." The
fund may also invest a portion of its assets in securities of issuers domiciled
outside the United States.

The fund is designed for investors seeking a high level of current income and
who are able to tolerate greater credit risk and price fluctuations than those
that exist in funds investing in higher quality debt securities.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

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

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

HIGH YIELD BOND RISKS -- Lower rated debt securities generally have higher
rates of interest and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness than higher rated debt securities. The
market prices of these securities may



                                                                             ---
        HIGH-INCOME BOND FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  13
                                                                             ---

<PAGE>


fluctuate more than higher quality securities and may decline significantly in
periods of general economic difficulty. There may be little trading in the
secondary market for particular debt securities, which may make them more
difficult to value or sell.

INTEREST RATE RISKS -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CREDIT RISKS -- 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.

MARKET RISKS -- The prices of, and the income generated by, the bonds and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The fund
has selected the Barclays Capital U.S. Corporate High Yield Index 2% Issuer Cap
to replace the Credit Suisse High Yield Index as its broad-based securities
market index. The fund's investment adviser believes that the Barclays Capital
U.S. Corporate High Yield Index 2% Issuer Cap better reflects the market
sectors and securities in which the fund primarily invests than the Credit
Suisse High Yield Index. The Citigroup Broad Investment-Grade (BIG) Bond Index
reflects the market sectors and securities in which the fund primarily invests
and the Lipper High Current Yield Funds Index includes mutual funds that
disclose investment objectives that are reasonably comparable to those of the
fund. This information provides some indication of the risks of investing in
the fund. Past results are not predictive of future results. Figures shown
reflect fees and expenses associated with an investment in the fund, but do not
reflect insurance contract fees and expenses. If insurance contract fees and
expenses were included, results would have been lower.


Calendar year total returns.*


                                    [CHART]

 2000   2001    2002    2003   2004   2005    2006   2007    2008      2009
------  -----  ------  ------  -----  -----  ------  -----  -------   -----
-3.23%  7.82%  -1.69%  29.55%  9.66%  2.25%  10.66%  1.40%  -23.76%   39.14%



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


HIGHEST   16.16% (quarter ended June 30, 2009)
LOWEST   -16.05% (quarter ended December 31, 2008)



----
14  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  HIGH-INCOME BOND FUND
----

<PAGE>


For periods ended December 31, 2009:





AVERAGE ANNUAL TOTAL RETURNS                                           1 YEAR 5 YEARS 10 YEARS* LIFETIME*
---------------------------------------------------------------------------------------------------------

Fund                                                                   39.14%  4.01%    5.90%     9.31%
Barclays Capital U.S. Corporate High Yield Index 2% Issuer Cap
 (reflects no deduction for fees, expenses or taxes)                   58.76   6.49     6.87       N/A
Credit Suisse High Yield Index (reflects no deduction for fees,
 expenses or taxes)                                                    54.22   5.99     7.07       N/A
Citigroup Broad Investment-Grade (BIG) Bond Index (reflects no
 deduction for fees, expenses or taxes)                                 5.06   5.22     6.47      8.35
Lipper High Current Yield Funds Index (reflects no deduction for fees
 or taxes)                                                             49.49   4.27     4.13      7.48




* Lifetime results are from February 8, 1984, the date the fund began
  investment operations. Class 3 shares were first offered on January 16, 2004;
  therefore, results for the fund prior to that date assume a hypothetical
  investment in Class 1 shares, but reflect the .18% annual expense that
  applies to Class 3 shares and is described in the "Plans of distribution"
  section of this prospectus. Results for Class 1 shares are comparable to
  those of Class 3 shares because both classes invest in the same portfolio of
  securities.



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company


PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
are:





PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
------------------------------------------------------------------------------------------------------------------------

   ABNER D. GOLDSTINE                  12 years              Senior Vice President - Fixed Income, Capital Research and
   Senior Vice President                                     Management Company
------------------------------------------------------------------------------------------------------------------------
   DAVID C. BARCLAY                    17 years              Senior Vice President - Fixed Income, Capital Research and
                                                             Management Company
------------------------------------------------------------------------------------------------------------------------
   DAVID A. DAIGLE                      1 year               Senior Vice President - Fixed Income, Capital Research
                                                             Company
------------------------------------------------------------------------------------------------------------------------
   MARCUS B. LINDEN                    3 years               Senior Vice President - Fixed Income, Capital Research
                                                             Company




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



                                                                             ---
        HIGH-INCOME BOND FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  15
                                                                             ---

<PAGE>

U.S. GOVERNMENT/AAA-RATED SECURITIES FUND


INVESTMENT OBJECTIVE

The fund's investment objective is to provide a high level of current income
consistent with preservation of capital.

FEES AND EXPENSES OF THE FUND

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


ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 3
-------------------------------------------------------------------------------
Management fee.........................................................  0.39%
Distribution and/or service (12b-1) fees...............................  0.18
Other expenses.........................................................  0.02
Total annual fund operating expenses...................................  0.59



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 3                                          $60    $189    $329     $738



PORTFOLIO TURNOVER

The fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the fund's
performance. During the most recent fiscal year, the fund's portfolio turnover
rate was 100% of the average value of its portfolio.


PRINCIPAL INVESTMENT STRATEGIES

Normally, the fund invests at least 80% of its assets in securities that are
guaranteed or sponsored by the U.S. government or debt securities that are
rated Aaa by Moody's Investors Service or AAA by Standard & Poor's Corporation
or unrated but determined to be of equivalent quality by the fund's investment
adviser. The fund is designed for investors seeking income and more price
stability than from investing in stocks and lower quality debt securities, and
capital preservation over the long term.

The fund may also invest a significant portion of its assets in mortgage-backed
securities. Certain of these securities may not be backed by the full faith and
credit of the U.S. government and are supported only by the credit of the
issuer.

The investment adviser uses a system of multiple portfolio counselors in
managing the fund's assets. Under this approach, the portfolio of the fund is
divided into segments managed by individual counselors who decide how their
respective segments will be invested.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively
valued securities that, in its opinion, represent above-average, long-term
investment opportunities. The investment adviser believes that an important way
to accomplish this is by analyzing various factors, which may include the
credit strength of the issuer, prices of similar securities issued by
comparable issuers and anticipated changes in interest rates, general market
conditions and other factors pertinent to the particular security being
evaluated. Securities may be sold when the investment adviser believes that
they no longer represent relatively attractive investment opportunities.

PRINCIPAL RISKS

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

INTEREST RATE RISKS -- While the fund invests primarily in securities that are
guaranteed or sponsored by the U.S. government, these securities are subject to
interest rate and prepayment risks. The prices of, and the income generated by,
most debt securities held by the





----
16  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
----


<PAGE>


fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the prices of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem, "call" or refinance a security before its
stated maturity, which may result in the fund having to reinvest the proceeds
in lower yielding securities. Longer maturity debt securities generally have
higher rates of interest and may be subject to greater price fluctuations than
shorter maturity debt securities.

SECURITIES BACKED BY THE U.S. TREASURY -- A security backed by the U.S.
Treasury or the full faith and credit of the U.S. government is guaranteed only
as to the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates. The fund may also invest in debt securities and
mortgage-backed securities issued by federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government. These
securities are neither issued nor guaranteed by the U.S. Treasury.

PREPAYMENT RISKS RELATED TO ASSET-BACKED SECURITIES -- Many types of debt
securities, including mortgage-related securities, are subject to prepayment
risk. For example, when interest rates fall, homeowners are more likely to
refinance their home mortgages and "prepay" their principal earlier than
expected. The fund must then reinvest the prepaid principal in new securities
when interest rates on new mortgage investments are falling, thus reducing the
fund's income. Conversely, if interest rates increase, homeowners may not make
prepayments to the extent expected, resulting in an extension of the term of
the security backed by such mortgages.

CREDIT RISKS -- 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.

MARKET RISKS -- The prices of, and the income generated by, the bonds and other
securities held by the fund may decline in response to certain events taking
place around the world, including those directly involving the issuers whose
securities are owned by the fund; conditions affecting the general economy;
overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations.

It is important to note that neither your investment in the fund nor the fund's
yield is guaranteed by the U.S. government. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, entity or person.

INVESTMENT RESULTS

The following information shows how the fund's investment results have varied
from year to year and how the fund's average annual total returns for various
periods compare with different broad measures of market performance. The Lipper
General U.S. Government Funds Average includes mutual funds that disclose
investment objectives that are reasonably comparable to those of the fund. The
Consumer Price Index provides a comparison of the fund's results to inflation.
This information provides some indication of the risks of investing in the
fund. Past results are not predictive of future results. Figures shown reflect
fees and expenses associated with an investment in the fund, but do not reflect
insurance contract fees and expenses. If insurance contract fees and expenses
were included, results would have been lower.

Calendar year total returns.*


                                      [CHART]

    2000   2001   2002   2003   2004   2005   2006   2007   2008    2009
   ------ ------ ------ ------ ------ ------ ------ ------  -----   ----
   11.49%  7.05%  9.26%  2.33%  3.41%  2.50%  3.80%  6.63%  7.66%   2.58%


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

HIGHEST   5.17% (quarter ended December 31, 2008)
LOWEST   -1.77% (quarter ended June 30, 2004)




                                                                                         ---
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  17
                                                                                         ---


<PAGE>


For periods ended December 31, 2009:





AVERAGE ANNUAL TOTAL RETURNS                            1 YEAR 5 YEARS 10 YEARS* LIFETIME*
------------------------------------------------------------------------------------------

Fund                                                     2.58%  4.61%    5.63%     6.68%
Citigroup Treasury/Govt. Sponsored/Mortgage Index
 (reflects no deduction for fees, expenses or taxes)     1.63   5.35     6.35      7.57
Lipper General U.S. Government Funds Average (reflects
 no deduction for fees or taxes)                         1.25   3.82     5.28      6.30
CPI                                                      2.72   2.56     2.52      2.88




* Lifetime results are from December 1, 1985, the date the fund began
  investment operations. Class 3 shares were first offered on January 16, 2004;
  therefore, results for the fund prior to that date assume a hypothetical
  investment in Class 1 shares, but reflect the .18% annual expense that
  applies to Class 3 shares and is described in the "Plans of distribution"
  section of this prospectus. Results for Class 1 shares are comparable to
  those of Class 3 shares because both classes invest in the same portfolio of
  securities.



MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company


PORTFOLIO COUNSELORS

The individuals primarily responsible for the portfolio management of the fund
  are:





----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO COUNSELOR          PORTFOLIO COUNSELOR EXPERIENCE  PRIMARY TITLE WITH INVESTMENT ADVISER
Series title (if applicable)          IN THIS FUND
----------------------------------------------------------------------------------------------------------------------------

   JOHN H. SMET                        18 years              Senior Vice President - Fixed Income, Capital Research and
   Senior Vice President                                     Management Company
----------------------------------------------------------------------------------------------------------------------------
   THOMAS H. HOGH                      13 years              Senior Vice President - Fixed Income, Capital Research Company
----------------------------------------------------------------------------------------------------------------------------
   FERGUS N. MACDONALD             Less than 1 year          Vice President - Fixed Income, Capital Research Company
----------------------------------------------------------------------------------------------------------------------------

   WESLEY K.-S. PHOA               Less than 1 year          Senior Vice President - Fixed Income, Capital Research Company
----------------------------------------------------------------------------------------------------------------------------




TAX INFORMATION

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

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.





----
18  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
----


<PAGE>

CASH MANAGEMENT FUND


INVESTMENT OBJECTIVE

The investment objective of the fund is to provide you with a way to earn
income on your cash reserves while preserving capital and maintaining liquidity.

FEES AND EXPENSES OF THE FUND

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


ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A
 PERCENTAGE OF THE VALUE OF YOUR INVESTMENT)                            CLASS 3
-------------------------------------------------------------------------------
Management fee.........................................................  0.32%
Distribution and/or service (12b-1) fees...............................  0.18
Other expenses.........................................................  0.01
Total annual fund operating expenses...................................  0.51



EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
your shares at the end of the periods. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. The example does not reflect insurance contract expenses. If
insurance contract expenses were reflected, expenses shown would be higher.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:



                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class 3                                          $52    $164    $285     $640



PRINCIPAL INVESTMENT STRATEGIES

Normally, the fund invests substantially in high-quality money market
instruments such as commercial paper, commercial bank obligations, savings
association obligations, U.S. or Canadian government securities, and short-term
corporate bonds and notes. These securities may have credit and liquidity
support features, including guarantees and letters of credit.

The fund may invest in securities issued by entities domiciled outside the
United States and securities with credit and liquidity support features
provided by entities domiciled outside of the United States. The fund may also
invest in securities of U.S. issuers with substantial operations outside the
United States.

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to provide current income while
preserving capital and maintaining liquidity. The investment adviser believes
that an important way to accomplish this is by analyzing various factors,
including the credit strength of the issuer, prices of similar securities
issued by comparable issuers, current and anticipated changes in interest
rates, general market conditions and other factors pertinent to the particular
security being evaluated.

PRINCIPAL RISKS

THE FUND IS NOT MANAGED TO MAINTAIN A STABLE ASSET VALUE OF $1.00 PER SHARE AND
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.

INTEREST RATE RISKS -- The value and liquidity of the securities held by the
fund may be affected by changing interest rates and by changes in credit
ratings of the securities. For example, the values of these securities may
decline when interest rates rise and increase when interest rates fall.

CREDIT AND LIQUIDITY SUPPORT RISKS -- Some of the securities held by the fund
may have credit and liquidity support features. Changes in the credit quality
of the issuer or provider of these support features could cause the fund to
experience a loss and may affect its share price.

MARKET RISKS -- Additionally, the securities held by the fund may be affected
by certain events taking place around the world, including those directly
involving the issuers whose securities are owned by the fund; conditions
affecting the general economy; overall market changes; local, regional or
global political, social or economic instability; governmental or governmental
agency responses to economic conditions; and currency, interest rate and
commodity price fluctuations.



                                                                             ---
         CASH MANAGEMENT FUND  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  19
                                                                             ---

<PAGE>


RISKS OF INVESTING OUTSIDE THE U.S. -- Investments in securities issued by
entities based outside the United States may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

INVESTMENT RESULTS

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


Calendar year total returns.*


                                    [CHART]

  2000   2001   2002   2003   2004   2005   2006   2007   2008    2009
  -----  -----  -----  -----  -----  -----  -----  -----  -----   -----
  5.85%  3.48%  1.06%  0.49%  0.77%  2.74%  4.64%  4.83%  1.99%   -0.31%



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


HIGHEST   1.52% (quarter ended December 31, 2000)
LOWEST   -0.09% (quarter ended December 31, 2009)



For periods ended December 31, 2009:



AVERAGE ANNUAL TOTAL RETURNS  1 YEAR 5 YEARS 10 YEARS* LIFETIME*
----------------------------------------------------------------
           Fund               -0.31%  2.76%    2.53%     4.43%



* Lifetime results are from February 8, 1984, the date the fund began
  investment operations. Class 3 shares were first offered on January 16, 2004;
  therefore, results for the fund prior to that date assume a hypothetical
  investment in Class 1 shares, but reflect the .18% annual expense that
  applies to Class 3 shares and is described in the "Plans of distribution"
  section of this prospectus. Results for Class 1 shares are comparable to
  those of Class 3 shares because both classes invest in the same portfolio of
  securities.

MANAGEMENT

INVESTMENT ADVISER

Capital Research and Management Company

TAX INFORMATION

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



----
20  AMERICAN FUNDS INSURANCE SERIES / PROSPECTUS  CASH MANAGEMENT FUND
----

<PAGE>


PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the fund through a broker-dealer or other financial
intermediary (such as a bank), the fund and the fund's distributor or its
affiliates may pay the intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your individual financial adviser to
recommend the fund over another investment. Ask your individual financial
adviser or visit your financial intermediary's website for more information.
The fund is not sold directly to the general public but instead is offered as
an underlying investment option for variable insurance contracts. In addition
to payments described above, the fund and its related companies may make
payments to the sponsoring insurance company (or its affiliates) for
distribution and/or other services. These payments may be a factor that the
insurance company considers in including the fund as an underlying investment
option in the variable insurance contract. The prospectus (or other offering
document) for your variable insurance contract may contain additional
information about these payments.



INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

GROWTH FUND

The fund's investment objective is to provide you with growth of capital.

The fund is designed for investors seeking capital appreciation through
investments in stocks. Investors in the fund should have a long-term
perspective and, for example, be able to tolerate potentially sharp declines in
value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
common stocks and seeks to invest in companies that appear to offer superior
opportunities for growth of capital.

The prices of the common stocks and other securities held by the fund may
decline in response to certain events taking place around the world, including
those directly involving the issuers whose securities are owned by the fund;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations. The growth-oriented common stocks and
other equity-type securities, such as preferred stocks, convertible preferred
stocks and convertible bonds, generally purchased by the fund may involve large
price swings and potential for loss, particularly in the case of smaller
capitalization stocks.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest a portion of its
assets in securities of issuers domiciled outside the United States. In
addition to the risks described above, investments in securities issued by
entities based outside the United States may be affected by currency controls;
different accounting, auditing, financial reporting, and legal standards and
practices; 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. These risks may be
heightened in connection with investments in developing countries. Investments
in securities issued by entities domiciled in the United States may also be
subject to many of these risks.

DEBT SECURITIES -- The fund may invest in debt securities, including a portion
of its assets in lower quality nonconvertible debt securities (rated Ba1 or
below by Moody's Investors Service and BB+ or below by Standard & Poor's
Corporation or unrated but determined by the fund's investment adviser to be of
equivalent quality). Such securities are sometimes referred to as "junk bonds."
The values of debt securities may be affected by changing interest rates and by
changes in effective maturities and credit ratings of these securities. For
example, the values of debt securities generally decline when interest rates
rise and increase when interest rates fall. 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 debt securities generally have higher rates of interest and may be
subject to greater price fluctuations than higher quality debt securities. In
addition, longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than shorter maturity
debt securities.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Standard & Poor's 500 Composite Index is a market
capitalization-weighted index based on the average weighted performance of 500
widely held common stocks. This index is unmanaged and its results include
reinvested dividends and/or



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

<PAGE>


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

INTERNATIONAL FUND

The fund's investment objective is to provide you with long-term growth of
capital.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

The fund invests primarily in common stocks of companies located outside the
United States.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of the common stocks
and other securities held by the fund may decline in response to certain events
taking place around the world, including those directly involving the issuers
whose securities are owned by the fund; conditions affecting the general
economy; overall market changes; local, regional or global political, social or
economic instability; governmental or governmental agency responses to economic
conditions; and currency, interest rate and commodity price fluctuations. The
growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, generally
purchased by the fund may involve large price swings and potential for loss.

INVESTING OUTSIDE THE UNITED STATES -- Investments in securities issued by
entities based outside the United States may be subject to the risks described
above to a greater extent. These investments may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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. These risks may be heightened in connection with investments in
developing countries. Investments in securities issued by entities domiciled in
the United States may also be subject to many of these risks.

DEVELOPING COUNTRIES -- The fund may invest a portion of its assets in common
stocks and other securities of companies in countries with developing economies
and/or markets. Developing countries may have less developed legal and
accounting systems. The governments of these countries may be more unstable and
likely to impose capital controls, nationalize a company or industry, place
restrictions on foreign ownership and on withdrawing sale proceeds of
securities from the country, and/or impose punitive taxes that could adversely
affect security prices. In addition, the economies of these countries may be
dependent on relatively few industries that are more susceptible to local and
global changes. Securities markets in these countries are also relatively small
and have substantially lower trading volumes. As a result, securities issued in
these countries may be more volatile and less liquid than securities issued in
countries with more developed economies or markets.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- MSCI All Country World ex USA Index is a free
float-adjusted market capitalization-weighted index that is designed to measure
equity market performance in the global developed and emerging markets,
excluding the United States. The index consists of more than 40 developed and
emerging market country indexes. This index is unmanaged and its results
include reinvested dividends and/or distributions, but do not reflect the
effect of sales charges, commissions, expenses or taxes. Lipper International
Funds Index is an equally weighted index of funds that invest assets in
securities with primary trading markets outside the United States. The results
of the underlying funds in the index include the reinvestment of dividends and
capital gain distributions, as well as brokerage commissions paid by the funds
for portfolio transactions and other fund expenses, but do not reflect the
effect of sales charges or taxes.



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

<PAGE>


GROWTH-INCOME FUND

The fund's investment objectives are to achieve long-term growth of capital and
income.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The fund invests primarily in
common stocks or other securities that demonstrate the potential for
appreciation and/or dividends. Although the fund focuses on investments in
medium to larger capitalization companies, the fund's investments are not
limited to a particular capitalization size. The fund is designed for investors
seeking both capital appreciation and income.

The prices of, and the income generated by, common stocks and other securities
held by the fund may decline in response to certain events taking place around
the world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

The growth-oriented common stocks and other equity-type securities, such as
preferred stocks, convertible preferred stocks and convertible bonds, purchased
by the fund may involve large price swings and potential for loss. Income
provided by the fund may be affected by changes in the dividend policies of the
companies in which the fund invests and the capital resources available for
such payments at such companies.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest up to 15% of its
assets, at the time of purchase, in securities of issuers domiciled outside the
United States. Investments in securities issued by entities based outside the
United States may be subject to the risks described above to a greater extent
and may also be affected by currency fluctuation and controls; different
accounting, auditing, financial reporting, disclosure, and regulatory 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. Investments in securities issued by entities domiciled in the
United States may also be subject to many of these risks.

DEBT SECURITIES -- The fund may also invest in bonds and other debt securities.
The prices of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the prices of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem, "call" or refinance 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. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt securities.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Standard & Poor's 500 Composite Index is a market
capitalization-weighted index based on the average weighted performance of 500
widely held common stocks. This index is unmanaged and its results include
reinvested dividends and/or distributions, but do not reflect the effect of
sales charges, commissions, expenses or taxes. Lipper Growth & Income Funds
Index is an equally weighted index of funds that combine a growth-of-earnings
orientation and an income requirement for level and/or rising dividends. The
results of the underlying funds in the index include the reinvestment of
dividends and capital gain distributions, as well as brokerage commissions paid
by the funds for portfolio transactions and other fund expenses, but do not
reflect the effect of sales charges or taxes.

ASSET ALLOCATION FUND

The fund's investment objective is to provide you with high total return
(including income and capital gains) consistent with preservation of capital
over the long term.

Investors in the fund should have a long-term perspective and, for example, be
able to tolerate potentially sharp declines in value.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:



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

<PAGE>


The fund invests in a diversified portfolio of common stocks and other equity
securities, bonds and other intermediate and long-term debt securities, and
money market instruments (debt securities maturing in one year or less). In
seeking to pursue its investment objective, the fund varies its mix of equity
securities, debt securities and money market instruments. Under normal market
conditions, the fund's investment adviser expects (but is not required) to
maintain an investment mix falling within the following ranges: 40%-80% in
equity securities, 20%-50% in debt securities and 0%-40% in money market
instruments. As of December 31, 2009, the fund was approximately 70% invested
in equity securities, 23% invested in debt securities and 7% invested in money
market instruments. The proportion of equities, debt and money market
securities held by the fund varies with market conditions and the investment
adviser's assessment of their relative attractiveness as investment
opportunities. The fund's percentage allocation to equity securities, debt
securities and money market instruments could cause the fund to underperform
relative to relevant benchmarks and other funds with similar investment
objectives.

COMMON STOCKS AND OTHER EQUITY SECURITIES -- The prices of, and the income
generated by, the common stocks, bonds and other securities held by the fund
may decline in response to certain events taking place around the world,
including those directly involving the issuers whose securities are owned by
the fund; conditions affecting the general economy; overall market changes;
local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

DEBT SECURITIES -- The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance a security before its stated maturity, which may result in the fund
having to reinvest the proceeds in lower yielding securities. Longer maturity
debt securities generally have higher rates of interest and may be subject to
greater price fluctuations than shorter maturity debt 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. A security backed by the U.S. Treasury or the full faith
and credit of the U.S. government is guaranteed only as to the timely payment
of interest and principal when held to maturity. Accordingly, the current
market values for these securities will fluctuate with changes in interest
rates.

HIGH YIELD BONDS -- The fund may invest up to 25% of its debt assets in lower
quality debt securities (rated Ba1 or below by Moody's Investors Service and
BB+ or below by Standard & Poor's Corporation or unrated but determined to be
of equivalent quality). Such securities are sometimes referred to as "junk
bonds." Lower rated debt securities generally have higher rates of interest and
involve greater risk of default or price changes due to changes in the issuer's
creditworthiness than higher rated debt securities. The market prices of these
securities may fluctuate more than higher quality securities and may decline
significantly in periods of general economic difficulty. There may be little
trading in the secondary market for particular debt securities, which may make
them more difficult to value or sell.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest up to 15% of its
assets in common stocks and other equity securities of issuers domiciled
outside the United States and up to 5% of its assets in debt securities of
issuers domiciled outside the United States. Investments in securities issued
by entities based outside the United States may be subject to the risks
described above to a greater extent. These investments may also be affected by
currency fluctuations and controls; different accounting, auditing, financial
reporting, disclosure, regulatory and legal standards and practices;
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. Investments in securities
issued by entities domiciled in the United States may also be subject to many
of these risks.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Barclays Capital U.S. Aggregate Index represents
the U.S. investment-grade fixed-rate bond market. This index is unmanaged and
its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. Standard &
Poor's 500 Composite Index is a market capitalization-weighted index based on
the average weighted performance of 500 widely held common stocks. This index
is unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
Citigroup Broad Investment-Grade (BIG) Bond Index is a market
capitalization-weighted index that includes fixed-rate U.S. Treasury,
government-sponsored, mortgage-backed, asset-backed and investment-grade
corporate securities with maturities of one year or longer. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.



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

<PAGE>


HIGH-INCOME BOND FUND

The fund's primary investment objective is to provide you with a high level of
current income. Its secondary investment objective is capital appreciation.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

HIGH YIELD BONDs -- The fund invests primarily in higher yielding and generally
lower quality debt securities (rated Ba1 or below or BB+ or below by a
nationally recognized statistical rating organization or unrated but determined
by the fund's investment adviser to be of equivalent quality), including
corporate loan obligations. Such securities are sometimes referred to as "junk
bonds."

Lower rated debt securities generally have higher rates of interest and involve
greater risk of default or price changes due to changes in the issuer's
creditworthiness than higher rated debt securities. The market prices of these
securities may fluctuate more than higher quality securities and may decline
significantly in periods of general economic difficulty. There may be little
trading in the secondary market for particular debt securities, which may make
them more difficult to value or sell. See the appendix in this prospectus for
credit rating descriptions.

DEBT SECURITIES -- Generally, the fund may invest in debt securities of any
maturity or duration. The prices of, and the income generated by, most debt
securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. For
example, the prices of debt securities in the fund's portfolio generally will
decline when interest rates rise and increase when interest rates fall. In
addition, falling interest rates may cause an issuer to redeem, "call" or
refinance 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. Longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than shorter maturity
debt securities.

The fund may also invest in common stocks and other equity-type securities,
such as preferred stocks, convertible preferred stocks, convertible bonds and
warrants, that provide an opportunity for income and/or capital appreciation.
The prices of, and the income generated by, the bonds and other securities held
by the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

INVESTING OUTSIDE THE UNITED STATES -- The fund may also invest a portion of
its assets in securities of issuers domiciled outside the United States.
Investments in securities issued by entities based outside the United States
may be subject to the risks described above to a greater extent. These
investments may also be affected by currency controls; different accounting,
auditing, financial reporting, disclosure, and regulatory and legal standards
and practices; 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. These risks may be
heightened in connection with investments in developing countries. Investments
in securities issued by entities domiciled in the United States may also be
subject to many of these risks. The fund's investment adviser attempts to
reduce these risks through diversification of the portfolio and ongoing credit
analysis, as well as by monitoring economic and legislative developments, but
there can be no assurance that it will be successful at doing so.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Barclays Capital U.S. Corporate High Yield Index 2%
Issuer Cap covers the universe of fixed rate, non-investment grade debt. The
index limits the maximum exposure of any one issuer to 2%. This index is
unmanaged and its results include reinvested dividends and/or distributions,
but do not reflect the effect of sales charges, commissions, expenses or taxes.
This index was not in existence on the date the fund began investment
operations; therefore, lifetime results are not shown. Credit Suisse High Yield
Index is designed to mirror the investable universe of the U.S.
dollar-denominated high-yield debt market. This index is unmanaged and its
results include reinvested dividends and/or distributions, but do not reflect
the effect of sales charges, commissions, expenses or taxes. This index was not
in existence on the date the fund began investment operations; therefore,
lifetime results are not shown. Citigroup Broad Investment-Grade (BIG) Bond
Index is a market capitalization-weighted index that includes fixed-rate U.S.
Treasury, government-sponsored, mortgage-backed, asset-backed and
investment-grade corporate securities with maturities of one year or longer.
This index is unmanaged and its results include reinvested dividends and/or
distributions, but do not reflect the effect of sales charges, commissions,
expenses or taxes. Lipper High Current Yield Funds Index is an equally weighted
index of funds that aim at high (relative) current yield from fixed-income
securities, have no quality or maturity restrictions and tend to invest in
lower grade debt issues. The results of the underlying funds in the index
include reinvestment of dividends and capital gain distributions, as well as
brokerage commissions paid by the funds for portfolio transactions and other
fund expenses, but do not reflect the effect of sales charges or taxes.



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

<PAGE>


U.S. GOVERNMENT/AAA-RATED SECURITIES FUND

The fund's investment objective is to provide a high level of current income
consistent with preservation of capital.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

Normally, the fund invests at least 80% of its assets in securities that are
guaranteed or sponsored by the U.S. government or debt securities that are
rated Aaa by Moody's Investors Service or AAA by Standard & Poor's Corporation
or unrated but determined to be of equivalent quality by the fund's investment
adviser. This policy is subject to change only upon 60 days' written notice to
shareholders. The fund is designed for investors seeking income and more price
stability than from investing in stocks and lower quality debt securities, and
capital preservation over the long term.

MORTGAGE-BACKED SECURITIES -- The fund may also invest a significant portion of
its assets in mortgage-backed securities. Certain of these securities may not
be backed by the full faith and credit of the U.S. government and are supported
only by the credit of the issuer. Many types of debt securities, including
mortgage-related securities, are subject to prepayment risk. For example, when
interest rates fall, homeowners are more likely to refinance their home
mortgages and "prepay" their principal earlier than expected. The fund must
then reinvest the prepaid principal in new securities when interest rates on
new mortgage investments are falling, thus reducing the fund's income.
Conversely, if interest rates increase, homeowners may not make prepayments to
the extent expected resulting in an extension of the term of the security
backed by such mortgages.

DEBT SECURITIES -- While the fund invests primarily in securities that are
guaranteed or sponsored by the U.S. government, these securities are subject to
interest rate and prepayment risks. The prices of, and the income generated by,
most debt securities held by the fund may be affected by changing interest
rates and by changes in the effective maturities and credit ratings of these
securities. For example, the prices of debt securities in the fund's portfolio
generally will decline when interest rates rise and increase when interest
rates fall. In addition, falling interest rates may cause an issuer to redeem,
"call" or refinance 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. Longer maturity debt securities generally have higher
rates of interest and may be subject to greater price fluctuations than shorter
maturity debt securities.

The prices of, and the income generated by, the bonds and other securities held
by the fund may decline in response to certain events taking place around the
world, including those directly involving the issuers whose securities are
owned by the fund; conditions affecting the general economy; overall market
changes; local, regional or global political, social or economic instability;
governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations.

SECURITIES BACKED BY THE U.S. TREASURY -- A security backed by the U.S.
Treasury or the full faith and credit of the U.S. government is guaranteed only
as to the timely payment of interest and principal when held to maturity.
Accordingly, the current market values for these securities will fluctuate with
changes in interest rates. The fund may also invest in debt securities and
mortgage-backed securities issued by federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government. These
securities are neither issued nor guaranteed by the U.S. Treasury.

CASH POSITION AND TEMPORARY INVESTMENTS -- The fund may also hold cash or money
market instruments. The percentage of the fund invested in such holdings varies
and depends on various factors, including market conditions and purchases and
redemptions of fund shares. For temporary defensive purposes, the fund may hold
all, or a significant portion, of its assets in cash, money market instruments
or other securities that may be deemed appropriate by the fund's investment
adviser. The investment adviser may determine that it is appropriate to take
such action in response to certain circumstances, such as periods of market
turmoil. A larger amount of such holdings could negatively affect a fund's
investment results in a period of rising market prices. A larger percentage of
cash or money market instruments could reduce a fund's magnitude of loss in the
event of falling market prices and provide liquidity to make additional
investments or to meet redemptions.

It is important to note that neither your investment in the fund nor the fund's
yield is guaranteed by the U.S. government.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

FUND COMPARATIVE INDEXES -- Citigroup Treasury/Government Sponsored/Mortgage
Index is a market capitalization-weighted index that includes U.S. Treasury and
agency securities, as well as FNMAs, FHLMCs and GNMAs. This index is unmanaged
and its results include reinvested dividends and/or distributions, but do not
reflect the effect of sales charges, commissions, expenses or taxes. Lipper
General U.S. Government Funds Average is composed of funds that invest
primarily in U.S. government and agency issues. The results of the underlying
funds in the average include the reinvestment of dividends and capital gain
distributions, as well as brokerage commissions paid by the fund for portfolio
transactions and other fund expenses, but do not reflect the effect of sales
charges or taxes. Consumer Price Index (CPI) is a measure of the average change
over time in the prices paid by urban consumers for a market basket of consumer
goods and services. Widely used as a measure of inflation, the CPI is computed
by the U.S. Department of Labor, Bureau of Labor Statistics.



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

<PAGE>


CASH MANAGEMENT FUND

The investment objective of the fund is to provide you with a way to earn
income on your cash reserves while preserving capital and maintaining liquidity.

The following describes the strategies that the investment adviser uses in
pursuit of the fund's objective and the corresponding risks:

MONEY MARKET INSTRUMENTS -- Normally, the fund invests substantially in
high-quality money market instruments such as commercial paper, commercial bank
obligations, savings association obligations, U.S. or Canadian government
securities, and short-term corporate bonds and notes. Some of the securities
held by the fund may have credit and liquidity support features, including
guarantees and letters of credit. Changes in the credit quality of the issuer
or provider of these support features could cause the fund to experience a loss
and may affect its share price.

The value and liquidity of the securities held by the fund may be affected by
changing interest rates and by changes in credit ratings of the securities. For
example, the values of these securities may decline when interest rates rise
and increase when interest rates fall.

INVESTING OUTSIDE THE UNITED STATES -- The fund may invest in securities issued
by entities domiciled outside the United States and securities with credit and
liquidity support features provided by entities domiciled outside of the United
States. The fund may also invest in securities of U.S. issuers with substantial
operations outside the United States. Additionally, the securities held by the
fund may be affected by certain events taking place around the world, including
those directly involving the issuers whose securities are owned by the fund;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; governmental or
governmental agency responses to economic conditions; and currency, interest
rate and commodity price fluctuations. Investments in securities issued by
entities based outside the United States may also be affected by currency
controls; different accounting, auditing, financial reporting, disclosure, and
regulatory and legal standards and practices; 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.

The fund is not managed to maintain a stable asset value of $1.00 per share and
it is possible to lose money by investing in the fund.

In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.

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 this prospectus.

INVESTMENT RESULTS

All fund results in the "Investment results" section of this prospectus reflect
the reinvestment of dividends and capital gains distributions, if any. Unless
otherwise noted, fund results reflect any fee waivers and/or expense
reimbursements in effect during the period presented.


MANAGEMENT AND ORGANIZATION

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the Series and
other mutual funds, including the American Funds. Capital Research and
Management Company is a wholly owned subsidiary of The Capital Group Companies,
Inc. and is located at 333 South Hope Street, Los Angeles, California 90071,
and 6455 Irvine Center Drive, Irvine, California 92618. Capital Research and
Management Company manages the investment portfolios and business affairs of
the Series. The total management fee paid by each fund for the previous fiscal
year (or, in the case of International Growth and Income Fund, the management
fee to be paid for the current fiscal year), expressed as a percentage of
average net assets of that fund, appear in the Annual Fund Operating Expenses
table for each fund. A more detailed description of the investment advisory and
service agreement between the Series and the investment adviser is included in
the Series' statement of additional information. A discussion regarding the
basis for the approval of the Series' investment advisory and service agreement
by the Series' board of trustees is contained in the Series' annual report to
shareholders for the fiscal year ended December 31, 2009.

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. Capital Research and Management Company and
the funds it advises have applied to the 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' boards, 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. Each fund's



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

<PAGE>


shareholders pre-approved this arrangement at a meeting of 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.

In addition, shareholders approved a proposal to reorganize the series into a
Delaware statutory trust. The reorganization may be completed in 2010 or early
2011; however, the series reserves the right to delay the implementation.


EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the funds'
portfolio transactions. In selecting broker-dealers, the investment adviser
strives to obtain "best execution" (the most favorable total price reasonably
attainable under the circumstances) for the funds' portfolio transactions,
taking into account a variety of factors. Subject to best execution, the
investment adviser may consider investment research and/or brokerage services
provided to the adviser in placing orders for the funds' portfolio
transactions. The investment adviser may place orders for the funds' portfolio
transactions with broker-dealers who have sold shares of funds managed by the
investment adviser or its affiliated companies; however, the investment adviser
does not give consideration to 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 funds' portfolio transactions. A more detailed
description of the investment adviser's policies is included in the statement
of additional information.

PORTFOLIO MANAGEMENT

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

PORTFOLIO HOLDINGS

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

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

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

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





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

JAMES K. DUNTON             Serves as an equity portfolio  Senior Vice
VICE CHAIRMAN OF THE BOARD  counselor for: GROWTH-INCOME   President --
                            FUND -- 26 years (since the    Capital Research
                            fund's inception) BLUE CHIP    Global Investors
                            INCOME AND GROWTH              Investment
                            FUND -- 9 years (since the     professional for 48
                            fund's inception)              years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
DONALD D. O'NEAL            Serves as an equity portfolio  Senior Vice
PRESIDENT AND TRUSTEE       counselor for: GROWTH-INCOME   President --
                            FUND -- 5 years                Capital Research
                                                           Global Investors
                                                           Investment
                                                           professional for 25
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
ALAN N. BERRO               Serves as an equity portfolio  Senior Vice
SENIOR VICE PRESIDENT       counselor for: ASSET           President --
                            ALLOCATION FUND -- 10 years    Capital World
                                                           Investors
                                                           Investment
                                                           professional for 24
                                                           years in total; 19
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
ABNER D. GOLDSTINE          Serves as a fixed-income       Senior Vice
SENIOR VICE PRESIDENT       portfolio counselor for:       President -- Fixed
                            HIGH-INCOME BOND FUND -- 12    Income, Capital
                            years                          Research and
                                                           Management Company
                                                           Investment
                                                           professional for 58
                                                           years in total; 43
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
C. ROSS SAPPENFIELD         Serves as an equity portfolio  Senior Vice
SENIOR VICE PRESIDENT       counselor for:                 President --
                            GROWTH-INCOME FUND -- 11       Capital Research
                            years BLUE CHIP INCOME AND     Global Investors
                            GROWTH FUND -- 9 years (since  Investment
                            the fund's inception)          professional for 18
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate




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

<PAGE>





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

JOHN H. SMET                Serves as a fixed-income                              Senior Vice
SENIOR VICE PRESIDENT       portfolio counselor for: U.S.                         President -- Fixed
                            GOVERNMENT/AAA-RATED                                  Income, Capital
                            SECURITIES FUND -- 18 years                           Research and
                                                                                  Management Company
                                                                                  Investment
                                                                                  professional for 28
                                                                                  years in total; 27
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
CARL M. KAWAJA              Serves as an equity portfolio                         Senior Vice
VICE PRESIDENT              counselor for:  NEW WORLD                             President --
                            FUND -- 11 years (since the                           Capital World
                            fund's inception)                                     Investors
                                                                                  Investment
                                                                                  professional for 22
                                                                                  years in total; 19
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
SUNG LEE                    Serves as an equity portfolio                         Senior Vice
VICE PRESIDENT              counselor for:                                        President --
                            INTERNATIONAL FUND -- 4                               Capital Research
                            years                                                 Global Investors
                            (since the fund's inception)                          Investment
                            INTERNATIONAL GROWTH AND INCOME FUND -- 2             professional for 16
                            years                                                 years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
ROBERT W. LOVELACE          Serves as an equity portfolio                         Senior Vice
VICE PRESIDENT              counselor for: GLOBAL GROWTH                          President --
                            FUND -- 13 years (since the                           Capital World
                            fund's inception) NEW WORLD                           Investors
                            FUND -- 11 years (since the                           Investment
                            fund's inception)                                     professional for 25
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
DAVID C. BARCLAY            Serves as a fixed-income                              Senior Vice
                            portfolio counselor for:                              President -- Fixed
                            HIGH-INCOME BOND FUND -- 17                           Income, Capital
                            years NEW WORLD FUND -- 11                            Research and
                            years (since the fund's                               Management Company
                            inception) BOND FUND -- 12                            Investment
                            years                                                 professional for 29
                                                                                  years in total; 22
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
DONNALISA PARKS BARNUM      Serves as an equity portfolio                         Senior Vice
                            counselor for: GROWTH                                 President --
                            FUND -- 7 years                                       Capital World
                                                                                  Investors
                                                                                  Investment
                                                                                  professional for 29
                                                                                  years in total; 24
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
CHRISTOPHER D. BUCHBINDER   Serves as an equity portfolio                         Senior Vice
                            counselor for: BLUE CHIP                              President --
                            INCOME AND GROWTH FUND -- 3                           Capital Research
                            years                                                 Global Investors
                                                                                  Investment
                                                                                  professional for 15
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
GORDON CRAWFORD             Serves as an equity portfolio                         Senior Vice
                            counselor for: GLOBAL SMALL                           President --
                            CAPITALIZATION                                        Capital Research
                            FUND -- 12 years (since the                           Global Investors
                            fund's inception) GLOBAL                              Investment
                            DISCOVERY FUND -- 5 years                             professional for 39
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
DAVID A. DAIGLE             Serves as a fixed-income                              Senior Vice
                            portfolio counselor for:                              President - Fixed
                             HIGH-INCOME BOND FUND -- 1                           Income, Capital
                            year (plus 9 years of prior                           Research Company
                            experience as an investment                           Investment
                            analyst for the fund)                                 professional for 16
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
MARK H. DALZELL             Serves as a fixed-income                              Senior Vice
                            portfolio counselor                                   President -- Fixed
                            for: BOND FUND -- 5                                   Income, Capital
                            years GLOBAL BOND FUND -- 4                           Research and
                            years (since the fund's                               Management Company
                            inception)                                            Investment
                                                                                  professional for 32
                                                                                  years in total; 22
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
MARK E. DENNING             Serves as an equity portfolio                         Senior Vice
                            counselor for: GLOBAL SMALL                           President --
                            CAPITALIZATION FUND --  12                            Capital Research
                            years (since the fund's                               Global Investors
                            inception) GLOBAL DISCOVERY                           Investment
                            FUND -- 5 years                                       professional for 28
                                                                                  years, all with
                                                                                  Capital Research
                                                                                  and Management
                                                                                  Company or affiliate
------------------------------------------------------------------------------------------------------
J. BLAIR FRANK              Serves as an equity portfolio                         Senior Vice
                            counselor for: GLOBAL SMALL                           President --
                            CAPITALIZATION FUND --  7                             Capital Research
                            years GROWTH-INCOME FUND -- 4                         Global Investors
                            years                                                 Investment
                                                                                  professional for 17
                                                                                  years in total; 16
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
DAVID A. HOAG               Serves as a fixed-income                              Senior Vice
                            portfolio counselor for: BOND                         President -- Fixed
                            FUND -- 3 years                                       Income, Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  Investment
                                                                                  professional for 22
                                                                                  years in total; 19
                                                                                  years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate
------------------------------------------------------------------------------------------------------
THOMAS H. HOGH              Serves as a fixed-income                              Senior Vice
                            portfolio counselor for:                              President -- Fixed
                            GLOBAL BOND FUND -- 4 years                           Income, Capital
                            (since the fund's                                     Research Company
                            inception) U.S.                                       Investment
                            GOVERNMENT/AAA-RATED                                  professional for 23
                            SECURITIES FUND --13                                  years in total; 20
                            years BOND FUND -- 3 years                            years with Capital
                                                                                  Research and
                                                                                  Management Company
                                                                                  or affiliate




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

<PAGE>





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

CLAUDIA P. HUNTINGTON       Serves as an equity portfolio  Senior Vice
                            counselor for: GROWTH-INCOME   President --
                            FUND -- 16 years (plus 5       Capital Research
                            years of prior experience as   Global Investors
                            an investment analyst for the  Investment
                            fund) GLOBAL DISCOVERY         professional for 37
                            FUND -- 9 years (since the     years in total; 35
                            fund's inception)              years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
GREGG E. IRELAND            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH AND INCOME       Capital World
                            FUND -- 4 years (since the     Investors
                            fund's inception) GROWTH       Investment
                            FUND -- 4 years                professional for 38
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
GREGORY D. JOHNSON          Serves as an equity portfolio  Senior Vice
                            counselor for: GROWTH          President --
                            FUND -- 3 years                Capital World
                                                           Investors
                                                           Investment
                                                           professional for 17
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
MICHAEL T. KERR             Serves as an equity portfolio  Senior Vice
                            counselor for:  GROWTH         President --
                            FUND -- 5 years                Capital World
                                                           Investors
                                                           Investment
                                                           professional for 27
                                                           years in total; 25
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
HAROLD H. LA                Serves as an equity portfolio  Senior Vice
                            counselor for: GLOBAL SMALL    President --
                            CAPITALIZATION FUND -- 2       Capital Research
                            years (plus 4 years of prior   Global Investors
                            experience as an investment    Investment
                            analyst for the fund)          professional for 12
                                                           years in total; 11
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
JEFFREY T. LAGER            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            ASSET ALLOCATION FUND -- 3     Capital World
                            years                          Investors
                                                           Investment
                                                           professional for 15
                                                           years in total; 14
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
MARCUS B. LINDEN            Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President -- Fixed
                            HIGH-INCOME BOND FUND -- 3     Income, Capital
                            years                          Research Company
                                                           Investment
                                                           professional for 15
                                                           years in total; 14
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
JAMES B. LOVELACE           Serves as an equity portfolio  Senior Vice
                            counselor for: BLUE CHIP       President --
                            INCOME AND GROWTH FUND -- 3    Capital Research
                            years                          Global Investors
                                                           Investment
                                                           professional for 28
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
JESPER LYCKEUS              Serves as an equity portfolio  Senior Vice
                            counselor for: INTERNATIONAL   President --
                            FUND -- 3 years (plus 8 years  Capital Research
                            of prior experience as an      Global Investors
                            investment analyst for the     Investment
                            fund) INTERNATIONAL GROWTH     professional for 15
                            AND INCOME FUND -- 2 years     years in total; 14
                            (since the fund's inception)   years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
FERGUS N. MACDONALD         Serves as a fixed-income       Vice President,
                            portfolio counselor for:       Fixed-Income,
                            U.S. GOVERNMENT/AAA-RATED      Capital Research
                            SECURITIES FUND --Less than 1  Company
                            year                           Investment
                                                           professional for 18
                                                           years in total; 7
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
RONALD B. MORROW            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GROWTH FUND -- 7 years (plus   Capital World
                            6 years of prior experience    Investors
                            as an investment analyst for   Investment
                            the fund)                      professional for 42
                                                           years in total; 13
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
JAMES R. MULALLY            Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President -- Fixed
                            ASSET ALLOCATION FUND -- 4     Income, Capital
                            years                          Research and
                            GLOBAL BOND FUND -- 2 years    Management Company
                                                           Investment
                                                           professional for 34
                                                           years in total; 30
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
WESLEY K.-S. PHOA           Serves as a fixed-income       Senior Vice
                            portfolio counselor for:       President,
                            U.S. GOVERNMENT/AAA-RATED      Fixed-Income,
                            SECURITIES FUND --Less than 1  Capital Research
                            year                           Company
                                                           Investment
                                                           professional for 17
                                                           years in total; 11
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
DAVID M. RILEY              Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            INTERNATIONAL GROWTH AND       Capital Research
                            INCOME FUND -- 2 years (since  Global Investors
                            the fund's inception)          Investment
                                                           professional for 16
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate




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

<PAGE>





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

EUGENE P. STEIN             Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            ASSET ALLOCATION FUND -- 2     Capital World
                            years                          Investors
                                                           Investment
                                                           professional for 39
                                                           years in total; 38
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
ANDREW B. SUZMAN            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH AND INCOME       Capital World
                            FUND -- 1 year                 Investors
                                                           Investment
                                                           professional for 17
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
CHRISTOPHER M. THOMSEN      Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            INTERNATIONAL FUND -- 4 years  Capital Research
                                                           Global Investors
                                                           Investment
                                                           professional for 13
                                                           years, all with
                                                           Capital Research
                                                           and Management
                                                           Company or affiliate
-------------------------------------------------------------------------------
STEVEN T. WATSON            Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH FUND -- 8 years  Capital World
                            (plus 4 years of prior         Investors
                            experience as an investment    Investment
                            analyst for the fund) GLOBAL   professional for 23
                            GROWTH AND INCOME              years in total; 20
                            FUND -- 4 years (since the     years with Capital
                            fund's inception)              Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
PAUL A. WHITE               Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GLOBAL GROWTH FUND -- 5 years  Capital World
                            (plus 5 years of prior         Investors
                            experience as an investment    Investment
                            analyst for the fund)          professional for 21
                                                           years in total; 11
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate
-------------------------------------------------------------------------------
DYLAN J.YOLLES              Serves as an equity portfolio  Senior Vice
                            counselor for:                 President --
                            GROWTH-INCOME FUND -- 5 years  Capital Research
                            (plus 5 years of prior         Global Investors
                            experience as an investment    Investment
                            analyst for the fund)          professional for 13
                                                           years in total; 10
                                                           years with Capital
                                                           Research and
                                                           Management Company
                                                           or affiliate



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

PURCHASES AND REDEMPTIONS OF SHARES


Shares of the Series are currently offered only to insurance company separate
accounts as well as so-called "feeder funds" under master-feeder arrangements
sponsored by insurance companies. All such shares may be purchased or redeemed
by the separate accounts (or feeder funds) at net asset value without any sales
or redemption charges. These purchases and redemptions are made at the price
next determined after such purchases and redemptions of units of the separate
accounts (or feeder funds).


FREQUENT TRADING OF FUND SHARES

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


The Series, through its transfer agent, American Funds Service Company, has
agreements with the Series' insurance relationships to maintain its
surveillance procedures that are designed to detect frequent trading in fund
shares. Under these procedures, various analytics are used to evaluate factors
that may be indicative of frequent trading. For example, transactions in fund
shares that exceed certain monetary thresholds may be scrutinized. American
Funds Service Company may work with the insurance company separate accounts or
feeder funds to apply their procedures that American Funds Service Company
believes are reasonably designed to enforce the frequent trading policies of
the Series. You should refer to disclosures provided by the insurance company
with which you have a contract to determine the specific trading restrictions
that apply to you.

Under its procedures, American Funds Service Company also may review
transactions that occur close in time to other transactions in the same account
or in multiple accounts under common ownership or influence. Trading activity
that is identified through these procedures or as a result of any other
information available to the funds will be evaluated to determine whether such
activity might constitute frequent trading. These procedures may be modified
from time to time as appropriate to improve the detection of frequent trading,
to facilitate monitoring for frequent trading in particular retirement plans or
other accounts, and to comply with applicable laws.


In addition to the Series' broad ability to restrict potentially harmful
trading as described previously, the Series' board of trustees has adopted a
"purchase blocking policy" under which any contract owner redeeming units
representing a beneficial interest in any fund other than Cash Management Fund
(including redemptions that are part of an exchange transaction) having a value
of $5,000 or more will be precluded from investing units of beneficial interest
in that fund (including investments that are part of an exchange transaction)



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

<PAGE>

for 30 calendar days after the redemption transaction. Under this purchase
blocking policy, certain purchases will not be prevented and certain
redemptions will not trigger a purchase block, such as: systematic redemptions
and purchases where the entity maintaining the contract owner's account is able
to identify the transaction as a systematic redemption or purchase; purchases
and redemptions of units representing a beneficial interest in a fund having a
value of less than $5,000; retirement plan contributions, loans and
distributions (including hardship withdrawals) identified as such on the
retirement plan recordkeeper's system; and purchase transactions involving
transfers of assets, where the entity maintaining the contract owner's account
is able to identify the transaction as one of these types of transactions.

The Series reserves the right to waive the purchase blocking policy in those
instances where American Funds Service Company determines that its surveillance
procedures are adequate to detect frequent trading in fund shares.


If American Funds Service Company identifies any activity that may constitute
frequent trading, it reserves the right to contact the insurance company
separate account or feeder fund and request that the separate account or feeder
fund either provide information regarding an account owner's transactions or
restrict the account owner's trading. If American Funds Service Company is not
satisfied that insurance company separate account or feeder fund has taken
appropriate action, American Funds Service Company may terminate the separate
account's or feeder fund's ability to transact in fund shares.


There is no guarantee that all instances of frequent trading in fund shares
will be prevented.

NOTWITHSTANDING THE SERIES' SURVEILLANCE PROCEDURES AND PURCHASE BLOCKING
POLICY, ALL TRANSACTIONS IN FUND SHARES REMAIN SUBJECT TO THE SERIES' AND
AMERICAN FUNDS DISTRIBUTORS, INC.'S RIGHT TO RESTRICT POTENTIALLY ABUSIVE
TRADING GENERALLY (INCLUDING THE TYPES OF TRANSACTIONS DESCRIBED ABOVE THAT
WILL NOT BE PREVENTED OR TRIGGER A BLOCK UNDER THE PURCHASE BLOCKING POLICY).
SEE THE STATEMENT OF ADDITIONAL INFORMATION FOR MORE INFORMATION ABOUT HOW
AMERICAN FUNDS SERVICE COMPANY MAY ADDRESS OTHER POTENTIALLY ABUSIVE TRADING
ACTIVITY IN THE SERIES.

VALUING SHARES


Each fund calculates its share price, also called net asset value, each day the
New York Stock Exchange is open for trading as of approximately 4 p.m. New York
time, the normal close of regular trading. The funds will not calculate net
asset values on days that the New York Stock Exchange is closed for trading.
Assets are valued primarily on the basis of market quotations. However, the
funds have adopted procedures for making "fair value" determinations if market
quotations are not readily available or are not considered reliable. For
example, if events occur between the close of markets outside the United States
and the close of regular trading on the New York Stock Exchange that, in the
opinion of the investment adviser, materially affect the value of any of the
securities in the funds' portfolios that principally trade in those
international markets, those securities will be valued in accordance with fair
value procedures. Use of these procedures is intended to result in more
appropriate net asset values. In addition, such use will reduce, if not
eliminate, potential arbitrage opportunities otherwise available to short-term
investors.


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

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

PLANS OF DISTRIBUTION


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


DISTRIBUTIONS AND TAXES

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

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

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


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

<PAGE>


FINANCIAL HIGHLIGHTS/1/

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





                    Income (loss) from investment operations/2/      Dividends and distributions
                    ------------------------------------------  -------------------------------------

                                    Net gains
          Net asset    Net         (losses) on                  Dividends                    Total
           value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period    beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended     of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Global Discovery Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $ 7.45      $.05           $ 3.78          $ 3.83      $(.08)       $  --        $ (.08)      $11.20     51.49%
12/31/08    14.09       .15            (6.37)          (6.22)      (.12)        (.30)         (.42)        7.45    (45.02)
12/31/07    13.05       .17             2.07            2.24       (.16)       (1.04)        (1.20)       14.09     17.55
12/31/06    11.63       .15             1.89            2.04       (.13)        (.49)         (.62)       13.05     17.66
12/31/05    10.79       .14             1.05            1.19       (.11)        (.24)         (.35)       11.63     11.07
CLASS 2
12/31/09     7.43       .03             3.74            3.77       (.05)          --          (.05)       11.15     50.91
12/31/08    14.02       .12            (6.32)          (6.20)      (.09)        (.30)         (.39)        7.43    (45.09)
12/31/07    13.00       .14             2.05            2.19       (.13)       (1.04)        (1.17)       14.02     17.22
12/31/06    11.59       .11             1.89            2.00       (.10)        (.49)         (.59)       13.00     17.41
12/31/05    10.76       .11             1.05            1.16       (.09)        (.24)         (.33)       11.59     10.80

Global Growth Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $13.96      $.26           $ 5.67          $ 5.93      $(.28)       $  --        $ (.28)      $19.61     42.58%
12/31/08    25.15       .47            (9.50)          (9.03)      (.41)       (1.75)        (2.16)       13.96    (38.23)
12/31/07    23.44       .51             2.98            3.49       (.76)       (1.02)        (1.78)       25.15     15.16
12/31/06    19.63       .41             3.62            4.03       (.22)          --          (.22)       23.44     20.73
12/31/05    17.31       .28             2.19            2.47       (.15)          --          (.15)       19.63     14.37
CLASS 2
12/31/09    13.88       .22             5.64            5.86       (.24)          --          (.24)       19.50     42.30
12/31/08    25.00       .42            (9.43)          (9.01)      (.36)       (1.75)        (2.11)       13.88    (38.39)
12/31/07    23.29       .45             2.95            3.40       (.67)       (1.02)        (1.69)       25.00     14.85
12/31/06    19.52       .36             3.59            3.95       (.18)          --          (.18)       23.29     20.43
12/31/05    17.23       .23             2.18            2.41       (.12)          --          (.12)       19.52     14.07

Global Small Capitalization Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $11.18      $.09           $ 6.80          $ 6.89      $(.07)       $  --        $ (.07)      $18.00     61.63%
12/31/08    27.20       .19           (13.33)         (13.14)        --        (2.88)        (2.88)       11.18    (53.39)
12/31/07    24.87       .12             5.27            5.39       (.90)       (2.16)        (3.06)       27.20     21.73
12/31/06    21.29       .19             4.74            4.93       (.14)       (1.21)        (1.35)       24.87     24.35
12/31/05    17.14       .13             4.23            4.36       (.21)          --          (.21)       21.29     25.66
CLASS 2
12/31/09    11.03       .05             6.70            6.75       (.04)          --          (.04)       17.74     61.30
12/31/08    26.95       .14           (13.18)         (13.04)        --        (2.88)        (2.88)       11.03    (53.52)
12/31/07    24.64       .05             5.22            5.27       (.80)       (2.16)        (2.96)       26.95     21.43
12/31/06    21.12       .14             4.70            4.84       (.11)       (1.21)        (1.32)       24.64     24.05
12/31/05    17.02       .09             4.19            4.28       (.18)          --          (.18)       21.12     25.35







                       Ratio of   Ratio of    Ratio of
                       expenses   expenses      net
          Net assets, to average to average    income
            end of    net assets net assets  (loss) to
Period    period (in    before     after      average
ended      millions)    waiver   waiver/3/  net assets/3/


Global Discovery Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 31        .61%       .61%        .59%
12/31/08        18        .60        .55        1.33
12/31/07        35        .60        .54        1.25
12/31/06        28        .62        .56        1.19
12/31/05        22        .61        .56        1.27
CLASS 2
12/31/09       192        .86        .86         .36
12/31/08       131        .85        .80        1.08
12/31/07       240        .85        .79         .98
12/31/06       151        .87        .81         .94
12/31/05        89        .86        .81        1.04

Global Growth Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09    $1,037        .56%       .56%       1.59%
12/31/08       675        .55        .50        2.37
12/31/07       684        .55        .50        2.06
12/31/06       278        .58        .53        1.95
12/31/05       206        .62        .57        1.56
CLASS 2
12/31/09     4,100        .82        .82        1.36
12/31/08     3,198        .80        .75        2.12
12/31/07     5,180        .80        .75        1.84
12/31/06     4,015        .83        .78        1.71
12/31/05     2,617        .87        .82        1.30

Global Small Capitalization Fund
---------------------------------------------------------------------------------------------------
CLASS 1
12/31/09    $  604        .76%       .76%        .61%
12/31/08       306        .74        .67        1.01
12/31/07       369        .73        .66         .45
12/31/06       247        .77        .69         .82
12/31/05       231        .79        .73         .72
CLASS 2
12/31/09     2,678       1.01       1.01         .36
12/31/08     1,748        .99        .92         .70
12/31/07     3,975        .98        .91         .20
12/31/06     2,927       1.02        .94         .61
12/31/05     1,977       1.04        .97         .49




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

<PAGE>






                    Income (loss) from investment operations/2/      Dividends and distributions
                    ------------------------------------------  -------------------------------------

                                    Net gains
          Net asset    Net         (losses) on                  Dividends                    Total
           value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period    beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended     of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Growth Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $33.51      $.35          $ 12.94         $ 13.29      $(.35)      $   --        $ (.35)      $46.45     39.74%
12/31/08    67.22       .63           (27.52)         (26.89)      (.56)       (6.26)        (6.82)       33.51    (43.83)
12/31/07    64.51       .68             7.44            8.12       (.68)       (4.73)        (5.41)       67.22     12.64
12/31/06    59.36       .70             5.46            6.16       (.63)        (.38)        (1.01)       64.51     10.48
12/31/05    51.39       .46             8.00            8.46       (.49)          --          (.49)       59.36     16.50
CLASS 2
12/31/09    33.27       .25            12.84           13.09       (.26)          --          (.26)       46.10     39.41
12/31/08    66.72       .50           (27.27)         (26.77)      (.42)       (6.26)        (6.68)       33.27    (43.97)
12/31/07    64.08       .50             7.39            7.89       (.52)       (4.73)        (5.25)       66.72     12.35
12/31/06    58.98       .54             5.43            5.97       (.49)        (.38)         (.87)       64.08     10.22
12/31/05    51.10       .34             7.92            8.26       (.38)          --          (.38)       58.98     16.19
CLASS 3
12/31/09    33.54       .28            12.95           13.23       (.28)          --          (.28)       46.49     39.51
12/31/08    67.21       .54           (27.50)         (26.96)      (.45)       (6.26)        (6.71)       33.54    (43.93)
12/31/07    64.50       .55             7.45            8.00       (.56)       (4.73)        (5.29)       67.21     12.44
12/31/06    59.34       .59             5.46            6.05       (.51)        (.38)         (.89)       64.50     10.29
12/31/05    51.38       .37             7.98            8.35       (.39)          --          (.39)       59.34     16.28

International Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $12.22      $.24           $ 5.04          $ 5.28      $(.25)      $ (.08)       $ (.33)      $17.17     43.50%
12/31/08    24.81       .43            (9.88)          (9.45)      (.40)       (2.74)        (3.14)       12.22    (42.01)
12/31/07    22.01       .43             3.95            4.38       (.41)       (1.17)        (1.58)       24.81     20.30
12/31/06    18.96       .41             3.21            3.62       (.38)        (.19)         (.57)       22.01     19.33
12/31/05    15.82       .32             3.11            3.43       (.29)          --          (.29)       18.96     21.75
CLASS 2
12/31/09    12.19       .21             5.01            5.22       (.22)        (.08)         (.30)       17.11     43.07
12/31/08    24.72       .41            (9.85)          (9.44)      (.35)       (2.74)        (3.09)       12.19    (42.12)
12/31/07    21.94       .36             3.94            4.30       (.35)       (1.17)        (1.52)       24.72     20.02
12/31/06    18.92       .35             3.20            3.55       (.34)        (.19)         (.53)       21.94     18.98
12/31/05    15.79       .28             3.11            3.39       (.26)          --          (.26)       18.92     21.50
CLASS 3
12/31/09    12.23       .22             5.04            5.26       (.23)        (.08)         (.31)       17.18     43.25
12/31/08    24.80       .43            (9.90)          (9.47)      (.36)       (2.74)        (3.10)       12.23    (42.10)
12/31/07    22.00       .39             3.94            4.33       (.36)       (1.17)        (1.53)       24.80     20.10
12/31/06    18.96       .37             3.20            3.57       (.34)        (.19)         (.53)       22.00     19.07
12/31/05    15.82       .29             3.11            3.40       (.26)          --          (.26)       18.96     21.54

New World Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $13.57      $.34          $  6.42         $  6.76      $(.29)      $   --        $ (.29)      $20.04     49.95%
12/31/08    25.88       .43           (10.68)         (10.25)      (.36)       (1.70)        (2.06)       13.57    (42.20)
12/31/07    21.56       .46             6.25            6.71       (.83)       (1.56)        (2.39)       25.88     32.53
12/31/06    16.67       .41             4.95            5.36       (.32)        (.15)         (.47)       21.56     32.88
12/31/05    13.96       .33             2.58            2.91       (.20)          --          (.20)       16.67     21.10
CLASS 2
12/31/09    13.47       .29             6.38            6.67       (.25)          --          (.25)       19.89     49.65
12/31/08    25.69       .40           (10.62)         (10.22)      (.30)       (1.70)        (2.00)       13.47    (42.37)
12/31/07    21.40       .40             6.20            6.60       (.75)       (1.56)        (2.31)       25.69     32.21
12/31/06    16.56       .36             4.92            5.28       (.29)        (.15)         (.44)       21.40     32.59
12/31/05    13.89       .29             2.56            2.85       (.18)          --          (.18)       16.56     20.74

Blue Chip Income and Growth Fund
----------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09   $ 6.67      $.16           $ 1.71          $ 1.87      $(.17)       $  --         $(.17)      $ 8.37     28.18%
12/31/08    11.53       .22            (4.22)          (4.00)      (.21)        (.65)         (.86)        6.67    (36.30)
12/31/07    11.97       .24              .07             .31       (.36)        (.39)         (.75)       11.53      2.25
12/31/06    10.91       .20             1.63            1.83       (.16)        (.61)         (.77)       11.97     17.73
12/31/05    10.26       .18              .59             .77       (.12)          --          (.12)       10.91      7.57
CLASS 2
12/31/09     6.62       .14             1.70            1.84       (.15)          --          (.15)        8.31     27.97
12/31/08    11.45       .19            (4.18)          (3.99)      (.19)        (.65)         (.84)        6.62    (36.50)
12/31/07    11.87       .21              .07             .28       (.31)        (.39)         (.70)       11.45      2.03
12/31/06    10.83       .17             1.61            1.78       (.13)        (.61)         (.74)       11.87     17.42
12/31/05    10.20       .15              .58             .73       (.10)          --          (.10)       10.83      7.24







                       Ratio of   Ratio of    Ratio of
                       expenses   expenses      net
          Net assets, to average to average    income
            end of    net assets net assets  (loss) to
Period    period (in    before     after      average
ended      millions)    waiver   waiver/3/  net assets/3/


Growth Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09    $ 6,565       .35%       .35%        .91%
12/31/08      4,768       .33        .30        1.23
12/31/07      5,051       .33        .30        1.00
12/31/06      3,503       .34        .31        1.14
12/31/05      3,709       .35        .32         .87
CLASS 2
12/31/09     18,201       .60        .60         .66
12/31/08     13,383       .58        .55         .95
12/31/07     25,359       .58        .55         .74
12/31/06     23,122       .59        .56         .89
12/31/05     18,343       .60        .57         .64
CLASS 3
12/31/09        230       .53        .53         .72
12/31/08        198       .51        .48        1.02
12/31/07        425       .51        .48         .81
12/31/06        451       .52        .49         .95
12/31/05        499       .53        .50         .69

International Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09     $2,851       .54%       .54%       1.70%
12/31/08      1,864       .52        .48        2.42
12/31/07      1,708       .52        .47        1.82
12/31/06      1,648       .54        .49        1.99
12/31/05      1,599       .57        .52        1.92
CLASS 2
12/31/09      6,411       .79        .79        1.48
12/31/08      4,901       .77        .72        2.16
12/31/07      9,719       .77        .72        1.55
12/31/06      7,260       .79        .74        1.72
12/31/05      4,790       .82        .77        1.64
CLASS 3
12/31/09         68       .72        .72        1.54
12/31/08         57       .70        .65        2.25
12/31/07        123       .70        .65        1.64
12/31/06        120       .72        .67        1.81
12/31/05        116       .75        .70        1.74

New World Fund
--------------------------------------------------------------------------------
CLASS 1
12/31/09     $  500       .82%       .82%       2.02%
12/31/08        253       .81        .73        2.18
12/31/07        261       .82        .74        1.92
12/31/06        126       .88        .80        2.19
12/31/05         88       .92        .85        2.22
CLASS 2
12/31/09      1,492      1.07       1.07        1.78
12/31/08      1,044      1.06        .98        1.94
12/31/07      1,875      1.07        .99        1.69
12/31/06      1,175      1.13       1.05        1.93
12/31/05        677      1.17       1.10        1.97

Blue Chip Income and Growth Fund
---------------------------------------------------------------------------------------------------
CLASS 1
12/31/09     $  408       .44%       .44%       2.26%
12/31/08        220       .43        .39        2.48
12/31/07        143       .42        .38        1.95
12/31/06        159       .43        .39        1.75
12/31/05        135       .45        .41        1.73
CLASS 2
12/31/09      3,344       .69         69        2.06
12/31/08      2,602       .68        .64        2.10
12/31/07      4,274       .67        .63        1.70
12/31/06      3,937       .68        .64        1.50
12/31/05      3,029       .70        .66        1.48




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

<PAGE>






                       Income (loss) from investment operations/2/      Dividends and distributions
                       ------------------------------------------  -------------------------------------

                                        Netgains
             Net asset    Net         (losses) on                  Dividends                    Total
              value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period       beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended        of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Global Growth and Income Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 6.68      $.20           $ 2.47          $ 2.67      $(.21)      $   --         $(.21)      $ 9.14     40.11%
12/31/08       11.78       .28            (5.09)          (4.81)      (.22)        (.07)         (.29)        6.68    (41.06)
12/31/07       10.98       .28             1.14            1.42       (.22)        (.40)         (.62)       11.78     13.04
12/31/06/4/    10.00       .14              .91            1.05       (.07)          --          (.07)       10.98     10.49
CLASS 2
12/31/09        6.67       .18             2.46            2.64       (.19)          --          (.19)        9.12     39.72
12/31/08       11.75       .26            (5.07)          (4.81)      (.20)        (.07)         (.27)        6.67    (41.17)
12/31/07       10.97       .25             1.13            1.38       (.20)        (.40)         (.60)       11.75     12.67
12/31/06/4/    10.00       .11              .92            1.03       (.06)          --          (.06)       10.97     10.30

Growth-Income Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $24.25      $.49          $  7.13         $  7.62      $(.50)      $   --        $ (.50)      $31.37     31.54%
12/31/08       42.52       .69           (15.91)         (15.22)      (.69)       (2.36)        (3.05)       24.25    (37.68)
12/31/07       42.43       .80             1.51            2.31       (.77)       (1.45)        (2.22)       42.52      5.32
12/31/06       38.31       .77             5.03            5.80       (.72)        (.96)        (1.68)       42.43     15.51
12/31/05       36.81       .62             1.61            2.23       (.58)        (.15)         (.73)       38.31      6.08
CLASS 2
12/31/09       24.11       .42             7.09            7.51       (.44)          --          (.44)       31.18     31.24
12/31/08       42.26       .60           (15.80)         (15.20)      (.59)       (2.36)        (2.95)       24.11    (37.85)
12/31/07       42.19       .68             1.50            2.18       (.66)       (1.45)        (2.11)       42.26      5.04
12/31/06       38.12       .67             4.99            5.66       (.63)        (.96)        (1.59)       42.19     15.20
12/31/05       36.64       .53             1.60            2.13       (.50)        (.15)         (.65)       38.12      5.83
CLASS 3
12/31/09       24.27       .45             7.12            7.57       (.45)          --          (.45)       31.39     31.30
12/31/08       42.51       .64           (15.90)         (15.26)      (.62)       (2.36)        (2.98)       24.27    (37.78)
12/31/07       42.42       .73             1.50            2.23       (.69)       (1.45)        (2.14)       42.51      5.12
12/31/06       38.31       .70             5.01            5.71       (.64)        (.96)        (1.60)       42.42     15.30
12/31/05       36.80       .56             1.61            2.17       (.51)        (.15)         (.66)       38.31      5.88

International Growth and Income Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $10.92      $.36            $4.04           $4.40      $(.19)      $ (.21)        $(.40)      $14.92     40.38%
12/31/08/6/    10.00       .01              .92             .93       (.01)          --          (.01)       10.92      9.28
CLASS 2
12/31/09       10.92       .26             4.10            4.36       (.17)        (.21)         (.38)       14.90     40.04
12/31/08/6/    10.00       .01              .92             .93       (.01)          --          (.01)       10.92      9.27

Asset Allocation Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $12.16      $.35           $ 2.59          $ 2.94      $(.35)      $   --        $ (.35)      $14.75     24.27%
12/31/08       18.51       .47            (5.70)          (5.23)      (.45)        (.67)        (1.12)       12.16    (29.30)
12/31/07       18.34       .51              .75            1.26       (.45)        (.64)        (1.09)       18.51      6.82
12/31/06       16.56       .47             1.97            2.44       (.43)        (.23)         (.66)       18.34     14.96
12/31/05       15.49       .41             1.05            1.46       (.39)          --          (.39)       16.56      9.45
CLASS 2
12/31/09       12.08       .32             2.56            2.88       (.31)          --          (.31)       14.65     23.98
12/31/08       18.39       .43            (5.66)          (5.23)      (.41)        (.67)        (1.08)       12.08    (29.51)
12/31/07       18.23       .47              .74            1.21       (.41)        (.64)        (1.05)       18.39      6.55
12/31/06       16.47       .42             1.96            2.38       (.39)        (.23)         (.62)       18.23     14.66
12/31/05       15.42       .37             1.04            1.41       (.36)          --          (.36)       16.47      9.14
CLASS 3
12/31/09       12.17       .33             2.57            2.90       (.32)          --          (.32)       14.75     23.95
12/31/08       18.50       .44            (5.68)          (5.24)      (.42)        (.67)        (1.09)       12.17    (29.39)
12/31/07       18.34       .48              .74            1.22       (.42)        (.64)        (1.06)       18.50      6.56
12/31/06       16.56       .44             1.97            2.41       (.40)        (.23)         (.63)       18.34     14.75
12/31/05       15.49       .38             1.05            1.43       (.36)          --          (.36)       16.56      9.26

Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 9.45      $.42           $  .80          $ 1.22      $(.34)      $   --         $(.34)      $10.33     12.83%
12/31/08       11.14       .61            (1.64)          (1.03)      (.63)        (.03)         (.66)        9.45     (9.16)
12/31/07       11.64       .65             (.24)            .41       (.91)          --          (.91)       11.14      3.66
12/31/06       11.31       .63              .17             .80       (.47)          --          (.47)       11.64      7.31
12/31/05       11.57       .60             (.40)            .20       (.46)          --          (.46)       11.31      1.77
CLASS 2
12/31/09        9.36       .40              .79            1.19       (.32)          --          (.32)       10.23     12.61
12/31/08       11.03       .59            (1.63)          (1.04)      (.60)        (.03)         (.63)        9.36     (9.35)
12/31/07       11.53       .61             (.24)            .37       (.87)          --          (.87)       11.03      3.33
12/31/06       11.22       .60              .16             .76       (.45)          --          (.45)       11.53      6.99
12/31/05       11.48       .57             (.39)            .18       (.44)          --          (.44)       11.22      1.59







                          Ratio of   Ratio of    Ratio of
                          expenses   expenses      net
             Net assets, to average to average    income
               end of    net assets net assets  (loss) to
Period       period (in    before     after      average
ended         millions)    waiver   waiver/3/  net assets/3/


Global Growth and Income Fund
------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09        $  160      .63%       .63%        2.63%
12/31/08            95      .62        .56         3.00
12/31/07            79      .71        .58         2.37
12/31/06/4/         45      .72/5/     .65/5/      2.10/5/
CLASS 2
12/31/09         1,951      .88        .88         2.42
12/31/08         1,529      .86        .81         2.73
12/31/07         1,997      .96        .83         2.11
12/31/06/4/        638      .97/5/     .90/5/      1.64/5/

Growth-Income Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $ 8,142      .29%       .29%        1.83%
12/31/08         5,034      .28        .25         2.03
12/31/07         5,618      .27        .25         1.82
12/31/06         3,759      .28        .25         1.92
12/31/05         3,825      .29        .27         1.68
CLASS 2
12/31/09        16,220      .54        .54         1.60
12/31/08        13,046      .53        .50         1.75
12/31/07        23,243      .52        .50         1.57
12/31/06        22,688      .53        .50         1.67
12/31/05        17,608      .54        .52         1.44
CLASS 3
12/31/09           225      .47        .47         1.68
12/31/08           205      .46        .43         1.83
12/31/07           405      .45        .43         1.64
12/31/06           458      .46        .43         1.74
12/31/05           471      .47        .45         1.50

International Growth and Income Fund
------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09           $28      .74%       .74%        2.74%
12/31/08/6/         12      .09        .08          .14
CLASS 2
12/31/09            99      .99        .99         1.89
12/31/08/6/          4      .11        .11          .05

Asset Allocation Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09        $4,151      .32%       .32%        2.65%
12/31/08         2,243      .32        .29         2.98
12/31/07         1,927      .32        .29         2.69
12/31/06         1,079      .33        .30         2.67
12/31/05           879      .35        .32         2.57
CLASS 2
12/31/09         5,537      .58        .58         2.45
12/31/08         4,822      .57        .54         2.70
12/31/07         7,308      .57        .54         2.45
12/31/06         6,362      .58        .55         2.42
12/31/05         5,120      .60        .57         2.31
CLASS 3
12/31/09            44      .51        .51         2.53
12/31/08            41      .50        .47         2.77
12/31/07            71      .50        .47         2.52
12/31/06            76      .51        .48         2.49
12/31/05            76      .53        .50         2.39

Bond Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09        $3,775      .39%       .39%        4.19%
12/31/08         2,090      .40        .36         5.84
12/31/07           436      .41        .37         5.59
12/31/06           230      .43        .39         5.54
12/31/05           182      .44        .40         5.30
CLASS 2
12/31/09         4,635      .64        .64         4.00
12/31/08         3,432      .65        .61         5.53
12/31/07         4,679      .66        .62         5.34
12/31/06         3,374      .68        .64         5.29
12/31/05         2,312      .69        .65         5.06




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

<PAGE>




                       Income (loss) from investment operations/2/      Dividends and distributions
                       ------------------------------------------  -------------------------------------

                                       Net gains
             Net asset    Net         (losses) on                  Dividends                    Total
              value,   investment   securities (both   Total from  (from net  Distributions   dividends   Net asset
Period       beginning   income       realized and     investment  investment (from capital      and      value, end  Total
ended        of period   (loss)       unrealized)      operations   income)      gains)     distributions of period  return/3/


Global Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $10.68      $.45            $ .62           $1.07       $(.18)       $ --         $(.18)      $11.57     10.04%
12/31/08       10.83       .48             (.09)            .39        (.54)         --/7/       (.54)       10.68      3.60
12/31/07       10.18       .49              .47             .96        (.31)         --          (.31)       10.83      9.54
12/31/06/8/    10.00       .10              .15             .25        (.07)         --          (.07)       10.18      2.52
CLASS 2
12/31/09       10.66       .42              .61            1.03        (.16)         --          (.16)       11.53      9.69
12/31/08       10.81       .44             (.07)            .37        (.52)         --/7/       (.52)       10.66      3.48
12/31/07       10.17       .47              .47             .94        (.30)         --          (.30)       10.81      9.23
12/31/06/9/    10.00       .06              .18             .24        (.07)         --          (.07)       10.17      1.99

High-Income Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $ 8.05      $.75           $ 2.41          $ 3.16      $ (.72)       $ --        $ (.72)      $10.49     39.45%
12/31/08       11.65       .87            (3.64)          (2.77)       (.83)         --          (.83)        8.05    (23.74)
12/31/07       12.90       .95             (.72)            .23       (1.48)         --         (1.48)       11.65      1.62
12/31/06       12.41       .92              .37            1.29        (.80)         --          (.80)       12.90     10.89
12/31/05       12.89       .85             (.55)            .30        (.78)         --          (.78)       12.41      2.46
CLASS 2
12/31/09        7.99       .71             2.39            3.10        (.70)         --          (.70)       10.39     38.94
12/31/08       11.55       .84            (3.60)          (2.76)       (.80)         --          (.80)        7.99    (23.84)
12/31/07       12.79       .91             (.72)            .19       (1.43)         --         (1.43)       11.55      1.33
12/31/06       12.32       .89              .36            1.25        (.78)         --          (.78)       12.79     10.59
12/31/05       12.81       .81             (.55)            .26        (.75)         --          (.75)       12.32      2.20
CLASS 3
12/31/09        8.07       .73             2.42            3.15        (.71)         --          (.71)       10.51     39.14
12/31/08       11.65       .86            (3.64)          (2.78)       (.80)         --          (.80)        8.07    (23.76)
12/31/07       12.88       .92             (.72)            .20       (1.43)         --         (1.43)       11.65      1.40
12/31/06       12.39       .90              .36            1.26        (.77)         --          (.77)       12.88     10.66
12/31/05       12.87       .82             (.55)            .27        (.75)         --          (.75)       12.39      2.25

U.S. Government/AAA-Rated Securities Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $12.29      $.37            $(.03)           $.34       $(.34)      $(.11)        $(.45)      $12.18      2.79%
12/31/08       11.73       .50              .41             .91        (.35)         --          (.35)       12.29      7.84
12/31/07       11.87       .58              .20             .78        (.92)         --          (.92)       11.73      6.83
12/31/06       11.91       .55             (.10)            .45        (.49)         --          (.49)       11.87      3.95
12/31/05       12.07       .48             (.16)            .32        (.48)         --          (.48)       11.91      2.70
CLASS 2
12/31/09       12.20       .34             (.03)            .31        (.32)       (.11)         (.43)       12.08      2.50
12/31/08       11.65       .47              .41             .88        (.33)         --          (.33)       12.20      7.63
12/31/07       11.79       .54              .19             .73        (.87)         --          (.87)       11.65      6.49
12/31/06       11.83       .51             (.09)            .42        (.46)         --          (.46)       11.79      3.75
12/31/05       12.00       .45             (.16)            .29        (.46)         --          (.46)       11.83      2.41
CLASS 3
12/31/09       12.30       .36             (.04)            .32        (.32)       (.11)         (.43)       12.19      2.58
12/31/08       11.74       .48              .41             .89        (.33)         --          (.33)       12.30      7.66
12/31/07       11.86       .55              .20             .75        (.87)         --          (.87)       11.74      6.63
12/31/06       11.89       .52             (.09)            .43        (.46)         --          (.46)       11.86      3.80
12/31/05       12.05       .46             (.16)            .30        (.46)         --          (.46)       11.89      2.50

Cash Management Fund
-------------------------------------------------------------------------------------------------------------------------------
CLASS 1
12/31/09      $11.44     $(.01)           $  --/7/        $(.01)      $(.03)       $ --/7/      $(.03)      $11.40      (.10)%
12/31/08       11.40       .24               --/7/          .24        (.20)         --          (.20)       11.44      2.15
12/31/07       11.62       .57               --/7/          .57        (.79)         --          (.79)       11.40      4.95
12/31/06       11.31       .54               --/7/          .54        (.23)         --          (.23)       11.62      4.81
12/31/05       11.09       .33               --/7/          .33        (.11)         --          (.11)       11.31      2.97
CLASS 2
12/31/09       11.38      (.04)              --/7/         (.04)       (.02)         --/7/       (.02)       11.32      (.33)
12/31/08       11.35       .20              .02             .22        (.19)         --          (.19)       11.38      1.90
12/31/07       11.56       .54               --/7/          .54        (.75)         --          (.75)       11.35      4.73
12/31/06       11.26       .51               --/7/          .51        (.21)         --          (.21)       11.56      4.59
12/31/05       11.05       .30               --/7/          .30        (.09)         --          (.09)       11.26      2.68
CLASS 3
12/31/09       11.44      (.03)            (.01)           (.04)       (.02)         --/7/       (.02)       11.38      (.31)
12/31/08       11.40       .22              .01             .23        (.19)         --          (.19)       11.44      1.99
12/31/07       11.60       .55               --/7/          .55        (.75)         --          (.75)       11.40      4.83
12/31/06       11.29       .52               --/7/          .52        (.21)         --          (.21)       11.60      4.64
12/31/05       11.07       .30               --/7/          .30        (.08)         --          (.08)       11.29      2.74







                          Ratio of   Ratio of    Ratio of
                          expenses   expenses      net
             Net assets, to average to average    income
               end of    net assets net assets  (loss) to
Period       period (in    before     after      average
ended         millions)    waiver   waiver/3/  net assets/3/


Global Bond Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $  162       .59%       .59%        4.06%
12/31/08          111       .59        .53         4.36
12/31/07           28       .61        .55         4.61
12/31/06/8/        12       .15        .13         1.00
CLASS 2
12/31/09        1,203       .84        .84         3.79
12/31/08          802       .84        .79         4.06
12/31/07          279       .86        .80         4.41
12/31/06/9/        15       .13        .12          .60

High-Income Bond Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $  635       .48%       .48%        7.86%
12/31/08          340       .48        .43         8.22
12/31/07          308       .48        .44         7.41
12/31/06          293       .49        .45         7.36
12/31/05          309       .50        .46         6.76
CLASS 2
12/31/09        1,063       .74        .74         7.62
12/31/08          780       .73        .68         7.92
12/31/07          996       .73        .69         7.17
12/31/06          832       .74        .70         7.12
12/31/05          590       .75        .71         6.55
CLASS 3
12/31/09           24       .67        .67         7.69
12/31/08           18       .66        .61         7.96
12/31/07           28       .66        .62         7.21
12/31/06           34       .67        .63         7.19
12/31/05           37       .68        .64         6.58

U.S. Government/AAA-Rated Securities Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $  999       .41%       .41%        2.99%
12/31/08          496       .43        .38         4.17
12/31/07          211       .46        .41         4.83
12/31/06          218       .47        .42         4.64
12/31/05          252       .47        .43         3.99
CLASS 2
12/31/09        1,561       .66        .66         2.79
12/31/08        1,219       .68        .64         3.93
12/31/07          597       .71        .66         4.58
12/31/06          402       .72        .67         4.40
12/31/05          341       .72        .68         3.75
CLASS 3
12/31/09           27       .59        .59         2.91
12/31/08           33       .61        .57         4.03
12/31/07           29       .64        .59         4.65
12/31/06           32       .65        .60         4.45
12/31/05           39       .65        .61         3.81

Cash Management Fund
-----------------------------------------------------------------------------------
CLASS 1
12/31/09       $  105       .33%       .33%        (.08)%
12/31/08          158       .32        .29         2.07
12/31/07          112       .33        .30         4.88
12/31/06           98       .33        .30         4.74
12/31/05           75       .33        .30         2.91
CLASS 2
12/31/09          664       .58        .58         (.33)
12/31/08        1,023       .57        .54         1.73
12/31/07          452       .58        .55         4.61
12/31/06          282       .58        .55         4.52
12/31/05          153       .58        .55         2.71
CLASS 3
12/31/09           17       .51        .51         (.27)
12/31/08           25       .50        .47         1.91
12/31/07           20       .51        .48         4.70
12/31/06           18       .51        .48         4.53
12/31/05           16       .51        .48         2.70




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

<PAGE>





                                                       Year ended December 31
                                                   -------------------------------
Portfolio turnover rate for all classes of shares  2009  2008  2007  2006    2005
-------------------------------------------------  ---- ----   ----  ----    ----

   Global Discovery Fund                            60%  46%     50%   31%     53%
   Global Growth Fund                               43   38      38    31      26
   Global Small Capitalization Fund                 55   47      49    50      47
   Growth Fund                                      37   26      40    35      29
   International Fund                               46   52      41    29      40
   New World Fund                                   25   32      34    32      26
   Blue Chip Income and Growth Fund                 22   24      27    21      33
   Global Growth and Income Fund                    47   36      36     8/4/   --
   Growth-Income Fund                               24   31      24    25      20
   International Growth and Income Fund             21   --/6/   --    --      --
   Asset Allocation Fund                            41   36      29    38      23
   Bond Fund                                       125   63      57    57      46
   Global Bond Fund                                 86  118      85     7/8/   --
   High-Income Bond Fund                            47   29      32    35      35
   U.S. Government/AAA-Rated Securities Fund       100  108      91    76      86
   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 Capital
   Research and Management Company. During some of the periods shown, Capital
   Research and Management Company reduced fees for investment advisory
   services.

/4/From May 1, 2006, commencement of operations.

/5/Annualized.

/6/From November 18, 2008, commencement of operations.

/7/Amount less than $.01.

/8/From October 4, 2006, commencement of operations.

/9/From November 6, 2006, when Class 2 shares were first issued.



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

<PAGE>

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


OTHER FUND INFORMATION

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

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

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

The current SAI and the codes of ethics are on file with the Securities and
Exchange Commission (SEC). These and other related materials about the Series
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/551-8090) or on the EDGAR database on the SEC's website
at http://www.sec.gov or, after payment of a duplicating fee, via e-mail
request to publicinfo@sec.gov or by writing to the SEC's Public Reference
Section, 100 F Street, NE, Washington, D.C. 20549-1520.

The current SAI and annual/semi-annual reports to shareholders can be found
online at americanfunds.com/afis and may be available on the website of the
company that issued your insurance contract. You also may request a free copy
of these documents or the codes of ethics by calling American Funds at
800/421-9900, ext.65413 or writing to the Secretary at 333 South Hope Street,
Los Angeles, California 90071.





     INAFPR-989-0510P Printed in USA  Investment Company File No. 811-3857





The Capital Group Companies
American Funds   Capital Research and Management   Capital International    Capital Guardian   Capital Bank and Trust






<PAGE>


                        AMERICAN FUNDS INSURANCE SERIES

                                     Part B
                      Statement of Additional Information

                                May 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, 2010. 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






           CLASS 1 AND CLASS 2 SHARES OF:                 CLASS 3 SHARES OF:
-------------------------------------------------------------------------------
 Global Discovery Fund      Asset Allocation Fund       Growth Fund
 Global Growth Fund         Bond Fund                   International Fund
 Global Small               Global Bond Fund            Growth-Income Fund
 Capitalization Fund        High-Income Bond Fund       Asset Allocation Fund
 Growth Fund                U.S. Government/AAA-Rated   High-Income Bond Fund
 International Fund         Securities Fund             U.S.
 New World Fund             Cash Management Fund        Government/AAA-Rated
 Blue Chip and Income Fund                              Securities Fund
 Global Growth and Income                               Cash Management Fund
 Fund
 Growth-Income Fund
 International Growth and
 Income Fund
-------------------------------------------------------------------------------




                             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  . . . . . . . . . . . . . . . . . . . . .       27
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
<PAGE>


                 CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES

The following limitations and guidelines are considered at the time of purchase,
under normal circumstances, and are based on a percentage of each fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the funds' investment limitations.


GLOBAL DISCOVERY FUND

     General

     .    The fund seeks to achieve its objective by investing in securities of
          companies that can benefit from innovation, exploit new technologies
          or provide products and services that meet the demands of an evolving
          global economy. Current income is a secondary consideration.

     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. Debt securities rated Ba1 or below by Moody's and
          BB+ or below by S&P or unrated securities that are determined to be of
          equivalent quality are known as "junk bonds" or high yield securities
          ("high yield").

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.


                   American Funds Insurance Series -- Page 2
<PAGE>


GLOBAL SMALL CAPITALIZATION FUND

     Equity securities

     .    Normally, the fund invests at least 80% of its assets in equity
          securities of companies with small market capitalizations. The
          investment adviser currently defines "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 25% of its assets in securities of issuers
          domiciled outside the United States.

     Debt securities

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


NEW WORLD FUND

     General

     .    The fund invests primarily in stocks of companies with significant
          exposure to countries with developing economies and/or markets.

     .    The fund will invest at least 35% of its assets in equity and debt
          securities of issuers primarily based in qualified countries which
          have developing economies and/or markets.

     Equity securities

     .    The fund may invest the balance of its assets in equity securities of
          any company regardless of where it is based, provided the adviser has
          determined that a significant portion of its assets or revenues
          (generally 20% or more) is attributable to developing countries.

     Debt securities

     .    The fund may invest up to 25% of its assets in 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
<PAGE>


     .    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.

     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
<PAGE>


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.

     .    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
<PAGE>


     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
<PAGE>


     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 397
          days, even if their original maturity is greater than one year.


                   American Funds Insurance Series -- Page 8
<PAGE>


          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. Investment grade bonds in the ratings categories
A or Baa (Moody's) and A or BBB (S&P) may be more susceptible to changes in market
or economic conditions than bonds rated in the highest rating categories.


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


                   American Funds Insurance Series -- Page 9
<PAGE>



     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.

     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.


                   American Funds Insurance Series -- Page 10
<PAGE>


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 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. Investing outside the United States may


                   American Funds Insurance Series -- Page 11
<PAGE>



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.


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
such factors as where the company is legally organized and/or maintains
principal corporate offices and/or conducts their principal operations.


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.


                   American Funds Insurance Series -- Page 12
<PAGE>


     GOVERNMENT REGULATION -- The political, economic and social structures of
     certain developing countries may be more volatile and less developed than
     those in the United States. Certain developing countries lack uniform
     accounting, auditing and financial reporting standards, have less
     governmental supervision of financial markets than in the United States,
     and do not honor legal rights enjoyed in the United States. Certain
     governments may be more unstable and present greater risks of
     nationalization or restrictions on foreign ownership of local companies.

     Repatriation of investment income, capital and the proceeds of sales by
     foreign investors may require governmental registration and/or approval in
     some developing market countries. While the funds will only invest in
     markets where these restrictions are considered acceptable, a country could
     impose new or additional repatriation restrictions after the funds'
     investment. If this happened, the funds' response might include, among
     other things, applying to the appropriate authorities for a waiver of the
     restrictions or engaging in transactions in other markets designed to
     offset the risks of decline in that country. Such restrictions will be
     considered in relation to the funds' liquidity needs and all other positive
     and negative factors. Further, some attractive equity securities may not be
     available to the funds because foreign shareholders hold the maximum amount
     legally permissible.

     While government involvement in the private sector varies in degree among
     developing countries, such involvement may in some cases include government
     ownership of companies in certain sectors, wage and price controls or
     imposition of trade barriers and other protectionist measures. With respect
     to any developing country, there is no guarantee that some future economic
     or political crisis will not lead to price controls, forced mergers of
     companies, expropriation or creation of government monopolies to the
     possible detriment of the funds' investments.

     LESS DEVELOPED SECURITIES MARKETS -- Developing countries may have less
     well-developed securities markets and exchanges. The securities markets
     have lower trading 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


                   American Funds Insurance Series -- Page 13
<PAGE>


     uncertainties in the operation of settlement systems in individual markets,
     competing claims may arise with respect to securities held by or to be
     transferred to the funds.

     INVESTOR INFORMATION -- The funds may encounter problems assessing
     investment opportunities in certain developing securities markets in light
     of limitations on available information and different accounting, auditing
     and financial reporting standards. In such circumstances, the investment
     adviser will seek alternative sources of information, and to the extent the
     investment adviser is not satisfied with the sufficiency of the information
     obtained with respect to a particular market or security, the funds will
     not invest in such market or security.

     TAXATION -- Taxation of dividends and capital gains received by
     non-residents varies among developing countries and, in some cases, is
     comparatively high. In addition, developing countries typically have less
     well-defined tax laws and procedures and such laws may permit retroactive
     taxation so that the funds could in the future become subject to local tax
     liability that they had not reasonably anticipated in conducting their
     investment activities or valuing their assets.

     LITIGATION -- The funds and their shareholders may encounter substantial
     difficulties in obtaining and enforcing judgments against 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 (SEC).


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


                   American Funds Insurance Series -- Page 14
<PAGE>


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 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.


                   American Funds Insurance Series -- Page 15
<PAGE>



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.




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 Corporation
     (OPIC), the Commodity Credit Corporation (CCC) and the Small Business
     Administration (SBA).

OTHER FEDERAL AGENCY OBLIGATIONS -- Additional federal agency securities are
neither direct obligations of, nor guaranteed by, the U.S. government. These
obligations include securities issued by certain U.S. government agencies and
government-sponsored entities. However, they generally involve some form of
federal sponsorship: some operate under a government charter; some are backed by
specific types of collateral; some are supported by the issuer's right to borrow
from the Treasury; and others are supported only by the credit of the issuing
government agency or entity. These agencies and entities include, but are not
limited to: Federal Home Loan Bank, Federal Home Loan Mortgage Corporation
(Freddie Mac), Federal National Mortgage Association (Fannie Mae), Tennessee
Valley Authority and Federal Farm Credit Bank System.


                   American Funds Insurance Series -- Page 16
<PAGE>


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.



     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


                   American Funds Insurance Series -- Page 17
<PAGE>


     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, commercial mortgage-related
     securities often are structured with some form of credit enhancement to
     protect against potential losses on the underlying mortgage loans. Many of
     the risks of investing in commercial mortgage-backed securities reflect the
     risks of investing in the real estate securing the underlying mortgage
     loans, including the effects of local and other economic conditions on real
     estate markets, the ability of tenants to make 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.


                   American Funds Insurance Series -- Page 18
<PAGE>


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.


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.


                   American Funds Insurance Series -- Page 19
<PAGE>



Cash Management Fund may purchase corporate obligations that mature or that will
be redeemed in thirteen months 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.


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


                   American Funds Insurance Series -- Page 20
<PAGE>


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. 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 inability 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<


                   American Funds Insurance Series -- Page 21
<PAGE>



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 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.


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. Because the
security purchased constitutes collateral for the repurchase obligation, a
repurchase agreement may be considered a loan that is collateralized by the
security purchased. 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.


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


                   American Funds Insurance Series -- Page 22
<PAGE>


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.




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 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. It may
also result in the realization of net capital gains, which are taxable when
distributed to shareholders, unless the shareholder is exempt from taxation.


Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved. Transaction costs are
usually reflected in the spread between the bid and asked price.


                   American Funds Insurance Series -- Page 23
<PAGE>



A fund's portfolio turnover rate would equal 100% if each security in the fund's
portfolio was replaced once per year. The following table sets forth the
portfolio turnover rates for each applicable fund for fiscal year ended December
31, 2009 and 2008:





                                        FISCAL YEAR    PORTFOLIO TURNOVER RATE
-------------------------------------------------------------------------------

GLOBAL DISCOVERY FUND                       2009                 60%
                                            2008                 46
-------------------------------------------------------------------------------
GLOBAL GROWTH FUND                          2009                 43
                                            2008                 38
-------------------------------------------------------------------------------
GLOBAL SMALL CAPITALIZATION FUND            2009                 55
                                            2008                 47
-------------------------------------------------------------------------------
GROWTH FUND                                 2009                 37
                                            2008                 26
-------------------------------------------------------------------------------
INTERNATIONAL FUND                          2009                 46
                                            2008                 52
-------------------------------------------------------------------------------
NEW WORLD FUND                              2009                 25
                                            2008                 32
-------------------------------------------------------------------------------
BLUE CHIP INCOME AND GROWTH FUND            2009                 22
                                            2008                 24
-------------------------------------------------------------------------------
GLOBAL GROWTH AND INCOME FUND               2009                 47
                                            2008                 36
-------------------------------------------------------------------------------
GROWTH-INCOME FUND                          2009                 24
                                            2008                 31
-------------------------------------------------------------------------------
INTERNATIONAL GROWTH AND INCOME FUND        2009                 21
                                            2008                 --
-------------------------------------------------------------------------------
ASSET ALLOCATION FUND                       2009                 41
                                            2008                 36
-------------------------------------------------------------------------------
BOND FUND*                                  2009                125
                                            2008                 63
-------------------------------------------------------------------------------
GLOBAL BOND FUND*                           2009                 86
                                            2008                118
-------------------------------------------------------------------------------
HIGH-INCOME BOND FUND                       2009                 47
                                            2008                 29
-------------------------------------------------------------------------------
U.S. GOVERNMENT/AAA-RATED SECURITIES
FUND*                                       2009                100
                                            2008                108
-------------------------------------------------------------------------------




* The fund attempts to take prompt advantage of market conditions, and as a
  result, may at times have a high rate of portfolio turnover relative to many
  other mutual funds. However, high portfolio turnover is not a principal
  strategy of the fund.

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. In
managing a fund, a fund's investment adviser may apply more restrictive policies
than those listed below.


FUNDAMENTAL POLICIES -- The Series has adopted the following policies, which may
not be changed without approval by holders of a majority of its outstanding
shares. Such majority is currently 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.


The following policies apply to each fund in the Series (please also see
"Additional information about fundamental policies" below):

1.   Except as permitted by (i) the 1940 Act and the rules and regulations
thereunder, or other successor law governing the regulation of registered
investment companies, or interpretations or modifications thereof by the SEC,
SEC staff or other authority of competent jurisdiction, or (ii) exemptive or
other relief or permission from the SEC, SEC staff or other authority of
competent jurisdiction, a fund may not:

          a.  Borrow money;

          b.  Issue senior securities;

          c.  Underwrite the securities of other issuers;

          d.  Purchase or sell real estate or commodities;

          e.  Make loans; or

          f. Purchase the securities of any issuer if, as a result of such
          purchase, a funds' investments would be concentrated in any particular
          industry.

2.   The fund may not invest in companies for the purpose of exercising control
or management.

ADDITIONAL INFORMATION ABOUT FUNDAMENTAL POLICIES -- The information below is
not part of the Series' fundamental policies. This information is intended to
provide a summary of what is currently required or permitted by the 1940 Act and
the rules and regulations thereunder, or by the interpretive guidance thereof by
the SEC or SEC staff, for particular fundamental policies of the Series.


For purposes of fundamental policy 1a, a fund may borrow money in amounts of up
to 33-1/3% of its total assets from banks for any purpose, and may borrow up to
5% of its total assets from banks or other lender for temporary purposes.


                   American Funds Insurance Series -- Page 25
<PAGE>



For purposes of fundamental policy 1e, a fund may not lend more than 33-1/3% of
its total assets, except through the purchase of debt obligations.


For purposes of fundamental policy 1f, a fund may not invest 25% or more of its
total assets in the securities of issuers in the same industry, unless the fund
has adopted a policy allowing for such investments, and except that the Cash
Management Fund may invest without limitation in securities of the United States
government or its agencies or instrumentalities and obligations of U.S. banks,
including U.S. branches of banks based outside the United States (e.g.,
certificates of deposit, interest bearing time deposits, bank notes and banker's
acceptances). In evaluating and selecting such investments, the investment
adviser, on behalf of the fund, uses the criteria set forth under the headings
"Certain investment limitations and guidelines" and "Description of certain
securities and investment techniques" in this statement of additional
information.


                   American Funds Insurance Series -- Page 26
<PAGE>


                            MANAGEMENT OF THE SERIES

BOARD OF TRUSTEES AND OFFICERS


"INDEPENDENT" TRUSTEES/1/


The Series' nominating and governance committee and board select independent
trustees with a view toward constituting a board that, as a body, possesses the
qualifications, skills, attributes and experience to appropriately oversee the
actions of the Series' service providers, decide upon matters of general policy
and represent the long-term interests of fund shareholders. In doing so, they
consider the qualifications, skills, attributes and experience of the current
board members of the Series, with a view toward maintaining a board that is
diverse in viewpoint, experience, education and skills.


The Series seeks independent trustees who have high ethical standards and the
highest levels of integrity and commitment, who have inquiring and independent
minds, mature judgment, good communication skills, and other complementary
personal qualifications and skills that enable them to function effectively in
the context of the Series' board and committee structure and who have the
ability and willingness to dedicate sufficient time to effectively fulfill their
duties and responsibilities.


Each independent trustee has a significant record of accomplishments in
governance, business, not-for-profit organizations, government service,
academia, law, accounting or other professions. Although no single list could
identify all experience upon which the Series' independent trustees draw in
connection with their service, the following table summarizes key experience for
each independent trustee. These references to the qualifications, attributes and
skills of the trustees are pursuant to the disclosure requirements of the
Securities and Exchange Commission, and shall not be deemed to impose any
greater responsibility or liability on any trustee or the board as a whole.
Notwithstanding the accomplishments listed below, none of the independent
trustees is considered an "expert" within the meaning of the federal securities
laws with respect to information in the Series' registration statement.


                   American Funds Insurance Series -- Page 27
<PAGE>





                                                                             OTHER
 NAME, AGE AND                     PRINCIPAL            NUMBER OF        DIRECTORSHIPS
 POSITION WITH SERIES            OCCUPATION(S)        PORTFOLIOS/3/     HELD BY TRUSTEE
 (YEAR FIRST ELECTED AS A            DURING            OVERSEEN BY           DURING                OTHER RELEVANT
 TRUSTEE)/2/                    PAST FIVE YEARS          TRUSTEE       PAST FIVE YEARS/4/           INFORMATION
-----------------------------------------------------------------------------------------------------------------------

 Lee A. Ault III, 73         Private investor and          38         Anworth Mortgage        . Service as chief
 Trustee (1999)              corporate director;                      Asset Corporation;      executive officer,
                             former Chairman of the                   Office Depot, Inc.      payment services company
                             Board, In-Q-Tel, Inc.                                            . Corporate board
                             (technology venture                                              experience
                             company)                                                         . Service on board of
                                                                                              healthcare foundation


-----------------------------------------------------------------------------------------------------------------------
 William H. Baribault, 64    Chairman of the Board         38         Former Director of      . Service as chief
 Trustee (2009)              and CEO, Oakwood                         Henry Co. (until        executive officer for
                             Enterprises (private                     2009); Professional     multiple companies
                             investment and                           Business Bank (until    . Corporate board
                             consulting)                              2009)                   experience
                                                                                              . Service on advisory and
                                                                                              trustee boards for
                                                                                              charitable, educational
                                                                                              and non-profit
                                                                                              organizations
-----------------------------------------------------------------------------------------------------------------------
 James G. Ellis, 63          Dean and Professor of         41         Quiksilver, Inc.;       . Service as chief
 Trustee (2010)              Marketing, Marshall                      former Director of      executive officer for
                             School of Business,                      Genius Products         multiple companies
                             University of Southern                   (until 2008);           . Corporate board
                             California                               Professional Business   experience
                                                                      Bank (until 2007)       . Service on advisory and
                                                                                              trustee boards for
                                                                                              charitable, municipal and
                                                                                              non-profit organizations
                                                                                              . M.B.A.

-----------------------------------------------------------------------------------------------------------------------
 Martin Fenton, 74           Chairman of the Board,        41         Capital Private         . Service as chief
 Chairman of the Board       Senior Resource Group                    Client Services         executive officer of
 (Independent and            LLC (development and                     Funds                   multiple companies
 Non-Executive) (1995)       management of senior
                             living communities)


-----------------------------------------------------------------------------------------------------------------------
 Leonard R. Fuller, 63       President and CEO,            41         None                    . Former partner, public
 Trustee (1999)              Fuller Consulting                                                accounting firm
                             (financial management                                            . Financial management
                             consulting firm)                                                 consulting
                                                                                              .Service on advisory and
                                                                                              trustee boards for
                                                                                              municipal, educational
                                                                                              and non-profit
                                                                                              organizations
                                                                                              . M.B.A.



-----------------------------------------------------------------------------------------------------------------------
 W. Scott Hedrick, 64        Founding General              38         Hot Topic, Inc.;        . Corporate board
 Trustee (2007)              Partner, InterWest                       Office Depot, Inc.      experience
                             Partners (a venture                                              . Service on advisory and
                             capital firm)                                                    trustee boards for
                                                                                              charitable and non-profit
                                                                                              organizations
                                                                                              . M.B.A.

-----------------------------------------------------------------------------------------------------------------------
 R. Clark Hooper, 63         Private investor;             44         JPMorgan Value          . Senior regulatory and
 Trustee (2010)              former President,                        Opportunities Fund,     management experience,
                             Dumbarton Group LLC                      Inc.;                   National Association of
                             (securities industry                     The Swiss Helvetia      Securities Dealers (now
                             consulting); former                      Fund, Inc.              FINRA)
                             Executive Vice                                                   . Service on trustee boards
                             President- Policy                                                for charitable,
                             and Oversight, NASD                                              educational and
                                                                                              non-profit organizations


-----------------------------------------------------------------------------------------------------------------------
 Merit E. Janow, 51          Professor, Columbia           41         The NASDAQ Stock        . Service with Office of
 Trustee (2007)              University, School of                    Market LLC; Trimble     the U.S. Trade
                             International and                        Navigation Limited      Representative and U.S.
                             Public Affairs; former                                           Department of Justice
                             Member, World Trade                                              . Corporate board
                             Organization Appellate                                           experience
                             Body                                                             . Service on advisory and
                                                                                              trustee boards for
                                                                                              charitable, educational
                                                                                              and non-profit
                                                                                              organizations
                                                                                              . Experience
                                                                                              as corporate lawyer
                                                                                              .J.D.

-----------------------------------------------------------------------------------------------------------------------
 Laurel B. Mitchell,         Director, Accounting          38         None                    . Assistant professor,
 Ph.D., 54                   Program, University of                                           accounting
 Trustee (2010)              Redlands                                                         . Service in the Office of
                                                                                              Chief Accountant and
                                                                                              Enforcement Division of
                                                                                              the Securities and
                                                                                              Exchange Commission
                                                                                              . Experience in corporate
                                                                                              management and public
                                                                                              accounting
                                                                                              . Service on advisory and
                                                                                              trustee boards for
                                                                                              charitable, educational
                                                                                              and non-profit
                                                                                              organizations
                                                                                              . Ph.D., accounting
                                                                                              . Formerly licensed as
                                                                                              C.P.A.




-----------------------------------------------------------------------------------------------------------------------
 Frank M. Sanchez, 66        Principal, The Sanchez        38         None                    . Senior academic
 Trustee (2010)              Family Corporation dba                                           leadership position
                             McDonald's Restaurants                                           . Corporate board
                             (McDonald's licensee)                                            experience
                                                                                              . Service on advisory and
                                                                                              trustee boards for
                                                                                              charitable and non-profit
                                                                                              organization
                                                                                              . Ph.D., education
                                                                                              administration and
                                                                                              finance

-----------------------------------------------------------------------------------------------------------------------
 Margaret Spellings, 52      President and CEO,            38         None                    . Former senior advisor to
 Trustee (2010)              Margaret Spellings &                                             the Governor of Texas
                             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.,      President and                 41         None                    . Senior academic
 61                          Professor of                                                     leadership positions for
 Trustee (2010)              Anthropology, The                                                multiple universities
                             University of Tulsa                                              . Service on advisory and
                                                                                              trustee boards for
                                                                                              educational and
                                                                                              non-profit organizations
                                                                                              . Ph.D., anthropology


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





                   American Funds Insurance Series -- Page 28
<PAGE>

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                   American Funds Insurance Series -- Page 29
<PAGE>


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                   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/


Interested trustees have similar qualifications, skills and attributes as the
independent trustees. Interested trustees are senior executive officers of
Capital Research and Management Company or its affiliates. This management role
with the Series' service providers also permits them to make a significant
contribution to the Series' board.



                                              PRINCIPAL
                                            OCCUPATION(S)
                                             DURING PAST
                                             FIVE YEARS
                                            AND POSITIONS
                                              HELD WITH                               OTHER
 NAME,A GE AND                           AFFILIATED ENTITIES       NUMBER OF      DIRECTORSHIPS
 POSITION WITH SERIES                          OR THE            PORTFOLIOS/3/       HELD BY
 (YEAR FIRST ELECTED AS A               PRINCIPAL UNDERWRITER     OVERSEEN BY   TRUSTEE DURING THE   OTHER RELEVANT
 TRUSTEE/OFFICER)/2/                        OF THE SERIES           TRUSTEE     PAST FIVE YEARS/4/    INFORMATION
--------------------------------------------------------------------------------------------------------------------

 James K. Dunton, 72                   Senior Vice President -        17         None                None
 Vice Chairman of the Board (1993)     Capital Research Global
                                       Investors, Capital
                                       Research and Management
                                       Company; Director,
                                       Capital Research and
                                       Management Company
--------------------------------------------------------------------------------------------------------------------
 Donald D. O'Neal, 49                  Senior Vice President -        18         None                None
 President and Trustee (1998)          Capital Research Global
                                       Investors, Capital
                                       Research and Management
                                       Company; Director, The
                                       Capital Group
                                       Companies, Inc.*
--------------------------------------------------------------------------------------------------------------------



OTHER OFFICERS/6/



 NAME, AGE AND
 POSITION WITH SERIES         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, 55      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, 80     Senior Vice President - Fixed Income, Capital
 Senior Vice President      Research and Management Company; Director, Capital
 (1993)                     Research and Management Company
-------------------------------------------------------------------------------
 C. Ross Sappenfield, 44    Senior Vice President - Capital Research Global
 Senior Vice President      Investors, Capital Research Company*
 (2008)
-------------------------------------------------------------------------------
 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.*
-------------------------------------------------------------------------------
 S. Keiko McKibben, 41      Vice President - Capital Research Global Investors,
 Vice President (2010)      Capital Research Company*
-------------------------------------------------------------------------------
 Susan M. Tolson, 48        Senior Vice President - Fixed Income, Capital
 Vice President (1999)      Research and Management Company
-------------------------------------------------------------------------------
 Steven I. Koszalka, 46     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, 42        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 10 funds and is available through tax-deferred retirement plans
 and IRAs; and Endowments, which 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, 2009:




                                                                                 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           $50,001 -       Over $100,000        N/A/5/              N/A
                           $100,000
----------------------------------------------------------------------------------------------
 William H. Baribault        None              None             N/A/5/              N/A
----------------------------------------------------------------------------------------------
 James G. Ellis/4/           None          Over $100,000        N/A/5/              N/A
----------------------------------------------------------------------------------------------
 Martin Fenton             $10,001 -       Over $100,000        N/A/5/         Over $100,000
                            $50,000
----------------------------------------------------------------------------------------------
 Leonard R. Fuller           None            $50,001 -          N/A/5/         Over $100,000
                                             $100,000
----------------------------------------------------------------------------------------------
 W. Scott Hedrick            None              None             N/A/5/              N/A
----------------------------------------------------------------------------------------------
 R. Clark Hooper/4/          None          Over $100,000        N/A/5/         Over $100,000
----------------------------------------------------------------------------------------------
 Merit E. Janow              None          Over $100,000        N/A/5/              N/A
----------------------------------------------------------------------------------------------
 Laurel B.                   None        $10,001 - $50,000      N/A/5/              N/A
 Mitchell/4/
----------------------------------------------------------------------------------------------
 Frank M. Sanchez/4/         None        $10,001 - $50,000      N/A/5/              N/A
----------------------------------------------------------------------------------------------
 Margaret                    None              None             N/A/5/              N/A
 Spellings/4/
----------------------------------------------------------------------------------------------
 Steadman Upham/4/           None          Over $100,000        N/A/5/         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 James G. Ellis, R. Clark Hooper, Laurel B. Mitchell, Frank M. Sanchez,
 Margaret Spellings and Steadman Upham were newly elected to the board effective
 January 1, 2010.
5 The funds in the Series are not available for investment in the independent
 trustees deferred compensation plan.

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, 2009:




                                                                                                              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                                                                       $164,048                    $172,164
------------------------------------------------------------------------------------------------------------------------------------
 William H. Baribault                                                                    98,900                     105,089
------------------------------------------------------------------------------------------------------------------------------------
 James G. Ellis/3/                                                                         None                     222,278
------------------------------------------------------------------------------------------------------------------------------------
 Martin Fenton/4/                                                                       104,635                     422,629
------------------------------------------------------------------------------------------------------------------------------------
 Leonard R. Fuller/4/                                                                   112,440                     354,152
------------------------------------------------------------------------------------------------------------------------------------
 W. Scott Hedrick                                                                       134,044                     141,000
------------------------------------------------------------------------------------------------------------------------------------
 R. Clark Hooper/3/                                                                        None                     383,220
------------------------------------------------------------------------------------------------------------------------------------
 Merit E. Janow                                                                         119,505                     226,500
------------------------------------------------------------------------------------------------------------------------------------
 Laurel B. Mitchell/3/                                                                     None                     120,580
------------------------------------------------------------------------------------------------------------------------------------
 Frank M. Sanchez/3/                                                                       None                     150,282
------------------------------------------------------------------------------------------------------------------------------------
 Margaret Spellings/3/                                                                     None                      80,794
------------------------------------------------------------------------------------------------------------------------------------
 Steadman Upham/3/                                                                         None                     237,778
------------------------------------------------------------------------------------------------------------------------------------




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, 2009 does not include earnings on amounts deferred in
 previous fiscal years. See footnote 4 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 10 funds and is available through tax-deferred retirement plans
 and IRAs; and Endowments, which is available to certain nonprofit
 organizations.
3 James G. Ellis, R. Clark Hooper, Laurel B. Mitchell, Frank M. Sanchez,
 Margaret Spellings and Steadman Upham were newly elected to the board effective
 January 1, 2010.
4 Since the deferred compensation plan's adoption, the total amount of deferred
 compensation accrued by the Series (plus earnings thereon) through the 2009
 fiscal year for participating trustees is as follows: Martin Fenton ($436,406)
 and Leonard R. Fuller ($39,551). 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 may 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 for the Series dated August 28, 2009, which is 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 Class 1 and Class 2 shares. In addition, Growth Fund,
International Fund, Growth-Income Fund, Asset Allocation Fund, High-Income Bond
Fund, U.S. Government/AAA-Rated Securities Fund  and Cash Management Fund have
Class 3 shares. 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.


LEADERSHIP STRUCTURE -- The board's chair is currently an independent trustee
who is not an "interested person" of the Series within the meaning of the 1940
Act. The board has determined that an independent chair facilitates oversight
and enhances the effectiveness of the board. The independent chair's duties
include, without limitation, generally presiding at meetings of the board,
approving board meeting schedules and agendas, leading meetings of the
independent trustees in executive session, facilitating communication with
committee chairs, and serving as the principal independent trustee contact for
Series management and independent fund counsel.


                   American Funds Insurance Series -- Page 37
<PAGE>



RISK OVERSIGHT -- Day-to-day management of the Series and the funds, including
risk management, is the responsibility of the Series' contractual service
providers, including the Series' investment adviser, principal
underwriter/distributor and transfer agent. Each of these entities is
responsible for specific portions of the Series' operations, including the
processes and associated risks relating to the funds' investments, integrity of
cash movements, financial reporting, operations and compliance. The board of
trustees oversees the service providers' discharge of their responsibilities,
including the processes they use to manage relevant risks. In that regard, the
board receives reports regarding Series service providers' operations, including
risks. For example, the board receives reports from investment professionals
regarding risks related to the funds' investments and trading. The board also
receives compliance reports from the Series' and the investment adviser's chief
compliance officers addressing certain areas of risk.


Committees of the Series' board, as well as joint committees of independent
board members of funds managed by Capital Research and Management Company, also
explore risk management procedures in particular areas and then report back to
the full board. For example, the Series' audit committee oversees the processes
and certain attendant risks relating to financial reporting, valuation of fund
assets, and related controls.


Not all risks that may affect the Series can be identified or processes and
controls developed to eliminate or mitigate their effect. Moreover, it is
necessary to bear certain risks (such as investment-related risks) to achieve
each fund's objectives. As a result of the foregoing and other factors, the
ability of the Series' service providers to eliminate or mitigate risks is
subject to limitations.


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 2009 fiscal year.


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 2009 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


                   American Funds Insurance Series -- Page 38
<PAGE>



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 committee meetings were held during
the 2009 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 Series' board.
Therefore, if more than one fund invests in the same company, they may vote
differently on the same proposal. In addition, the Series' board monitors 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 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 funds 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


                   American Funds Insurance Series -- Page 39
<PAGE>



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.

     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 Series to own beneficially 5% or more of any
class of a fund's shares as of the opening of business on April 1, 2010. Unless
otherwise indicated, the ownership percentages below represent ownership of
record rather than beneficial ownership.


                   American Funds Insurance Series -- Page 40
<PAGE>


GLOBAL DISCOVERY



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

 Lincoln Life Insurance Company          Record      Class 1        52.70%
 Omnibus Account                                     Class 2        93.37
 Fort Wayne, IN
----------------------------------------------------------------------------
 Capital Research & Management           Record      Class 1        47.30
 Company
 Corporate Account
 Irvine, CA
----------------------------------------------------------------------------
 Lincoln Life & Annuity of New York      Record      Class 2         6.63
 Omnibus Account
 Fort Wayne, IN
----------------------------------------------------------------------------



GLOBAL GROWTH



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

 John Hancock Life Insurance Co. USA        Record      Class 1        33.21%
 JHT Global Diversification
 Boston, MA
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA        Record      Class 1        18.76
 American Global Growth
 Boston, MA
-------------------------------------------------------------------------------
 SAST                                       Record      Class 1        16.34
 Global Growth Portfolio
 Los Angeles, CA
-------------------------------------------------------------------------------
 Lincoln Life Insurance Company             Record      Class 1        13.37
 Omnibus Account                                        Class 2        46.90
 Fort Wayne, IN
-------------------------------------------------------------------------------
 Nationwide Variable Insurance Trust        Record      Class 1        12.63
 Omnibus Account
 Conshohocken, PA
-------------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.          Record      Class 2        17.66
 Omnibus Account
 Los Angeles, CA
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2        16.51
 Company
 Omnibus Account
 Hartford, CT
-------------------------------------------------------------------------------
 MetLife Insurance Co. of Connecticut       Record      Class 2         6.85
 Omnibus Account
 Boston, MA
-------------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 41
<PAGE>


GLOBAL SMALL CAPITALIZATION FUND



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

 Lincoln Life Insurance Company             Record      Class 1        22.36%
 Omnibus Account                                        Class 2        43.83
 Fort Wayne, IN
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA        Record      Class 1        20.59
 JHT Global Diversification
 Boston, MA
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA        Record      Class 1        16.84
 American Global Small Capitalization
 Boston, MA
-------------------------------------------------------------------------------
 Met Investors Series Trust                 Record      Class 1        13.24
 AFS Growth Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Met Investors Series Trust                 Record      Class 1        11.49
 AFS Balanced Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Hartford Series Funds, Inc.                Record      Class 1        10.31
 AFS Global Small Capitalization HLS
 Fund
 Woodbury, MN
-------------------------------------------------------------------------------
 Metropolitan Life Insurance Company        Record      Class 2        22.29
 Omnibus Account
 Irvine, CA
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2        16.93
 Company
 Omnibus Account
 Hartford, CT
-------------------------------------------------------------------------------





GROWTH FUND



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

 Lincoln Life Insurance Company            Record      Class 1         25.56%
 Omnibus Account                                       Class 2         41.79
 Fort Wayne, IN
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA       Record      Class 1         19.12
 Omnibus Account
 Boston, MA
-------------------------------------------------------------------------------
 Pacific Life                              Record      Class 1         13.73
 Pacific Select Fund
 Kansas City, MO
-------------------------------------------------------------------------------
 Met Investors Series Trust                Record      Class 1          9.13
 AFS Growth Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Met Investors Series Trust                Record      Class 1          7.39
 AFS Balanced Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Met Investors Series Trust                Record      Class 1          6.28
 AFS Growth Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance       Record      Class 2         17.98
 Company
 Omnibus Account
 Hartford, CT
-------------------------------------------------------------------------------
 ING                                       Record      Class 2         11.89
 Growth Portfolio
 Scottsdale, AZ
-------------------------------------------------------------------------------
 Metropolitan Life Insurance Company       Record      Class 2          6.30
 Omnibus Account
 Irvine, CA
-------------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.         Record      Class 3        100.00
 Omnibus Account
 Los Angeles, CA
-------------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 42
<PAGE>


INTERNATIONAL FUND



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

 Lincoln Life Insurance Company            Record      Class 1         32.08%
 Omnibus Account                                       Class 2         48.82
 Fort Wayne, IN
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA       Record      Class 1         29.28
 Omnibus Account
 Boston, MA
-------------------------------------------------------------------------------
 Met Investors Series Trust                Record      Class 1          8.04
 AFS International Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Hartford Series Funds, Inc.               Record      Class 1          7.18
 AFS International HLS Fund
 Woodbury, MN
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA       Record      Class 1          5.33
 JHT Fundamental Holding
 Boston, MA
-------------------------------------------------------------------------------
 ING                                       Record      Class 2         21.92
 International Portfolio
 Scottsdale, AZ
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance       Record      Class 2         16.96
 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 43
<PAGE>


NEW WORLD FUND



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

 Lincoln Life Insurance Company             Record      Class 1        19.72%
 Omnibus Account                                        Class 2        58.91
 Fort Wayne, IN
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA        Record      Class 1        16.25
 JHT Global Diversification
 Boston, MA
-------------------------------------------------------------------------------
 Met Investors Series Trust                 Record      Class 1        15.86
 AFS Growth Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA        Record      Class 1        15.62
 American New World
 Boston, MA
-------------------------------------------------------------------------------
 Met Investors Series Trust                 Record      Class 1        13.78
 AFS Balanced Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Hartford Series Funds, Inc.                Record      Class 1        11.76
 AFS New World HLS Fund
 Woodbury, MN
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2        30.84
 Company
 Omnibus Account #1
 Hartford, CT
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2         7.30
 Company
 Omnibus Account #2
 Hartford, CT
-------------------------------------------------------------------------------



BLUE CHIP INCOME AND GROWTH FUND



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

 John Hancock Life Insurance Co. USA        Record      Class 1        53.41%
 Omnibus Account
 Boston, MA
-------------------------------------------------------------------------------
 Lincoln Life Insurance Company             Record      Class 1        22.51
 Omnibus Account                                        Class 2        68.18
 Fort Wayne, IN
-------------------------------------------------------------------------------
 MML                                        Record      Class 1        14.83
 American Funds Core Allocation Fund
 Springfield, MA
-------------------------------------------------------------------------------
 Hartford Series Funds, Inc.                Record      Class 1         6.73
 AFS Blue Chip Income & Growth HLS Fund
 Woodbury, MN
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2        24.91
 Company
 Omnibus Account
 Hartford, CT
-------------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 44
<PAGE>


GLOBAL GROWTH AND INCOME FUND



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

 Hartford Series Funds, Inc.                Record      Class 1        54.44%
 AFS Global Growth & Income HLS Fund
 Woodbury, MN
-------------------------------------------------------------------------------
 Lincoln Life Insurance Company             Record      Class 1        45.56
 Omnibus Account                                        Class 2        63.62
 Fort Wayne, IN
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2        28.40
 Company
 Omnibus Account #1
 Hartford, CT
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2         5.71
 Company
 Omnibus Account #2
 Hartford, CT
-------------------------------------------------------------------------------



GROWTH-INCOME FUND



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

 Lincoln Life Insurance Company            Record      Class 1        22.30%
 Omnibus Account                                       Class 2        46.13
 Fort Wayne, IN
-------------------------------------------------------------------------------
 Pacific Life                              Record      Class 1        17.81
 Pacific Select Fund
 Kansas City, MO
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA       Record      Class 1        14.88
 Omnibus Account
 Boston, MA
-------------------------------------------------------------------------------
 Met Investors Series Trust                Record      Class 1        11.02
 AFS Balanced Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Met Investors Series Trust                Record      Class 1        10.99
 AFS Growth Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Met Investors Series Trust                Record      Class 1         7.51
 AFS Moderate Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Nationwide Variable Insurance Trust       Record      Class 1         6.64
 Omnibus Account
 Conshohocken, PA
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance       Record      Class 2        20.19
 Company
 Omnibus Account
 Hartford, CT
-------------------------------------------------------------------------------
 ING                                       Record      Class 2         8.80
 Growth-Income Portfolio
 Scottsdale, AZ
-------------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.         Record      Class 2         6.01
 Omnibus Account                                       Class 3        100.00
 Los Angeles, CA
-------------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 45
<PAGE>


INTERNATIONAL GROWTH AND INCOME FUND



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

 Capital Research & Management           Record      Class 1        53.28%
 Company
 Corporate Account
 Irvine, CA
----------------------------------------------------------------------------
 Lincoln Life Insurance Company          Record      Class 1        46.72
 Omnibus Account                                     Class 2        96.15
 Fort Wayne, IN
----------------------------------------------------------------------------



ASSET ALLOCATION FUND



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

 John Hancock Life Insurance Co. USA       Record      Class 1        40.07%
 American Asset Allocation
 Boston, MA
-------------------------------------------------------------------------------
 Nationwide Variable Insurance Trust       Record      Class 1        33.93
 Omnibus Account
 Conshohocken, PA
-------------------------------------------------------------------------------
 Lincoln Life Insurance Company            Record      Class 1        12.24
 Omnibus Account                                       Class 2        56.30
 Fort Wayne, IN
-------------------------------------------------------------------------------
 ING                                       Record      Class 1         7.51
 Asset Allocation Portfolio
 Scottsdale, AZ
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance       Record      Class 2        25.31
 Company
 Omnibus Account #1
 Hartford, CT
-------------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.         Record      Class 2         8.43
 Omnibus Account                                       Class 3        100.00
 Los Angeles, CA
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance       Record      Class 2         6.10
 Company
 Omnibus Account #2
 Hartford, CT
-------------------------------------------------------------------------------




                   American Funds Insurance Series -- Page 46
<PAGE>


BOND FUND



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

 John Hancock Life Insurance Co. USA        Record      Class 1        23.35%
 Omnibus Account
 Boston, MA
-------------------------------------------------------------------------------
 Nationwide Variable Insurance Trust        Record      Class 1        15.36
 Omnibus Account
 Conshohocken, PA
-------------------------------------------------------------------------------
 ING                                        Record      Class 1        12.94
 Bond Portfolio
 Scottsdale, AZ
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA        Record      Class 1        11.36
 JHT Fundamental Holding
 Boston, MA
-------------------------------------------------------------------------------
 Met Investors Series Trust                 Record      Class 1         6.60
 AFS Moderate Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Lincoln Life Insurance Company             Record      Class 1         5.93
 Omnibus Account                                        Class 2        56.45
 Fort Wayne, IN
-------------------------------------------------------------------------------
 Met Investors Series Trust                 Record      Class 1         5.76
 AFS Bond Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA        Record      Class 1         5.73
 JHT Global Diversification
 Boston, MA
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2        27.04
 Company
 Omnibus Account #1
 Hartford, CT
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2         7.24
 Company
 Omnibus Account #2
 Hartford, CT
-------------------------------------------------------------------------------



GLOBAL BOND FUND



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

 Lincoln Life Insurance Company             Record      Class 1        32.23%
 Omnibus Account                                        Class 2        67.08
 Fort Wayne, IN
-------------------------------------------------------------------------------
 Met Investors Series Trust                 Record      Class 1        25.26
 AFS Balanced Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Hartford Series Funds, Inc.                Record      Class 1        21.76
 AFS Global Bond HLS Fund
 Woodbury, MN
-------------------------------------------------------------------------------
 Met Investors Series Trust                 Record      Class 1        10.89
 AFS Growth Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Met Investors Series Trust                 Record      Class 1         9.87
 AFS Moderate Allocation Portfolio
 Irvine, CA
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2        23.80
 Company
 Omnibus Account #1
 Hartford, CT
-------------------------------------------------------------------------------
 Hartford Life and Annuity Insurance        Record      Class 2         6.91
 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         29.16%
 Omnibus Account                                    Class 2         96.37
 Fort Wayne, IN
----------------------------------------------------------------------------
 Met Investors Series Trust             Record      Class 1         21.16
 AFS Moderate Allocation Portfolio
 Irvine, CA
----------------------------------------------------------------------------
 Met Investors Series Trust             Record      Class 1         20.30
 AFS Balanced Allocation Portfolio
 Irvine, CA
----------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA    Record      Class 1         12.22
 American Asset High-Yield Bond
 Boston, MA
----------------------------------------------------------------------------
 John Hancock Life Insurance Co. USA    Record      Class 1          9.64
 JHT Global Diversification
 Boston, MA
----------------------------------------------------------------------------
 Met Investors Series Trust             Record      Class 1          5.84
 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>


U.S. GOVERNMENT/AAA-RATED SECURITIES FUND



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

 Met Investors Series Trust               Record      Class 1         37.15%
 AFS Moderate Allocation Portfolio
 Irvine, CA
------------------------------------------------------------------------------
 Met Investors Series Trust               Record      Class 1         25.75
 AFS Balanced Allocation Portfolio
 Irvine, CA
------------------------------------------------------------------------------
 Lincoln Life Insurance Company           Record      Class 1         21.18
 Omnibus Account                                      Class 2         96.36
 Fort Wayne, IN
------------------------------------------------------------------------------
 Met Investors Series Trust               Record      Class 1          8.54
 AFS Growth Allocation Portfolio
 Irvine, CA
------------------------------------------------------------------------------
 AIG Sunamerica Life Assurance Co.        Record      Class 3        100.00
 Omnibus Account
 Los Angeles, CA
------------------------------------------------------------------------------



CASH MANAGEMENT FUND



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

 Lincoln Life Insurance Company         Record      Class 1         94.83%
 Omnibus Account                                    Class 2         94.10
 Fort Wayne, IN
----------------------------------------------------------------------------
 Paragon Life Insurance                 Record      Class 1          5.17
 Omnibus Account
 Saint Louis, MO
----------------------------------------------------------------------------
 Lincoln Life & Annuity of New York     Record      Class 2          5.90
 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.


                   American Funds Insurance Series -- Page 49
<PAGE>


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.


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;


                   American Funds Insurance Series -- Page 50
<PAGE>


     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;

     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


                   American Funds Insurance Series -- Page 51
<PAGE>


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       $ 66.0        None              None
--------------------------------------------------------------------------------
 Donald D. O'Neal           2       $217.9      1      $0.10        None
--------------------------------------------------------------------------------
 Alan N. Berro              3       $104.3        None              None
--------------------------------------------------------------------------------
 Abner D. Goldstine         2       $ 80.6        None              None
--------------------------------------------------------------------------------
 C. Ross Sappenfield        2       $ 81.6      1      $0.10        None
--------------------------------------------------------------------------------
 John H. Smet               6       $173.9        None              None
--------------------------------------------------------------------------------
 Carl M. Kawaja             4       $163.8      1      $0.94        None
--------------------------------------------------------------------------------
 Sung Lee                   2       $182.1        None              None
--------------------------------------------------------------------------------
 Robert W. Lovelace         3       $160.3      1      $0.94        None
--------------------------------------------------------------------------------
 David C. Barclay           4       $136.6      3      $0.66     16       $7.81
--------------------------------------------------------------------------------
 Donnalisa Parks            1       $156.2        None              None
 Barnum
--------------------------------------------------------------------------------
 Christopher D.                None               None              None
 Buchbinder
--------------------------------------------------------------------------------
 Gordon Crawford            3       $181.7        None              None
--------------------------------------------------------------------------------
 David A. Daigle            1       $ 15.6        None              None
--------------------------------------------------------------------------------
 Mark H. Dalzell            2       $ 50.4      2      $0.17    11/4/     $3.66
--------------------------------------------------------------------------------
 Mark E. Denning            5       $224.0      1      $0.13        None
--------------------------------------------------------------------------------
 J. Blair Frank             2       $174.4        None              None
--------------------------------------------------------------------------------
 David A. Hoag              4       $130.8        None              None
--------------------------------------------------------------------------------
 Thomas H. Hogh             3       $ 57.5      1      $0.18    4/5/      $0.43
--------------------------------------------------------------------------------
 Claudia P.                 3       $ 45.4        None              None
 Huntington
--------------------------------------------------------------------------------
 Gregg E. Ireland           2       $200.0      1      $0.08        None
--------------------------------------------------------------------------------
 Gregory D. Johnson         3       $ 98.2        None              None
--------------------------------------------------------------------------------
 Michael T. Kerr            2       $201.3        None              None
--------------------------------------------------------------------------------
 Harold H. La               1       $  7.3        None              None
--------------------------------------------------------------------------------
 Jeffrey T. Lager              None               None              None
--------------------------------------------------------------------------------
 Marcus B. Linden           1       $ 15.6        None              None
--------------------------------------------------------------------------------
 James B. Lovelace          4       $163.2        None              None
--------------------------------------------------------------------------------
 Jesper Lyckeus             2       $182.1      1      $0.13        None
--------------------------------------------------------------------------------
 Fergus N. MacDonald        1       $  7.1        None              None
--------------------------------------------------------------------------------
 Ronald B. Morrow           3       $251.5        None              None
--------------------------------------------------------------------------------
 James R. Mulally           3       $123.7      1      $0.03        None
--------------------------------------------------------------------------------
 Wesley K.-S. Phoa          1       $  7.1      3      $0.28      9       $3.45
--------------------------------------------------------------------------------
 David M. Riley             2       $161.5        None              None
--------------------------------------------------------------------------------
 Eugene P. Stein            1       $ 50.2        None              None
--------------------------------------------------------------------------------
 Andrew B. Suzman           2       $ 68.5      1      $0.08        None
--------------------------------------------------------------------------------
 Christopher M.             1       $ 16.4        None              None
 Thomsen
--------------------------------------------------------------------------------
 Steven T. Watson           3       $112.3        None              None
--------------------------------------------------------------------------------
 Paul A. White                 None               None              None
--------------------------------------------------------------------------------
 Dylan J. Yolles               None               None              None
--------------------------------------------------------------------------------





                   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 $0.22 billion in total
 assets) is based partially on its investment results.
5 The advisory fee of one of these accounts (representing $0.10 billion in total
 assets) is based partially on its investment results.


                   American Funds Insurance Series -- Page 53
<PAGE>



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, 2010, unless sooner
terminated, and may be renewed from year to year thereafter, provided that any
such renewal has been specifically approved at least annually by (a) the Board
of trustees, or by the vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the applicable Series, and (b) the vote of a
majority of trustees who are not parties to the Agreements or interested persons
(as defined in the 1940 Act) of any such party, cast in person at a meeting
called for the purpose of voting on such approval. The Agreements provide that
the investment adviser has no liability to the Series for its acts or omissions
in the performance of its obligations to the Series not involving willful
misconduct, bad faith, gross negligence or reckless disregard of its obligations
under the Agreements. The Agreements also provide that either party has the
right to terminate them, without penalty, upon 60 days' written 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 Agreements
provide 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


                   American Funds Insurance Series -- Page 54
<PAGE>


$1.0 billion but not exceeding $1.5 billion, plus 0.50% on net assets greater
than $1.5 billion but not exceeding $2.5 billion, plus 0.48% on net assets
greater than $2.5 billion but not exceeding $4.0 billion, plus 0.47% on net
assets greater than $4.0 billion but not exceeding $6.5 billion, plus 0.46% on
net assets greater than $6.5 billion but not exceeding $10.5 billion, plus 0.45%
on net assets greater than $10.5 billion but not exceeding $17.0 billion, plus
0.44% on net assets greater than $17.0 billion but not exceeding $21.0 billion,
plus 0.43% on net assets in excess of $21.0 billion;


New World Fund: 0.85% on the first $500 million of net assets, plus 0.77% on net
assets greater than $500 million but not exceeding $1.0 billion, plus 0.71% on
net assets 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


                   American Funds Insurance Series -- Page 55
<PAGE>


0.34% on net assets greater than $5.0 billion but not exceeding $8.0 billion,
plus 0.33% on net assets in excess of $8.0 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;


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 greater than $2.0 billion but
not exceeding $3.0 billion, plus 0.33% on net assets in excess of $3.0 billion;
and


Cash Management Fund: 0.32% on the first $1.0 billion of net assets, plus 0.29%
on net assets greater than $1.0 billion but not exceeding $2.0 billion, plus
0.27% on net assets in excess of $2.0 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.


                   American Funds Insurance Series -- Page 56
<PAGE>



The investment adviser's total fees for the fiscal years ended December 31,
2009, 2008 and 2007 were:




                                                FISCAL YEAR ENDED
                                     ------------------------------------------
                                         2009          2008           2007
-------------------------------------------------------------------------------

GLOBAL DISCOVERY FUND                $ 1,063,000   $ 1,310,000    $ 1,306,000
-------------------------------------------------------------------------------
GLOBAL GROWTH FUND                    23,377,000    27,394,000     26,735,000
-------------------------------------------------------------------------------
GLOBAL SMALL CAPITALIZATION FUND      18,901,000    23,424,000     27,298,000
-------------------------------------------------------------------------------
GROWTH FUND                           69,008,000    83,525,000     93,790,000
-------------------------------------------------------------------------------
INTERNATIONAL FUND                    38,935,000    46,787,000     50,363,000
-------------------------------------------------------------------------------
NEW WORLD FUND                        12,223,000    13,849,000     12,656,000
-------------------------------------------------------------------------------
BLUE CHIP INCOME AND GROWTH FUND      13,233,000    15,618,000     18,332,000
-------------------------------------------------------------------------------
GLOBAL GROWTH AND INCOME FUND         10,803,000    12,322,000      9,447,000
-------------------------------------------------------------------------------
GROWTH-INCOME FUND                    56,835,000    65,897,000     75,627,000
-------------------------------------------------------------------------------
INTERNATIONAL GROWTH AND INCOME          417,000        10,000            N/A
FUND
-------------------------------------------------------------------------------
ASSET ALLOCATION FUND                 25,476,000    26,361,000     26,249,000
-------------------------------------------------------------------------------
BOND FUND                             26,317,000    21,584,000     17,355,000
-------------------------------------------------------------------------------
GLOBAL BOND FUND                       5,945,000     4,382,000        776,000
-------------------------------------------------------------------------------
HIGH-INCOME BOND FUND                  6,760,000     6,092,000      6,066,000
-------------------------------------------------------------------------------
U.S. GOVERNMENT/AAA-RATED              8,397,000     5,079,000      3,222,000
SECURITIES FUND
-------------------------------------------------------------------------------
CASH MANAGEMENT FUND                   3,299,000     2,746,000      1,566,000
-------------------------------------------------------------------------------




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.





                   American Funds Insurance Series -- Page 57
<PAGE>



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






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

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





1 Includes waivers resulting from the investment adviser voluntarily reducing
 management fees to rates provided by amended Agreements.
2 For the period ended December 31, 2009, the investment adviser voluntarily
 reduced management fees for Bond Fund by $6,000 to the rates provided by its
 amended Agreement.

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


                   American Funds Insurance Series -- Page 58
<PAGE>


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, 2009, the Series incurred distribution expenses for Class 2 shares
of $148,249,000 and Class 3 shares of $1,053,000, payable to certain life
insurance companies under the Plan. Accrued and unpaid distribution expenses
were $14,676,000 for Class 2 shares and $96,000 for Class 3 shares.


COMPENSATION TO INSURANCE COMPANIES -- American Funds Distributors, Inc., at its
expense, currently makes payments to certain of the insurance companies listed
below that use the Series as the underlying investment in insurance contracts.
These payments generally cover expenses associated with education and training
meetings sponsored by American Funds Distributors, Inc. for insurance company
sales forces.


     AEGON, N.V.
     AIG SunAmerica Life Assurance Company

     Great-West Life & Annuity Insurance Company
     Hartford Life Insurance Company
     ING Life Insurance and Annuity Company

     Jackson National Life Insurance Company
     John Hancock Life Insurance Company (U.S.A.)
     The Lincoln National Life Insurance Company
     Massachusetts Mutual Life Insurance Company

     Metropolitan Life Insurance Company
     Nationwide Mutual Insurance Company
     New York Life Insurance and Annuity Corporation
     Pacific Life Insurance Company

     Protective Life Insurance Company
     Sun Life Assurance Company (U.S.A.)
     Travelers Insurance Company

     Transamerica Financial Life 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, 2009, 2008, and 2007 were:




                                                      FISCAL YEAR ENDED
                                           ------------------------------------------
                                               2009          2008           2007
-------------------------------------------------------------------------------------

GLOBAL DISCOVERY FUND                      $   198,000   $   186,000    $   222,000
-------------------------------------------------------------------------------------
GLOBAL GROWTH FUND                           4,054,000     5,006,000      4,883,000
-------------------------------------------------------------------------------------
GLOBAL SMALL CAPITALIZATION FUND             4,376,000     5,932,000      5,937,000
GROWTH FUND                                 13,528,000    12,525,000     15,510,000
-------------------------------------------------------------------------------------
INTERNATIONAL FUND                           7,385,000    11,069,000     12,067,000
-------------------------------------------------------------------------------------
NEW WORLD FUND                               1,400,000     1,746,000      2,110,000
-------------------------------------------------------------------------------------
BLUE CHIP INCOME AND GROWTH FUND             1,605,000     1,770,000      2,154,000
-------------------------------------------------------------------------------------
GLOBAL GROWTH AND INCOME FUND                2,088,000     2,785,000      2,034,000
-------------------------------------------------------------------------------------
GROWTH-INCOME FUND                           9,541,000    13,650,000     12,227,000
-------------------------------------------------------------------------------------
INTERNATIONAL GROWTH AND INCOME FUND           109,000         5,000            N/A
-------------------------------------------------------------------------------------
ASSET ALLOCATION FUND                        4,113,000     4,896,000      1,994,000
-------------------------------------------------------------------------------------
BOND FUND                                      199,000         2,000              0
-------------------------------------------------------------------------------------
GLOBAL BOND FUND                                10,000             0            N/A
-------------------------------------------------------------------------------------
HIGH-INCOME BOND FUND                           28,000         2,000          2,000
-------------------------------------------------------------------------------------




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


                   American Funds Insurance Series -- Page 62
<PAGE>



Bond Fund and High-Income Bond Fund increased during the year, resulting in an
increase in brokerage commissions paid on portfolio transactions.


The Series is required to disclose information regarding investments in the
securities of its "regular" broker-dealers (or parent companies of 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,
Goldman Sachs & Co.,  Morgan Stanley 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       UBS AG                    equity      $    653,000
                            ---------------------------------------------------
                            Credit Suisse Group AG    equity         5,756,000
-------------------------------------------------------------------------------
Global Growth Fund          UBS AG                    equity        54,781,000
                            ---------------------------------------------------
                            Citigroup Inc.            equity         6,620,000
-------------------------------------------------------------------------------
Growth Fund                 Goldman Sachs Group,      equity       135,072,000
                            Inc.
                            ---------------------------------------------------
                            Citigroup Inc.            equity       155,736,000
                            ---------------------------------------------------
                            Morgan Stanley            equity        88,800,000
-------------------------------------------------------------------------------
International Fund          Credit Suisse Group AG    equity       173,005,000
                            ---------------------------------------------------
                            UBS AG                    equity        53,139,000
-------------------------------------------------------------------------------
Global Growth and Income    Citigroup Inc.            equity         3,310,000
Fund
                            ---------------------------------------------------
                            UBS AG                    equity         3,376,000
-------------------------------------------------------------------------------
Growth-Income Fund          Citigroup Inc.            equity       219,972,000
                            ---------------------------------------------------
                            Credit Suisse Group AG    equity        77,238,000
                            ---------------------------------------------------
                            UBS AG                    equity       115,615,000
-------------------------------------------------------------------------------
International Growth and    Credit Suisse Group AG    equity           138,000
Income Fund
                            ---------------------------------------------------
                            UBS AG                    equity           775,000
-------------------------------------------------------------------------------
Asset Allocation Fund       Citigroup Inc.            equity         2,540,000
                            ---------------------------------------------------
                            Citigroup Inc.             debt         11,879,000
                            ---------------------------------------------------
                            Goldman Sachs Group,       debt          5,645,000
                            Inc.
                            ---------------------------------------------------
                            Morgan Stanley             debt          4,305,000
-------------------------------------------------------------------------------
Bond Fund                   Citigroup Inc.             debt         35,013,000
                            ---------------------------------------------------
                            Goldman Sachs Group,       debt         16,684,000
                            Inc.
                            ---------------------------------------------------
                            Morgan Stanley             debt         23,680,000
-------------------------------------------------------------------------------
Global Bond Fund            Citigroup Inc.            equity           168,000
                            ---------------------------------------------------
                            Citigroup Inc.             debt          1,889,000
                            ---------------------------------------------------
                            Goldman Sachs Group,       debt          3,316,000
                            Inc.
                            ---------------------------------------------------
                            Morgan Stanley             debt          1,076,000
-------------------------------------------------------------------------------
High-Income Bond Fund       Citigroup Inc.            equity         5,042,000
                            ---------------------------------------------------
                            Citigroup Inc.             debt          1,689,000
-------------------------------------------------------------------------------
U.S. Government/AAA-Rated   Goldman Sachs Group,       debt          8,045,000
Securities Fund             Inc.
                            ---------------------------------------------------
                            Citigroup Inc.             debt         12,753,000
                            ---------------------------------------------------
                            Morgan Stanley             debt          6,370,000
-------------------------------------------------------------------------------






                   American Funds Insurance Series -- Page 63
<PAGE>

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


                   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 by the Series or
its designee provided that your request contains all information and legal
documentation necessary to process the transaction. 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 generally 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 generally valued at prices obtained as of
approximately 3 p.m. from one or more independent pricing vendors. The pricing
vendors base bond prices on, among other things, benchmark yields, transactions,
bids, offers, quotations from dealers and trading systems, new issues, underlying
equity of the issuer, interest rate volatilities, spreads and other relationships
observed in the markets among comparable securities and proprietary pricing models
such as yield measures calculated using factors such as cash flows, prepayment
information, default rates, delinquency and loss assumptions, financial or
collateral characteristics or performance, credit enhancements, liquidation value
calculations, specific deal information and other reference data. The fund's
investment adviser performs certain checks on these prices prior to calculation
of the fund's net asset value. 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 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 generally 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


                   American Funds Insurance Series -- Page 67
<PAGE>


on the 60th day, based on the value determined on the 61st day. Forward currency
contracts are valued at the mean of representative quoted bid and asked prices.


Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of each fund's
shares into U.S. dollars at the prevailing market rates.


Securities and other assets for which representative market quotations are not
readily available or are considered unreliable by the investment adviser 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,
$3,000 for Class 2 shares and $39 for Class 3 shares for the 2009 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. Counsel does not provide legal services
to the Series' investment adviser or any of its affiliated companies or control
persons. 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 or
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.




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


                   American Funds Insurance Series -- Page 72
<PAGE>


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.


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


                   American Funds Insurance Series -- Page 73
<PAGE>


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.


VOTING RIGHTS -- Shareholders have one vote per share owned. In accordance with
current laws, it is anticipated that an insurance company issuing a variable
contract that participates in a fund will request voting instructions from
variable contract owners and will vote shares or other voting interests in the
separate account in accordance with voting instructions received, and will vote
shares or other voting interests not received in proportion to the voting
instructions received by all separate accounts. As a result of proportional
voting, the vote of a small number of contract holders could determine the
outcome of a shareholder vote.


                   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.


                   American Funds Insurance Series -- Page 77
<PAGE>


                    DESCRIPTION OF COMMERCIAL PAPER RATINGS

MOODY'S
COMMERCIAL PAPER RATINGS (HIGHEST THREE RATINGS)

P-1
Issuers (or supporting institutions) rated Prime-1 have a superior ability to
repay short-term debt obligations.


P-2
Issuers (or supporting institutions) rated Prime-2 have a strong ability to
repay short-term debt obligations.


P-3
Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to
repay short-term obligations.


STANDARD & POOR'S
COMMERCIAL PAPER RATINGS (HIGHEST THREE RATINGS)

A-1
A short-term obligation rated A-1 is rated in the highest category by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is strong. Within this category, certain obligations are designated
with a plus sign (+). This indicates that the obligor's capacity to meet its
financial commitment on these obligations is extremely strong.


A-2
A short-term obligation rated A-2 is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.


A-3
A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.


                   American Funds Insurance Series -- Page 78

..

AMERICAN FUNDS INSURANCE SERIES

Global Discovery Fund

12/31/2009

Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
The Americas	59.6	%
Europe	20.2
Asia/Pacific Basin	12.0
Other regions	3.2
Short-term securities & other assets less liabilities	5.0
	100.0	%
[end pie chart]
The Americas
United States	55.3	%
Brazil	3.1
Mexico	1.1
Canada	.1
	59.6
Europe
United Kingdom	5.2
Switzerland	4.9
Ireland	3.1
Germany	3.1
Finland	1.4
Other	2.5
	20.2
Asia/Pacific Basin
China	6.4
Taiwan	1.7
Australia	1.1
Other	2.8
	12.0
Other regions
Israel	3.2
	3.2
Short-term securities & other assets less liabilities	5.0
Total	100.0	%

AMERICAN FUNDS INSURANCE SERIES
Global Growth Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
The Americas	37.9	%
Europe	37.5
Asia/Pacific Basin	17.5
Short-term securities & other assets less liabilities	7.1
	100.0	%
[end pie chart]
The Americas
United States	31.3
Canada	2.3
Mexico	2.2
Brazil	1.7
Other	.4
	37.9
Europe
France	6.0	%
United Kingdom	5.8
Germany	4.8
Netherlands	4.4
Switzerland	4.2
Belgium	3.2
Spain	2.9
Denmark	2.4
Ireland	1.1
Other	2.7
	37.5
Asia/Pacific Basin
Japan	6.5
Australia	2.9
India	2.4
China	2.1
South Korea	1.3
Other	2.3
	17.5
Short-term securities & other assets less liabilities	7.1
Total	100.0	%

AMERICAN FUNDS INSURANCE SERIES
Global Small Capitalization Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
The Americas	40.2	%
Asia/Pacific Basin	32.7
Europe	22.5
Other regions	.4
Short-term securities & other assets less liabilities	4.2
[end pie chart]	100.0	%
The Americas
United States	33.2	%
Canada	3.9
Brazil	2.8
Mexico	.3
	40.2
Asia/Pacific Basin
China	8.3
Hong Kong	4.8
Australia	4.6
South Korea	3.7
Singapore	3.4
India	2.5
Taiwan	1.5
Japan	1.3
Thailand	1.2
Philippines	1.0
Other	.4
	32.7
Europe
United Kingdom	8.9
Greece	4.6
Sweden	1.6
Ireland	1.4
Germany	1.1
Italy	1.1
Other	3.8
	22.5
Other regions	.4
Short-term securities & other assets less liabilities	4.2
Total	100.0	%

AMERICAN FUNDS INSURANCE SERIES
Growth Fund
12/31/2009
[pie chart]
TOP 5 INDUSTRY SECTORS
Where the fund's assets were invested based on total net assets as of 12/31/2009
	Percent of
	net assets
Information Technology	19.7	%
Energy	12.7
Health care	12.6
Financials	12.2
Materials	10.6
Other industries	28.3
Short-term securities & other assets less liabilities	3.9
	100.0	%

[end pie chart]

AMERICAN FUNDS INSURANCE SERIES
International Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
Europe	65.7	%
Asia/Pacific Basin	20.8
The Americas	6.2
Other regions	4.6
Short-term securities & other assets less liabilities	2.7
	100.0
[end pie chart]
Europe
Germany	12.9
France	12.6
United Kingdom	11.6
Switzerland	8.2
Spain	5.1
Russia	3.5
Italy	3.2
Austria	1.7
Hungary	1.5
Belgium	1.4
Ireland	1.3
Sweden	1.1
Netherlands	1.0
Other	.6
	65.7
Asia/Pacific Basin
Japan	8.4
China	2.5
India	1.9
Taiwan	1.6
Hong Kong	1.4
South Korea	1.3
Philippines	1.0
Other	2.7
	20.8
The Americas
Brazil	3.9
Mexico	2.0
Canada	.3
	6.2
Other regions
South Africa	2.7
Israel	1.8
Egypt	.1
	4.6
Short-term securities & other assets less liabilities	2.7
Total	100.0	%

AMERICAN FUNDS INSURANCE SERIES
New World Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
Europe	30.5	%
The Americas	29.0
Asia/Pacific Basin	27.8
Other regions	5.3
Short-term securities & other assets less liabilities	7.4
	100.0	%
[end pie chart]
Europe
United Kingdom	5.7
Turkey	3.1
Switzerland	3.0
Russia	3.0
Spain	2.9
France	2.1
Germany	1.9
Belgium	1.4
Netherlands	1.1
Slovenia	1.1
Denmark	1.1
Italy	1.0
Other	3.1
	30.5
The Americas
Brazil	10.3
United States	9.1
Mexico	5.8
Republic Of Colombia	1.9
Other	1.9
	29.0
Asia/Pacific Basin
China	5.8
India	5.3
Japan	3.4
Australia	3.2
Indonesia	2.2
Korea	1.9
Malaysia	1.3
Hong Kong	1.2
Other	3.5
	27.8
Other regions
South Africa	3.1
Israel	2.0
Other	.2
	5.3
Short-term securities & other assets less liabilities	7.4
Total	100.0	%

AMERICAN FUNDS INSURANCE SERIES
Blue Chip Income and Growth Fund
12/31/2009
TOP 5 INDUSTRY SECTORS
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
Information technology	21.6	%
Industrials	15.7
Health Care	14.4
Consumer discretionary	9.7
Energy	7.6
Other industries	24.2
Short-term securities & other assets less liabilities	6.8
	100.0	%

[end pie chart]

AMERICAN FUNDS INSURANCE SERIES
Global Growth and Income Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
The Americas	45.1	%
Europe	29.2
Asia/Pacific Basin	15.3
Other regions	1.5
Bonds, short-term securities & other assets less liabilities	8.9
	100.0	%
[end pie chart]
The Americas
United States	38.0	%
Canada	6.3
Other	.8
	45.1
Europe
United Kingdom	8.0
France	6.7
Spain	3.3
Belgium	2.7
Switzerland	1.8
Germany	1.7
Netherlands	1.6
Italy	1.4
Ireland	1.2
Other	.8
	29.2
Asia/Pacific Basin
Australia	5.6
Japan	3.4
China	2.5
Taiwan	1.1
Other	2.7
	15.3
Other regions
South Africa	1.5
	1.5
Bonds, short-term securities & other assets less liabilities	8.9
Total	100.0	%

AMERICAN FUNDS INSURANCE SERIES
Growth-Income Fund
12/31/2009
TOP 5 INDUSTRY SECTORS
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
INFORMATION TECHNOLOGY	24.3	%
INDUSTRIALS	12.1
CONSUMER DISCRETIONARY	10.3
HEALTH CARE	9.0
ENERGY	8.4
OTHER INDUSTRIES	28.1
Short-term securities & other assets less liabilities	7.8
	100.00	%

[end pie chart]

AMERICAN FUNDS INSURANCE SERIES
International Growth and Income Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
Europe	58.0	%
Asia/Pacific Basin	25.2
The Americas	7.2
Other regions	1.4
Short-term securities & other assets less liabilities	8.2
	100.0	%
[end pie chart]
The Americas
United States	2.5	%
Brazil	2.2
Mexico	1.7
Other	.8
	7.2
Europe
United Kingdom	16.3
France	11.2
Germany	8.1
Switzerland	5.4
Spain	2.9
Italy	2.7
Austria	2.6
Sweden	1.7
Belgium	1.4
Netherlands	1.2
Russian Federation	1.0
Other	3.5
	58.0
Asia/Pacific Basin
Australia	3.4
China	3.6
Hong Kong	2.4
Taiwan	7.1
Japan	3.9
Thailand	1.1
Singapore	2.3
Other	1.4
	25.2
Other regions
South Africa	.5
Israel	.9
	1.4
Short-term securities & other assets less liabilities	8.2
Total	100.0	%

AMERICAN FUNDS INSURANCE SERIES
Asset Allocation Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
Equity securities	70.3	%
Bonds & notes of U.S. government & government agencies	8.9
Corporate bonds	8.8
Mortgage-backed obligations	5.1
Asset-backed obligations	.3
Bonds & notes of governments outside the U.S.	.1
Short-term securities & other assets less liabilities	6.5
	100.0	%

[end pie chart]

AMERICAN FUNDS INSURANCE SERIES
Bond Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
Corporate Bonds	29.0
U. S. Treasury	25.8
Mortgage-backed obligations	20.3
Bonds & notes of governments outside the U.S.	9.6
Bonds & notes of U.S. government & government agencies	5.5
Asset-backed Obligations	.6
Other securities	.1
Preferred Stocks	1.0
Short-term securities & other assets less liabilities	8.1
	100.0	%

[end pie chart]

AMERICAN FUNDS INSURANCE SERIES
Global Bond Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
Bonds & notes of governments & government agencies outside the U.S.	47.3
Corporate bonds	23.0
Bonds & notes of U.S. government & government agencies	12.5
Mortgage & Asset-backed obligations	10.6
Preferred stocks	.6
Short-term securities & other assets less liabilities	6.0	%
	100.0
Net Assets
[end pie chart]
Currency weighting	Currency weighting
by country	(after hedging)
UNITED STATES 1	45.3	%
EMU 2	23.2
JAPAN	11.2
POLAND	3.1
SOUTH KOREA	2.9
AUSTRALIA	2.2
MEXICO	2.1
DENMARK	2.0
UNITED KINGDOM	2.0
MALAYSIA	1.2
SINGAPORE	1.1
SWEDEN	.9
CANADA	.8
NORWAY	.5
TURKEY	.4
ISRAEL	.3
INDONESIA	.2
THAILAND	.2
EGYPT	.2
BRAZIL	.2
TOTAL	100.0	%
1 Includes U.S. dollar-denominated bonds of other countries, totaling 11.0%.
2 European Monetary Union consists of Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.  Euro-denominated bonds include corporate and European government debt.

AMERICAN FUNDS INSURANCE SERIES
High-Income Bond Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
Equity securities	4.2
Corporate bonds	84.9
U.S. Treasury bonds & notes	.2
Mortgage-backed obligations	1.1
Bonds & notes of governments outside the U.S.	.3
Short-term securities & other assets less liabilities	9.3
	100.0	%

[end pie chart]

AMERICAN FUNDS INSURANCE SERIES
U.S. Government/AAA-Rated Securities Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
Mortgage-backed obligations	39.6
U.S. Treasury bonds & notes	39.3
Federal agency bonds & notes	10.4
Asset-backed obligations	1.6
Other bonds	.4
Short-term securities & other assets less liabilities	8.7
	100.0	%

[end pie chart]

AMERICAN FUNDS INSURANCE SERIES
Cash Management Fund
12/31/2009
Where the fund's assets were invested based on total net assets as of 12/31/2009
[pie chart]
	Percent of
	net assets
Federal agency discount notes	14.1
U.S. Treasuries	4.4
Corporate short-term notes & other assets less liabilities	81.5
	100.0	%

[end pie chart]

[logo – American Funds®]

American Funds Insurance Series®

Global Discovery Fund

Investment portfolio

December 31, 2009

Common stocks — 94.65%	Shares			Value (000)
SOFTWARE & SERVICES — 17.06%
Microsoft Corp.		183,800		$	5,604
Yahoo! Inc.1		285,000			4,782
Global Payments Inc.		80,000			4,309
Rovi Corp.1		131,600			4,194
Google Inc., Class A1		5,500			3,410
Oracle Corp.		125,000			3,067
NetEase.com, Inc. (ADR)1		69,400			2,610
McAfee, Inc.1		52,000			2,110
Acxiom Corp.1		140,000			1,879
United Internet AG1,2		134,004			1,771
Autodesk, Inc.1		60,000			1,525
eBay Inc.1		60,000			1,412
Nintendo Co., Ltd.2		4,300			1,020
Moneysupermarket.com Group PLC2		235,000			281
					37,974
DIVERSIFIED FINANCIALS — 9.93%
Credit Suisse Group AG2		117,000			5,756
Deutsche Bank AG2		72,800			5,127
IntercontinentalExchange, Inc.1		30,000			3,369
JPMorgan Chase & Co.		65,000			2,709
Bank of New York Mellon Corp.		75,000			2,098
State Street Corp.		28,000			1,219
Moody’s Corp.		44,000			1,179
UBS AG1,2		42,538			653
					22,110
TECHNOLOGY HARDWARE & EQUIPMENT — 9.53%
Apple Inc.1		35,000			7,380
Wistron Corp.2		1,131,222			2,187
QUALCOMM Inc.		45,000			2,082
Corning Inc.		100,000			1,931
Trimble Navigation Ltd.1		70,000			1,764
Delta Electronics, Inc.2		540,490			1,683
Cisco Systems, Inc.1		70,000			1,676
Logitech International SA1		83,700			1,431
Avid Technology, Inc.1		85,000			1,085
					21,219
PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES — 8.17%
Teva Pharmaceutical Industries Ltd. (ADR)		127,000			7,135
Myriad Genetics, Inc.1		142,000			3,706
Life Technologies Corp.1		35,000			1,828
Novartis AG2		32,000			1,742
Vertex Pharmaceuticals Inc.1		40,000			1,714
Richter Gedeon NYRT2		5,500			1,247
UCB SA2		19,654			822
					18,194
BANKS — 6.54%
Banco Bradesco SA, preferred nominative		236,500			4,938
Itaú Unibanco Holding SA, preferred nominative (ADR)		88,000			2,010
HSBC Holdings PLC (Hong Kong)2		159,211			1,813
Industrial and Commercial Bank of China Ltd., Class H2		2,135,000			1,752
Zions Bancorporation		80,000			1,026
Grupo Financiero Banorte, SAB de CV, Series O		280,000			1,024
BNP Paribas SA2		12,221			964
Banco Santander, SA2		36,947			607
BOC Hong Kong (Holdings) Ltd.2		186,000			418
					14,552
HEALTH CARE EQUIPMENT & SERVICES — 5.17%
Inverness Medical Innovations, Inc.1		158,000			6,559
The Cooper Companies, Inc.		60,000			2,287
Sinopharm Group Co. Ltd., Class H1,2		346,000			1,217
Hologic, Inc.1		80,000			1,160
Beckman Coulter, Inc.		4,447			291
					11,514
COMMERCIAL & PROFESSIONAL SERVICES — 4.72%
Downer EDI Ltd.2		290,000			2,417
Serco Group PLC2		205,000			1,745
Manpower Inc.		31,900			1,741
Monster Worldwide, Inc.1		100,000			1,740
Capita Group PLC2		130,000			1,570
SGS SA2		1,000			1,301
					10,514
MEDIA — 4.64%
British Sky Broadcasting Group PLC2		305,000			2,751
Time Warner Inc.		91,666			2,671
Omnicom Group Inc.		40,000			1,566
CTC Media, Inc.1		85,000			1,267
McGraw-Hill Companies, Inc.		30,000			1,005
Grupo Televisa, SAB de CV, ordinary participation certificates (ADR)		44,000			913
Next Media Ltd.1,2		1,157,000			155
					10,328
TRANSPORTATION — 4.56%
Ryanair Holdings PLC (ADR)1		186,400			4,999
AMR Corp.1		300,000			2,319
easyJet PLC1,2		316,000			1,783
AirAsia Bhd.1,2		2,600,000			1,043
					10,144
ENERGY — 4.09%
FMC Technologies, Inc.1		85,000			4,916
Schlumberger Ltd.		64,200			4,179
					9,095
UTILITIES — 3.71%
Xinao Gas Holdings Ltd.2		2,610,000			6,668
Scottish and Southern Energy PLC2		85,000			1,590
					8,258
INSURANCE — 3.60%
Sampo Oyj, Class A2		125,000			3,031
China Life Insurance Co. Ltd., Class H2		398,000			1,948
First American Corp.		45,055			1,492
Marsh & McLennan Companies, Inc.		60,000			1,325
American International Group, Inc.1		7,500			225
					8,021
RETAILING — 2.90%
Tractor Supply Co.1		35,000			1,854
Bed Bath & Beyond Inc.1		45,000			1,738
Best Buy Co., Inc.		43,000			1,697
Lowe’s Companies, Inc.		50,000			1,169
					6,458
CONSUMER SERVICES — 1.64%
Paddy Power PLC2		55,000			1,948
Texas Roadhouse, Inc.1		115,000			1,291
OPAP SA2		18,490			405
					3,644
TELECOMMUNICATION SERVICES — 1.57%
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B2		1,574,000			1,571
Philippine Long Distance Telephone Co. (ADR)		9,100			515
Philippine Long Distance Telephone Co.2		9,100			513
Millicom International Cellular SA		12,200			900
					3,499
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 0.84%
NVIDIA Corp.1		100,000			1,868
MATERIALS — 0.70%
Ecolab Inc.		35,000			1,560
CONSUMER DURABLES & APPAREL — 0.32%
GEOX SpA2		105,050			722
FOOD & STAPLES RETAILING — 0.24%
Wal-Mart de México, SAB de CV, Series V		118,600			532
MISCELLANEOUS — 4.72%
Other common stocks in initial period of acquisition					10,503
Total common stocks (cost: $193,985,000)					210,709
	Shares or			Value
Convertible securities — 0.37%	principal amount				(000	)
TRANSPORTATION — 0.35%
AMR Corp. 6.25% convertible notes 2014	$	750,000		$	781
INSURANCE — 0.02%
American International Group, Inc. 8.50% convertible preferred 2011, units		2,943			33
Total convertible securities (cost: $1,000,000)					814
	Principal amount
Short-term securities — 4.94%		(000	)
Medtronic Inc. 0.10% due 1/27/20103	$	2,600			2,600
Freddie Mac 0.07%–0.095% due 1/4–3/24/2010		2,500			2,500
Park Avenue Receivables Co., LLC 0.22% due 1/14/20103		2,000			2,000
Yale University 0.26% due 1/11/2010		1,700			1,700
Coca-Cola Co. 0.21% due 1/4/20103		1,200			1,200
Fannie Mae 0.09% due 2/3/2010		1,000			1,000
Total short-term securities (cost: $10,999,000)					11,000
Total investment securities (cost: $205,984,000)					222,523
Other assets less liabilities					95
Net assets				$	222,618

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

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

2Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $61,215,000, which represented 27.50% of the net assets of the fund. This entire amount relates to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

3Purchased 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 $5,800,000, which represented 2.61% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

Global Discovery Fund

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
Apple		3.31	%
Teva Pharmaceutical Industries		3.21
Xinao Gas Holdings		3.00
Inverness Medical Innovations		2.94
Credit Suisse		2.59
Microsoft		2.52
Deutsche Bank		2.30
Ryanair Holdings		2.25
Banco Bradesco		2.22
FMC Technologies		2.21

							Percent
				Value			of net
Common stocks  - 94.65%	Shares				(000	)	assets
Software & services  -  17.06%
Microsoft Corp.		183,800		$	5,604			2.52	%
Yahoo! Inc. (1)		285,000			4,782			2.15
Global Payments Inc.		80,000			4,309			1.94
Rovi Corp. (1)		131,600			4,194			1.88
Google Inc., Class A (1)		5,500			3,410			1.53
Oracle Corp.		125,000			3,067			1.38
NetEase.com, Inc. (ADR) (1)		69,400			2,610			1.17
McAfee, Inc. (1)		52,000			2,110			.95
Acxiom Corp. (1)		140,000			1,879			.84
United Internet AG (1) (2)		134,004			1,771			.79
Other securities					4,238			1.91
					37,974			17.06
Diversified financials  -  9.93%
Credit Suisse Group AG (2)		117,000			5,756			2.59
Deutsche Bank AG (2)		72,800			5,127			2.30
IntercontinentalExchange, Inc. (1)		30,000			3,369			1.51
JPMorgan Chase & Co.		65,000			2,709			1.22
Bank of New York Mellon Corp.		75,000			2,098			.94
Other securities					3,051			1.37
					22,110			9.93
Technology hardware & equipment  -  9.53%
Apple Inc. (1)		35,000			7,380			3.31
Wistron Corp. (2)		1,131,222			2,187			.98
QUALCOMM Inc.		45,000			2,082			.94
Corning Inc.		100,000			1,931			.87
Trimble Navigation Ltd. (1)		70,000			1,764			.79
Other securities					5,875			2.64
					21,219			9.53
Pharmaceuticals, biotechnology & life sciences  -  8.17%
Teva Pharmaceutical Industries Ltd. (ADR)		127,000			7,135			3.21
Myriad Genetics, Inc. (1)		142,000			3,706			1.66
Life Technologies Corp. (1)		35,000			1,828			.82
Novartis AG (2)		32,000			1,742			.78
Other securities					3,783			1.70
					18,194			8.17
Banks  -  6.54%
Banco Bradesco SA, preferred nominative		236,500			4,938			2.22
Itaú Unibanco Holding SA, preferred nominative (ADR)		88,000			2,010			.90
HSBC Holdings PLC (Hong Kong) (2)		159,211			1,813			.82
Industrial and Commercial Bank of China Ltd., Class H (2)		2,135,000			1,752			.79
Other securities					4,039			1.81
					14,552			6.54
Health care equipment & services  -  5.17%
Inverness Medical Innovations, Inc. (1)		158,000			6,559			2.94
The Cooper Companies, Inc.		60,000			2,287			1.03
Other securities					2,668			1.20
					11,514			5.17
Commercial & professional services  -  4.72%
Downer EDI Ltd. (2)		290,000			2,417			1.09
Serco Group PLC (2)		205,000			1,745			.78
Other securities					6,352			2.85
					10,514			4.72
Media  -  4.64%
British Sky Broadcasting Group PLC (2)		305,000			2,751			1.24
Time Warner Inc.		91,666			2,671			1.20
Other securities					4,906			2.20
					10,328			4.64
Transportation  -  4.56%
Ryanair Holdings PLC (ADR) (1)		186,400			4,999			2.25
AMR Corp. (1)		300,000			2,319			1.04
easyJet PLC (1) (2)		316,000			1,783			.80
Other securities					1,043			.47
					10,144			4.56
Energy  -  4.09%
FMC Technologies, Inc. (1)		85,000			4,916			2.21
Schlumberger Ltd.		64,200			4,179			1.88
					9,095			4.09
Utilities  -  3.71%
Xinao Gas Holdings Ltd. (2)		2,610,000			6,668			3.00
Other securities					1,590			.71
					8,258			3.71
Insurance  -  3.60%
Sampo Oyj, Class A (2)		125,000			3,031			1.36
China Life Insurance Co. Ltd., Class H (2)		398,000			1,948			.87
Other securities					3,042			1.37
					8,021			3.60
Retailing  -  2.90%
Tractor Supply Co. (1)		35,000			1,854			.83
Other securities					4,604			2.07
					6,458			2.90
Consumer services  -  1.64%
Paddy Power PLC (2)		55,000			1,948			.88
Other securities					1,696			.76
					3,644			1.64
Telecommunication services  -  1.57%
Other securities					3,499			1.57
Other  -  2.10%
NVIDIA Corp. (1)		100,000			1,868			.84
Other securities					2,814			1.26
					4,682			2.10
Miscellaneous  -  4.72%
Other common stocks in initial period of acquisition					10,503			4.72
Total common stocks (cost: $193,985,000)					210,709			94.65
							Percent
	Principal amount			Value			of net
Convertible securities  - 0.37%	(000)				(000	)	assets
Other  -  0.37%
AMR Corp. 6.25% convertible notes 2014	$	750			781			.35
Other securities					33			.02
Total convertible securities (cost: $1,000,000)					814			.37
	Principal						Percent
	amount			Value			of net
Short-term securities  - 4.94%		(000	)		(000	)	assets
Medtronic Inc. 0.10% due 1/27/2010 (3)	$	2,600		$	2,600			1.17
Freddie Mac 0.07%-0.095% due 1/4-3/24/2010		2,500			2,500			1.12
Park Avenue Receivables Co., LLC 0.22% due 1/14/2010 (3)		2,000			2,000			.90
Other securities					3,900			1.75
Total short-term securities (cost: $10,999,000)					11,000			4.94
Total investment securities (cost: $205,984,000)					222,523			99.96
Other assets less liabilities					95			.04
Net assets				$	222,618			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.

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 $61,215,000, which represented 27.50% of the net assets of the fund. This entire amount relates to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

(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 $5,800,000, which represented 2.61% 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, 2009

Common stocks — 92.60%	Shares			Value (000)
INFORMATION TECHNOLOGY — 15.00%
Microsoft Corp.		3,730,000		$	113,728
Cisco Systems, Inc.1		3,121,500			74,729
Samsung Electronics Co. Ltd.2		98,845			67,557
Oracle Corp.		2,425,000			59,509
Texas Instruments Inc.		2,050,000			53,423
Google Inc., Class A1		75,000			46,499
Yahoo! Inc.1		2,330,200			39,101
Hewlett-Packard Co.		700,000			36,057
SAP AG2		450,000			21,208
SAP AG (ADR)		200,000			9,362
ASML Holding NV (New York registered)		730,489			24,902
ASML Holding NV2		111,111			3,776
Nintendo Co., Ltd.2		105,000			24,907
Canon, Inc.2		519,000			21,954
Infosys Technologies Ltd.2		360,000			20,093
Apple Inc.1		78,000			16,447
Tyco Electronics Ltd.		666,250			16,356
KLA-Tencor Corp.		412,921			14,931
Murata Manufacturing Co., Ltd.2		300,000			14,822
Hon Hai Precision Industry Co., Ltd.2		3,000,000			14,128
Applied Materials, Inc.		1,000,000			13,940
Altera Corp.		550,000			12,447
MediaTek Inc.2		640,278			11,131
STMicroelectronics NV2		1,200,000			10,873
Cielo SA, ordinary nominative		1,215,000			10,696
HTC Corp.2		846,300			9,642
Venture Corp. Ltd.2		1,300,000			8,150
					770,368
HEALTH CARE — 11.89%
Novo Nordisk A/S, Class B2		1,455,200			93,096
Roche Holding AG2		493,500			83,859
UCB SA2		1,575,677			65,935
UnitedHealth Group Inc.		1,995,000			60,808
Aetna Inc.		1,262,600			40,024
Sonic Healthcare Ltd.2		2,110,000			29,058
Smith & Nephew PLC2		2,767,000			28,449
Bayer AG2		349,300			27,897
Merck & Co., Inc.		679,600			24,833
Baxter International Inc.		390,000			22,885
Hospira, Inc.1		380,000			19,380
Stryker Corp.		355,000			17,881
CSL Ltd.2		540,043			15,710
Shire Ltd. (ADR)		250,000			14,675
Pharmaceutical Product Development, Inc.		544,350			12,760
DENTSPLY International Inc.		360,000			12,661
Covance Inc.1		195,000			10,641
Intuitive Surgical, Inc.1		30,000			9,100
Nobel Biocare Holding AG2		243,500			8,140
Novartis AG2		120,000			6,531
RHÖN-KLINIKUM AG, non-registered shares2		260,000			6,355
					610,678
CONSUMER STAPLES — 11.80%
Anheuser-Busch InBev NV2		1,885,024			97,317
Pernod Ricard SA2		1,027,739			88,152
Unilever NV, depository receipts2		2,588,000			84,269
C&C Group PLC2		8,109,589			34,972
Coca-Cola Co.		490,000			27,930
Beiersdorf AG2		386,500			25,383
Philip Morris International Inc.		500,000			24,095
Avon Products, Inc.		695,800			21,918
British American Tobacco PLC2		664,500			21,585
METRO AG2		343,108			20,898
Nestlé SA2		400,000			19,412
Wal-Mart de México, SAB de CV, Series V (ADR)2		400,000			17,957
SABMiller PLC2		600,000			17,618
Woolworths Ltd.2		608,483			15,240
Procter & Gamble Co.		250,000			15,157
PepsiCo, Inc.		245,000			14,896
Tesco PLC2		2,100,000			14,447
Cia. de Bebidas das Américas — AmBev, preferred nominative (ADR)		140,000			14,153
Jerónimo Martins, SGPS, SA2		1,120,000			11,132
Kimberly-Clark de México, SAB de CV, Class A		2,300,000			10,301
Danone SA2		150,430			9,154
Cosan Ltd., Class A1		7,134			62
					606,048
FINANCIALS — 11.72%
UBS AG1,2		3,570,000			54,781
Allianz SE2		422,000			52,489
Macquarie Group Ltd.2		1,064,909			45,590
China Life Insurance Co. Ltd., Class H2		7,940,000			38,857
Moody’s Corp.		1,395,600			37,402
Banco Santander, SA2		2,123,226			34,859
DLF Ltd.2		4,370,000			33,643
HSBC Holdings PLC (United Kingdom)2		2,427,777			27,743
AXA SA2		1,164,463			27,520
Bank of Nova Scotia		508,000			23,888
Prudential PLC2		2,275,386			23,210
DnB NOR ASA1,2		2,053,333			22,287
Housing Development Finance Corp. Ltd.2		370,000			21,290
JPMorgan Chase & Co.		500,000			20,835
Royal Bank of Scotland Group PLC1,2		34,090,000			16,010
Industrial and Commercial Bank of China Ltd., Class H2		19,500,000			16,005
Itaú Unibanco Holding SA, preferred nominative		687,500			15,265
CIMB Group Holdings Bhd.2		3,750,000			14,065
Berkshire Hathaway Inc., Class A1		140			13,888
Wells Fargo & Co.		500,000			13,495
Sun Hung Kai Properties Ltd.2		860,000			12,762
BNP Paribas SA2		136,555			10,768
ACE Ltd.		190,000			9,576
Citigroup Inc.		2,000,000			6,620
Ayala Land, Inc.2		19,300,000			4,669
East West Bancorp, Inc.2,3		344,146			4,622
					602,139
CONSUMER DISCRETIONARY — 9.36%
Virgin Media Inc.1		4,860,000			81,794
Toyota Motor Corp.2		1,452,900			61,081
News Corp., Class A		3,883,407			53,164
Honda Motor Co., Ltd.2		1,408,800			47,663
Home Depot, Inc.		1,200,000			34,716
adidas AG2		422,000			22,768
NIKE, Inc., Class B		320,000			21,142
H & M Hennes & Mauritz AB, Class B2		376,000			20,823
Burberry Group PLC2		1,870,000			17,952
GOME Electrical Appliances Holding Ltd.1,2		50,000,000			17,929
Carphone Warehouse Group PLC2		5,625,000			16,978
McDonald’s Corp.		250,000			15,610
Harman International Industries, Inc.		440,000			15,523
Target Corp.		250,000			12,093
Best Buy Co., Inc.		235,000			9,273
Suzuki Motor Corp.2		313,000			7,690
Kesa Electricals PLC2		3,210,000			7,665
Carnival Corp., units1		225,000			7,130
Nikon Corp.2		301,000			5,940
Time Warner Inc.		100,000			2,914
Multi Screen Media Private Ltd.1,2,4		16,148			1,058
					480,906
TELECOMMUNICATION SERVICES — 7.74%
Telefónica, SA2		4,087,799			113,850
Koninklijke KPN NV2		5,328,000			90,306
América Móvil, SAB de CV, Series L (ADR)		1,275,000			59,899
América Móvil, SAB de CV, Series L		3,350,000			7,886
SOFTBANK CORP.2		1,651,300			38,618
AT&T Inc.		1,000,000			28,030
China Telecom Corp. Ltd., Class H2		59,870,000			24,775
Telekom Austria AG, non-registered shares2		1,445,200			20,619
Vodafone Group PLC2		6,000,000			13,912
					397,895
INDUSTRIALS — 7.01%
United Technologies Corp.		652,000			45,255
Tyco International Ltd.		1,133,750			40,452
KBR, Inc.		1,713,000			32,547
Siemens AG2		346,057			31,718
Vestas Wind Systems A/S1,2		457,370			27,982
First Solar, Inc.1		195,000			26,403
Actuant Corp., Class A		1,270,000			23,533
Ryanair Holdings PLC (ADR)1		733,100			19,662
Michael Page International PLC2		2,995,000			18,183
Delta Air Lines, Inc.1		1,160,000			13,201
Schneider Electric SA2		100,000			11,577
IDEX Corp.		360,000			11,214
China Railway Construction Corp. Ltd., Class H2		8,753,500			11,150
Marubeni Corp.2		2,000,000			10,894
Masco Corp.		775,000			10,703
Finmeccanica SpA2		480,000			7,650
FANUC LTD2		75,000			6,978
Macquarie Infrastructure Group2		4,000,000			4,766
United Parcel Service, Inc., Class B		75,000			4,303
Alstom SA2		30,066			2,087
					360,258
ENERGY — 6.81%
TOTAL SA2		1,035,000			66,276
Petróleo Brasileiro SA — Petrobras, ordinary nominative (ADR)		700,000			33,376
Petróleo Brasileiro SA — Petrobras, preferred nominative (ADR)		380,000			16,108
Reliance Industries Ltd.2		2,074,000			48,400
Chevron Corp.		580,000			44,654
Royal Dutch Shell PLC, Class B2		574,666			16,768
Royal Dutch Shell PLC, Class B (ADR)		233,643			13,582
Tenaris SA (ADR)		640,000			27,296
Oil Search Ltd.2		3,810,000			20,785
Canadian Natural Resources, Ltd.		280,700			20,381
Suncor Energy Inc.		370,000			13,153
Imperial Oil Ltd.		257,928			10,020
Statoil ASA2		366,435			9,139
Eni SpA2		300,000			7,632
Baker Hughes Inc.		54,200			2,194
					349,764
MATERIALS — 5.40%
Barrick Gold Corp.		900,000			35,442
Sigma-Aldrich Corp.		659,649			33,332
Rio Tinto PLC2		581,250			31,368
Alcoa Inc.		1,770,000			28,533
Holcim Ltd1,2		324,908			25,158
Akzo Nobel NV2		363,100			23,915
Sociedad Química y Minera de Chile SA, Class B (ADR)		500,992			18,822
Aquarius Platinum Ltd.1,2		2,777,778			18,015
CEMEX, SAB de CV, ordinary participation certificates, units (ADR)1		1,500,000			17,730
Potash Corp. of Saskatchewan Inc.		130,000			14,105
Shin-Etsu Chemical Co., Ltd.2		160,000			9,024
Weyerhaeuser Co.		200,000			8,628
Nitto Denko Corp.2		200,000			7,131
Praxair, Inc.		75,000			6,023
					277,226
UTILITIES — 2.63%
GDF Suez2		1,141,805			49,500
SUEZ Environnement Co.2		1,295,000			29,895
CLP Holdings Ltd.2		3,740,000			25,274
RWE AG2		187,500			18,207
E.ON AG2		300,000			12,515
					135,391
MISCELLANEOUS — 3.24%
Other common stocks in initial period of acquisition					166,358
Total common stocks (cost: $3,773,988,000)					4,757,031
				Value
Preferred stocks — 0.15%	Shares				(000	)
FINANCIALS — 0.15%
SMFG Preferred Capital USD 3 Ltd. 9.50%3,5		6,960,000		$	7,343
SMFG Preferred Capital USD 2 Ltd. 8.75% noncumulative3		400,000			395
Total preferred stocks (cost: $6,891,000)					7,738
Convertible securities — 0.17%
FINANCIALS — 0.17%
East West Bancorp, Inc. 13.00% convertible preferred1,2,3		5,942			8,828
Total convertible securities (cost: $5,942,000)					8,828
	Principal amount
Short-term securities — 7.01%		(000	)
Fannie Mae 0.11%–0.25% due 1/5–8/16/2010	$	71,200			71,189
Federal Home Loan Bank 0.075%–0.10% due 2/26–3/17/2010		62,800			62,793
International Bank for Reconstruction and Development 0.09%–0.10% due 2/16–2/18/2010		50,300			50,297
KfW 0.20% due 1/29/20103		27,600			27,596
ANZ National (International) Ltd. 0.23% due 1/25/20103		25,400			25,396
General Electric Capital Corp. 0.01% due 1/4/2010		24,600			24,600
Caisse d’Amortissement de la Dette Sociale 0.245% due 1/25/2010		22,000			21,997
Coca-Cola Co. 0.18% due 1/7/20103		21,000			20,999
National Australia Funding (Delaware) Inc. 0.20% due 1/14/20103		17,900			17,898
Québec (Province of) 0.18% due 1/11/20103		12,000			11,999
Eni Finance USA Inc. 0.16% due 1/6/20103		11,500			11,500
Barton Capital LLC 0.20% due 1/11/20103		7,400			7,399
U.S. Treasury Bill 0.055% due 3/11/2010		6,700			6,700
Total short-term securities (cost: $360,352,000)					360,363
Total investment securities (cost: $4,147,173,000)					5,133,960
Other assets less liabilities					3,335
Net assets				$	5,137,295

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

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

2Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $2,739,880,000, which represented 53.33% of the net assets of the fund. This amount includes $2,707,415,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

3Purchased 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 $143,975,000, which represented 2.80% of the net assets of the fund.

4Purchased 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.

5Coupon rate may change periodically.

Key to abbreviation

ADR = American Depositary Receipts

Global Growth Fund

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
Telefónica		2.21	%
Microsoft		2.21
Anheuser-Busch InBev		1.89
Novo Nordisk		1.81
Koninklijke KPN		1.76
Pernod Ricard		1.72
Unilever NV		1.64
Roche		1.63
Virgin Media		1.59
Cisco Systems		1.45

							Percent
				Value			of net
Common stocks  - 92.60%	Shares				(000	)	assets
Information technology  -  15.00%
Microsoft Corp.		3,730,000		$	113,728			2.21	%
Cisco Systems, Inc. (1)		3,121,500			74,729			1.45
Samsung Electronics Co. Ltd. (2)		98,845			67,557			1.32
Oracle Corp.		2,425,000			59,509			1.16
Texas Instruments Inc.		2,050,000			53,423			1.04
Google Inc., Class A (1)		75,000			46,499			.91
Yahoo! Inc. (1)		2,330,200			39,101			.76
Hewlett-Packard Co.		700,000			36,057			.70
SAP AG (2)		450,000			21,208
SAP AG (ADR)		200,000			9,362			.60
Other securities					249,195			4.85
					770,368			15.00
Health care  -  11.89%
Novo Nordisk A/S, Class B (2)		1,455,200			93,096			1.81
Roche Holding AG (2)		493,500			83,859			1.63
UCB SA (2)		1,575,677			65,935			1.28
UnitedHealth Group Inc.		1,995,000			60,808			1.19
Aetna Inc.		1,262,600			40,024			.78
Other securities					266,956			5.20
					610,678			11.89
Consumer staples  -  11.80%
Anheuser-Busch InBev NV (2)		1,885,024			97,317			1.89
Pernod Ricard SA (2)		1,027,739			88,152			1.72
Unilever NV, depository receipts (2)		2,588,000			84,269			1.64
C&C Group PLC (2)		8,109,589			34,972			.68
Other securities					301,338			5.87
					606,048			11.80
Financials  -  11.72%
UBS AG (1)  (2)		3,570,000			54,781			1.06
Allianz SE (2)		422,000			52,489			1.02
Macquarie Group Ltd. (2)		1,064,909			45,590			.89
China Life Insurance Co. Ltd., Class H (2)		7,940,000			38,857			.76
Moody's Corp.		1,395,600			37,402			.73
Banco Santander, SA (2)		2,123,226			34,859			.68
DLF Ltd. (2)		4,370,000			33,643			.65
Other securities					304,518			5.93
					602,139			11.72
Consumer discretionary  -  9.36%
Virgin Media Inc. (1)		4,860,000			81,794			1.59
Toyota Motor Corp. (2)		1,452,900			61,081			1.19
News Corp., Class A		3,883,407			53,164			1.03
Honda Motor Co., Ltd. (2)		1,408,800			47,663			.93
Home Depot, Inc.		1,200,000			34,716			.68
Other securities					202,488			3.94
					480,906			9.36
Telecommunication services  -  7.74%
Telefónica, SA (2)		4,087,799			113,850			2.21
Koninklijke KPN NV (2)		5,328,000			90,306			1.76
América Móvil, SAB de CV, Series L (ADR)		1,275,000			59,899
América Móvil, SAB de CV, Series L		3,350,000			7,886			1.32
SOFTBANK CORP. (2)		1,651,300			38,618			.75
Other securities					87,336			1.70
					397,895			7.74
Industrials  -  7.01%
United Technologies Corp.		652,000			45,255			.88
Tyco International Ltd.		1,133,750			40,452			.79
KBR, Inc.		1,713,000			32,547			.63
Siemens AG (2)		346,057			31,718			.62
Other securities					210,286			4.09
					360,258			7.01
Energy  -  6.81%
TOTAL SA (2)		1,035,000			66,276			1.29
Reliance Industries Ltd. (2)		2,074,000			48,400			.94
Chevron Corp.		580,000			44,654			.87
Petróleo Brasileiro SA - Petrobras, ordinary nominative (ADR)		700,000			33,376			.65
Other securities					157,058			3.06
					349,764			6.81
Materials  -  5.40%
Barrick Gold Corp.		900,000			35,442			.69
Sigma-Aldrich Corp.		659,649			33,332			.65
Rio Tinto PLC (2)		581,250			31,368			.61
Other securities					177,084			3.45
					277,226			5.40
Utilities  -  2.63%
GDF Suez (2)		1,141,805			49,500			.96
Other securities					85,891			1.67
					135,391			2.63
Miscellaneous  -  3.24%
Other common stocks in initial period of acquisition					166,358			3.24
Total common stocks (cost: $3,773,988,000)					4,757,031			92.60
							Percent
				Value			of net
Preferred stocks  - 0.15%					(000	)	assets
Financials  -  0.15%
Other securities					7,738			.15
Total preferred stocks (cost: $6,891,000)					7,738			.15
							Percent
				Value			of net
Convertible securities  - 0.17%					(000	)	assets
Financials  -  0.17%
Other securities					8,828			.17
Total convertible securities (cost: $5,942,000)					8,828			.17
	Principal						Percent
	amount			Value			of net
Short-term securities  - 7.01%		(000	)		(000	)	assets
Fannie Mae 0.11%-0.25% due 1/5-8/16/2010	$	71,200			71,189			1.38
Federal Home Loan Bank 0.075%-0.10% due 2/26-3/17/2010		62,800			62,793			1.22
International Bank for Reconstruction and Development 0.09%-0.10% due 2/16-2/18/2010		50,300			50,297			.98
Other securities					176,084			3.43
Total short-term securities (cost: $360,352,000)					360,363			7.01
Total investment securities (cost: $4,147,173,000)					5,133,960			99.93
Other assets less liabilities					3,335			.07
Net assets				$	5,137,295			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 $1,058,000, which represented .02% of the net assets of the fund) may be subject to legal or contractual restrictions on resale. Some of these securities (with an aggregate value of $143,975,000, which represented 2.80% of the net assets of the fund) may be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers.

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. Further details on such holdings and related transactions during the year ended December 31, 2009, appear below.

									Dividend			Value of affiliate
	Beginning						Ending		income			at 12/31/09
	shares		Additions		Reductions		shares			(000	)		(000	)
AMG Advanced Metallurgical Group NV (3)		1,600,800		-		1,600,800		-		-			-

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 $2,739,880,000, which represented 53.33% of the net assets of the fund. This amount includes $2,707,415,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

(3) Unaffiliated issuer at 12/31/2009.

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

Global Small Capitalization Fund

Investment portfolio

December 31, 2009

Common stocks — 94.92%	Shares			Value (000)
CONSUMER DISCRETIONARY — 18.35%
Jumbo SA1,2		7,141,333		$	90,647
Modern Times Group MTG AB, Class B2		813,500			40,290
Fourlis1,2		2,804,285			36,556
Oceanus Group Ltd.2,3		81,265,000			25,207
Hankook Tire Co., Ltd.2		1,151,000			25,071
Golden Eagle Retail Group Ltd.2		11,915,000			24,078
Paddy Power PLC2		622,000			22,027
Pantaloon Retail (India) Ltd.2		2,500,000			20,251
Pantaloon Retail (India) Ltd., Class B2		200,000			1,223
Parkson Retail Group Ltd.2		11,368,000			19,887
Lions Gate Entertainment Corp.3		3,250,000			18,882
Central European Media Enterprises Ltd., Class A3		790,000			18,652
CTC Media, Inc.3		1,100,000			16,390
Harman International Industries, Inc.		444,600			15,686
ASOS PLC2,3		2,000,000			15,638
Expedia, Inc.3		557,200			14,326
Minth Group Ltd.2		9,118,000			13,368
Live Nation, Inc.3		1,450,000			12,339
Blue Nile, Inc.3		182,400			11,551
Melco Crown Entertainment Ltd. (ADR)3		3,052,763			10,288
Signet Jewelers Ltd.3		383,000			10,234
Raffles Education Corp. Ltd.2		35,803,240			10,217
Cheil Worldwide Inc.2		37,100			10,014
AutoNation, Inc.3		500,000			9,575
Stella International Holdings Ltd.2		5,259,500			9,536
Café de Coral Holdings Ltd.2		3,800,000			8,671
CKX, Inc.3,4		1,600,000			8,432
GEOX SpA2		1,145,750			7,877
Schibsted ASA2,3		343,747			7,695
Ekornes ASA2		293,100			6,071
NEXEN Tire Co., Ltd.2		1,005,000			5,808
Brunswick Corp.		430,000			5,465
American Axle & Manufacturing Holdings, Inc.3		680,000			5,454
Titan Industries Ltd.2		169,314			5,146
Billabong International Ltd.2		463,578			4,506
Parkson Holdings Bhd.2		2,721,950			4,222
P.F. Chang’s China Bistro, Inc.3		100,000			3,791
Jo-Ann Stores, Inc.3		100,000			3,624
Gafisa SA, ordinary nominative		216,200			3,504
Toll Corp.3		175,000			3,292
Rightmove PLC2		395,665			3,203
Group 1 Automotive, Inc.3		100,000			2,835
Pou Sheng International (Holdings) Ltd.2,3		18,226,000			2,713
Rational AG2		12,323			2,086
Timberland Co., Class A3		110,000			1,972
Bloomsbury Publishing PLC2		625,000			1,277
Ten Alps PLC2,3		2,600,000			1,156
Gaming VC Holdings SA2		200,000			704
Phorm, Inc.2,3		125,000			678
Mobil Travel Guide, Inc.2,3,5		219,739			55
CEC Unet PLC2,3		14,911,148			—
					602,170
INFORMATION TECHNOLOGY — 15.01%
Kingboard Chemical Holdings Ltd.2		11,482,000			45,245
AAC Acoustic Technologies Holdings Inc.2		27,066,000			44,458
Rovi Corp.3		1,347,989			42,960
Kingboard Laminates Holdings Ltd.2		59,286,509			40,924
Hittite Microwave Corp.3		525,000			21,394
VTech Holdings Ltd.2		2,124,000			20,253
Semtech Corp.3		1,170,000			19,902
Global Unichip Corp.2		3,576,627			18,837
Infotech Enterprises Ltd.2		2,585,988			17,111
FormFactor, Inc.3		710,600			15,463
OBIC Co., Ltd.2		92,630			15,121
Intersil Corp., Class A		962,500			14,765
Global Payments Inc.		267,000			14,381
Delta Electronics (Thailand) PCL2		23,250,000			12,945
Verifone Holdings, Inc.3		775,000			12,694
DTS, Inc.3		357,919			12,244
RichTek Technology Corp.2		1,090,000			11,074
Halma PLC2		2,182,500			8,508
SkillSoft PLC (ADR)3		750,000			7,860
SuccessFactors, Inc.3		470,000			7,793
Acxiom Corp.3		550,000			7,381
Hana Microelectronics PCL2		11,370,000			7,096
Telecity Group PLC2,3		1,048,097			6,463
Acer Inc.2		2,113,930			6,322
austriamicrosystems AG, non-registered shares2,3		279,314			6,089
Wistron Corp.2		3,100,000			5,994
FARO Technologies, Inc.3		255,000			5,467
ACI Worldwide, Inc.3		315,600			5,413
OnMobile Global Ltd.2,3		470,000			4,552
PixArt Imaging Inc.2		485,000			4,070
Spectris PLC2		340,000			4,011
Digital River, Inc.3		139,770			3,772
Varian Semiconductor Equipment Associates, Inc.3		90,000			3,229
Playtech Ltd.2		460,000			3,094
Redington (India) Ltd.2		462,660			3,086
Renishaw PLC2		310,000			2,730
Wincor Nixdorf AG2		40,000			2,726
Logitech International SA3		150,000			2,565
Tripod Technology Corp.2		669,000			2,247
SEEK Ltd.2		250,263			1,538
HSW International, Inc.3,4		1,902,173			589
HSW International, Inc.2,3,4		674,303			149
KAB Distribution Inc.2,3		1,500,000			—
					492,515
INDUSTRIALS — 12.99%
Monster Worldwide, Inc.3		2,100,000			36,540
Intertek Group PLC2		1,385,000			27,923
International Container Terminal Services, Inc.2		47,285,000			22,870
MSC Industrial Direct Co., Inc., Class A		477,000			22,419
Copart, Inc.3		540,000			19,780
Pfeiffer Vacuum Technology AG, non-registered shares2		168,000			14,073
Landstar System, Inc.		360,000			13,957
Downer EDI Ltd.2		1,672,000			13,936
TrueBlue, Inc.3		915,000			13,551
JVM Co., Ltd.1,2,3		411,500			13,010
Pursuit Dynamics PLC1,2,3		4,229,200			10,258
Jain Irrigation Systems Ltd.2		525,000			9,854
Aboitiz Equity Ventures, Inc.2		48,700,000			9,428
Lonrho PLC2,3		49,607,000			9,384
ALL — América Latina Logística SA, units		1,000,000			9,354
Herman Miller, Inc.		585,000			9,348
Prysmian SpA2		525,000			9,183
Loomis AB, Class B2		768,000			8,389
Goodpack Ltd.2		10,490,000			8,374
De La Rue PLC2		523,679			8,325
Temp Holdings Co., Ltd.2		906,000			7,114
Ellaktor SA2		960,000			7,073
Flughafen Wien AG, non-registered shares2		135,000			6,735
CoStar Group, Inc.3		160,000			6,683
Uponor Oyj2		303,000			6,481
AMR Corp.3		837,500			6,474
Frigoglass SAIC2,3		558,473			5,383
Hays PLC2		3,180,000			5,308
John Bean Technologies Corp.		310,000			5,273
Go-Ahead Group PLC2		240,000			5,144
easyJet PLC2,3		855,000			4,823
AirAsia Bhd.2,3		11,878,000			4,765
DCC PLC2		163,754			4,570
Horizon North Logistics Inc.3		2,700,000			4,256
J&P-AVAX SA2		1,046,000			4,144
BELIMO Holding AG2		3,450			3,830
Zenergy Power PLC2,3		2,000,000			3,737
S1 Corp.2		88,000			3,663
Seco Tools AB, Class B2		275,000			3,337
Houston Wire & Cable Co.		267,600			3,184
United Stationers Inc.3		55,000			3,127
Heidelberger Druckmaschinen AG2,3		393,000			3,075
Standard Parking Corp.3		190,000			3,017
Geberit AG2		16,500			2,920
Mine Safety Appliances Co.		110,000			2,918
Sintex Industries Ltd.2		429,100			2,525
Kaba Holding AG2		9,500			2,280
Northgate PLC2,3		627,270			2,197
Dalian Port (PDA) Co. Ltd., Class H2		5,600,000			2,148
PRONEXUS INC.2		318,000			1,883
Permasteelisa SpA2,3		88,000			1,636
Beacon Roofing Supply, Inc.3		95,000			1,520
Watsco, Inc.		28,000			1,371
Advisory Board Co.3		38,000			1,165
Indutrade AB2		60,962			1,149
Chen Hsong Holdings Ltd.2		2,416,000			681
LECG Corp.3		144,700			433
American Shipping Co. ASA2,3		188,000			209
Aker Philadelphia Shipyard ASA2,3,4		110,800			131
					426,318
HEALTH CARE — 10.94%
Volcano Corp.3		2,295,478			39,895
Inverness Medical Innovations, Inc.3		784,577			32,568
Myriad Genetics, Inc.3		1,031,900			26,933
Talecris Biotherapeutics Holdings Corp.3		1,190,000			26,501
Cochlear Ltd.2		320,899			19,814
OJSC Pharmstandard (GDR)2,3		946,865			19,006
EGIS Nyrt.2		175,825			17,497
Illumina, Inc.3		538,500			16,505
Nakanishi Inc.2		188,900			15,019
Masimo Corp.3		473,300			14,398
Integra LifeSciences Holdings Corp.3		357,250			13,140
Sonic Healthcare Ltd.2		937,860			12,916
athenahealth, Inc.3		276,000			12,486
ZOLL Medical Corp.3		435,424			11,635
ResMed Inc.3		200,000			10,454
NuVasive, Inc.3		305,000			9,754
Genomma Lab Internacional, SAB de CV, Series B3		4,245,000			9,347
Greatbatch, Inc.3		405,200			7,792
Amylin Pharmaceuticals, Inc.3		453,000			6,428
Merck Ltd.2		370,857			4,560
Invacare Corp.		180,000			4,489
American Medical Systems Holdings, Inc.3		212,936			4,108
Array BioPharma Inc.3		1,115,000			3,133
Laboratorios Farmacéuticos ROVI, SA2		255,000			2,817
ABIOMED, Inc.3		292,632			2,558
Beckman Coulter, Inc.		38,300			2,506
Ipca Laboratories Ltd.2		95,000			2,124
QRxPharma Ltd.2,3		3,000,000			2,079
Hologic, Inc.3		140,000			2,030
AS ONE Corp.2		107,100			1,869
Martek Biosciences Corp.3		95,000			1,799
Endo Pharmaceuticals Holdings Inc.3		77,100			1,581
A&D Pharma Holdings NV (GDR)2,3		232,200			1,164
Ondine Biopharma Corp.3,4		2,620,000			125
Ondine Biopharma Corp. (GBP denominated)2,3,4		490,000			24
Ondine Biopharma Corp.3		400,000			19
WuXi PharmaTech (Cayman) Inc. (ADR)3		6,700			107
					359,180
MATERIALS — 10.86%
African Minerals Ltd.2,3		7,905,000			47,404
African Minerals Ltd.2,3,4		2,480,000			14,872
Jaguar Mining Inc.3		1,603,000			18,087
Jaguar Mining Inc.3,4		952,500			10,747
European Goldfields Ltd.2,3		4,691,100			26,498
Midas Holdings Ltd.2		40,325,000			26,176
AK Steel Holding Corp.		1,055,000			22,524
Eastern Platinum Ltd.3		18,975,000			16,678
Allied Gold Ltd.1,2,3		38,040,274			11,302
Allied Gold Ltd. (CDI)1,2,3		12,000,000			3,663
Allied Gold Ltd. (GBP denominated)1,2,3		3,800,000			1,160
Inmet Mining Corp.		200,000			12,187
Lynas Corp. Ltd.2,3		23,325,296			11,326
Centamin Egypt Ltd.2,3		5,742,024			11,291
Rusoro Mining Ltd.3,4		14,011,765			5,891
Rusoro Mining Ltd.3		11,518,667			4,842
Aquarius Platinum Ltd.2,3		1,655,455			10,677
Lundin Mining Corp.3		2,250,000			9,243
Conquest Mining Ltd.1,2,3		20,000,000			8,869
Huabao International Holdings Ltd.2		7,510,000			8,099
FUCHS PETROLUB AG2		91,000			7,911
Kenmare Resources PLC2,3		21,637,759			7,694
Petropavlovsk PLC2,3		367,578			6,028
Symrise AG2		250,000			5,360
MBAC Fertilizer Corp.3		1,750,000			5,350
Cape Lambert Resources Ltd.2,3		10,400,000			4,906
Cheil Industries Inc.2		100,500			4,888
Mineral Deposits Ltd. (CAD denominated)3		2,550,000			2,436
Mineral Deposits Ltd.2,3		2,365,672			2,065
Sundance Resources Ltd.2,3		29,400,000			4,026
Northern Iron Ltd.2,3		3,493,249			3,912
Sika AG, non-registered shares2		2,500			3,885
SOL SpA2		520,000			2,960
Calgon Carbon Corp.3		175,000			2,432
Banro Corp.3		1,011,400			1,971
J.K. Cement Ltd.2		560,000			1,769
Oxus Gold PLC2,3		11,076,878			1,590
Intrepid Potash, Inc.3		51,100			1,491
Polo Resources Ltd.2,3		22,823,700			1,394
Chaarat Gold Holdings Ltd.2,3,4		1,710,000			863
Gemfields Resources PLC2,3,4		8,149,333			692
Gemfields Resources PLC2,3		2,000,000			170
Hard Creek Nickel Corp.3,4		1,997,100			372
Orsu Metals Corp.3		588,231			326
Gladstone Pacific Nickel Ltd.2,3		939,000			243
Zoloto Resources Ltd.2,3		2,395,200			55
Mwana Africa PLC2,3		192,500			38
					356,363
FINANCIALS — 8.34%
Industrial and Commercial Bank of China (Asia) Ltd.2		16,535,611			35,788
SVB Financial Group3		625,000			26,056
Redwood Trust, Inc.3		1,100,000			15,906
East West Bancorp, Inc.		670,800			10,599
East West Bancorp, Inc.2,4		394,535			5,299
Banco Daycoval SA, preferred nominative		2,085,700			11,707
CDL Hospitality Trusts2		8,824,000			10,851
Azimut Holding SpA2		760,000			10,138
Portfolio Recovery Associates, Inc.3		225,000			10,098
Banco Cruzeiro do Sul SA, preferred nominative		1,377,100			10,053
Champion Real Estate Investment Trust2		21,937,377			9,285
Banco Pine SA, preferred nominative		1,500,000			9,254
Banco Panamericano SA, preferred nominative		1,516,700			9,183
Daegu Bank, Ltd.2		593,320			8,728
BOK Financial Corp.		180,000			8,554
Dolphin Capital Investors Ltd.2,3		7,805,320			7,169
Busan Bank2		575,000			6,859
Dah Sing Financial Holdings Ltd.2,3		1,200,000			6,617
Indiabulls Real Estate Ltd.2,3		1,200,000			5,829
First Southern Bancorp, Inc.2,3,5		232,830			4,913
Starwood Property Trust, Inc.		250,000			4,722
Zenith National Insurance Corp.		155,691			4,633
eHealth, Inc.3		255,000			4,190
Airesis SA1,2,3		3,294,151			4,186
Gruppo MutuiOnline SpA2		475,000			3,838
China Real Estate Information Corp. (ADR)3		343,900			3,776
Banco ABC Brasil SA, preferred nominative		469,300			3,178
Bajaj Holdings & Investment Ltd.2		237,225			3,110
CapitaMall Trust, units2		2,440,000			3,093
MGIC Investment Corp.3		525,000			3,033
City National Corp.		60,000			2,736
Sterling Bancshares, Inc.		469,290			2,407
Zions Bancorporation		175,000			2,245
Paraná Banco SA, preferred nominative		382,280			2,244
United Bankshares, Inc.		105,000			2,097
Islamic Arab Insurance Co. (Salama)2,3		5,250,000			1,228
					273,602
ENERGY — 5.13%
Heritage Oil Ltd.2,3		4,563,000			32,145
BJ Services Co.		1,332,500			24,784
Concho Resources Inc.3		454,000			20,385
Karoon Gas Australia Ltd.2,3		2,076,790			19,513
Cimarex Energy Co.		309,000			16,368
Dril-Quip, Inc.3		235,000			13,273
Regal Petroleum PLC2,3		9,555,500			12,266
Wellstream Holdings PLC2		1,000,000			8,535
ShaMaran Petroleum Corp.2,3,4		14,400,000			5,881
Exillon Energy PLC2,3		1,456,000			4,239
Oceaneering International, Inc.3		65,000			3,804
Borders & Southern Petroleum PLC2,3		3,340,000			3,313
Cap-Link Ventures Ltd.2,3,4		6,800,000			2,007
Leni Gas & Oil PLC2,3,4		25,500,000			1,288
BNK Petroleum Inc.3		508,600			573
Oilexco Inc. (GBP denominated)2,3,4		1,900,000			—
Oilexco Inc. (GBP denominated)2,3		1,755,000			—
Oilexco Inc.2,3,4		985,000			—
					168,374
CONSUMER STAPLES — 3.58%
Hite Brewery Co., Ltd.2		171,300			24,980
Kernel Holding SA2,3		1,555,000			22,666
Hypermarcas SA, ordinary nominative3		883,000			20,270
Whole Foods Market, Inc.3		525,000			14,411
Nong Shim Co., Ltd.2		40,505			8,656
Chattem, Inc.3		90,000			8,397
PureCircle Ltd. (CDI)2,3		1,845,238			7,257
Drogasil SA, ordinary nominative		341,900			5,494
China Green (Holdings) Ltd.2		4,123,000			3,898
PT BISI International Tbk2,3		9,354,500			1,342
					117,371
UTILITIES — 3.53%
Xinao Gas Holdings Ltd.2		37,865,700			96,732
Hyflux Ltd2		7,612,000			19,112
					115,844
TELECOMMUNICATION SERVICES — 1.24%
True Corp. PCL2,3		184,688,200			16,875
tw telecom inc.3		650,000			11,141
Partner Communications Co. Ltd.2		383,306			7,777
Partner Communications Co. Ltd. (ADR)		14,000			285
Total Access Communication PCL2		2,403,300			2,566
StarHub Ltd2		1,372,250			2,089
					40,733
MISCELLANEOUS — 4.95%
Other common stocks in initial period of acquisition					162,326
Total common stocks (cost: $2,710,231,000)					3,114,796
Rights & warrants — 0.05%	Shares
ENERGY — 0.02%
Cap-Link Ventures Ltd., warrants, expire 20122,3,4		6,800,000			781
Leni Gas & Oil PLC, warrants, expire 20132,3,4		12,750,000			17
					798
MATERIALS — 0.01%
Rusoro Mining Ltd., warrants, expire 20122,3,4		4,500,000			236
Rusoro Mining Ltd., warrants, expire 20112,3		833,334			5
Rusoro Mining Ltd., warrants, expire 20122,3,4		755,882			—
Hard Creek Nickel Corp., warrants, expire 20102,3,4		998,550			20
					261
MISCELLANEOUS — 0.02%
Other rights & warrants in initial period of acquisition					679
Total rights & warrants (cost: $3,898,000)					1,738
	Shares or
Convertible securities — 0.43%	principal amount
FINANCIALS — 0.32%
East West Bancorp, Inc. 13.00% convertible preferred2,3,4		6,812			10,120
First Southern Bancorp, Inc., Series C, convertible preferred2,3,5		398			398
					10,518
TELECOMMUNICATION SERVICES — 0.11%
tw telecom inc. 2.375% convertible debentures 2026	$	3,300,000			3,651
ENERGY — 0.00%
High Arctic Energy Services Inc. 10.00% convertible debentures 20122,4,6	CAD2,300,000				22
Total convertible securities (cost: $11,868,000)					14,191
	Principal amount
Bonds, notes & other debt instruments — 0.37%		(000	)
FINANCIALS — 0.37%
Zions Bancorporation 5.65% 2014	$	3,030			2,257
Zions Bancorporation 5.50% 2015		165			117
Zions Bancorporation 6.00% 2015		13,571			9,610
Total bonds, notes & other debt instruments (cost: $12,283,000)					11,984
	Principal amount			Value
Short-term securities — 4.20%		(000	)		(000	)
Eni Finance USA Inc. 0.17% due 1/15/20104	$	25,100		$	25,098
General Electric Capital Corp. 0.01% due 1/4/2010		24,300			24,300
National Australia Funding (Delaware) Inc. 0.185% due 3/9/20104		19,800			19,792
Freddie Mac 0.115% due 3/29/2010		16,000			15,997
KfW 0.19% due 1/14/20104		12,000			11,999
GDF SUEZ 0.20% due 2/8/20104		11,000			10,998
Fannie Mae 0.09%–0.13% due 1/15–2/3/2010		9,800			9,800
ING (U.S.) Funding LLC 0.22% due 1/19/2010		9,000			8,999
Bank of Nova Scotia 0.20% due 1/12/2010		8,500			8,499
Harvard University 0.11% due 1/8/2010		2,269			2,269
Total short-term securities (cost: $137,750,000)					137,751
Total investment securities (cost: $2,876,030,000)					3,280,460
Other assets less liabilities					1,145
Net assets				$	3,281,605

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

1Represents an affiliated company as defined under the Investment Company Act of 1940.

2Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $1,843,382,000, which represented 56.17% of the net assets of the fund. This amount includes $1,812,473,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

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

4Purchased 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 $136,445,000, which represented 4.16% of the net assets of the fund.

5Purchased 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
First Southern Bancorp	12/17/2009	$	4,913	$	4,913		.15	%
First Southern Bancorp, Series C	12/17/2009		398		398		.01
Mobil Travel Guide, Inc.	12/17/2007		55		55		.00
Total restricted securities		$	5,366	$	5,366		.16	%

6Scheduled interest and/or principal payment was not received.

Key to abbreviations

ADR = American Depositary Receipts

CDI = CREST Depository Interest

GDR = Global Depositary Receipts

CAD = Canadian dollars

GBP = British pounds

Global Small Capitalization Fund

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
Xinao Gas Holdings		2.95	%
Jumbo		2.76
African Minerals		1.90
Kingboard Chemical Holdings		1.38
AAC Acoustic Technologies Holdings		1.35
Rovi		1.31
Kingboard Laminates		1.25
Modern Times Group		1.23
Volcano		1.22
Fourlis		1.11

							Percent
				Value			of net
Common stocks  - 94.92%	Shares				(000	)	assets
Consumer discretionary  -  18.35%
Jumbo SA (1)  (2)		7,141,333		$	90,647			2.76	%
Modern Times Group MTG AB, Class B (1)		813,500			40,290			1.23
Fourlis (1)  (2)		2,804,285			36,556			1.11
Oceanus Group Ltd. (1) (3)		81,265,000			25,207			.77
Hankook Tire Co., Ltd. (1)		1,151,000			25,071			.76
Golden Eagle Retail Group Ltd. (1)		11,915,000			24,078			.73
Paddy Power PLC (1)		622,000			22,027			.67
Pantaloon Retail (India) Ltd. (1)		2,500,000			20,251			.62
Parkson Retail Group Ltd. (1)		11,368,000			19,887			.61
Lions Gate Entertainment Corp. (3)		3,250,000			18,882			.57
Central European Media Enterprises Ltd., Class A (3)		790,000			18,652			.57
Other securities					260,622			7.95
					602,170			18.35
Information technology  -  15.01%
Kingboard Chemical Holdings Ltd. (1)		11,482,000			45,245			1.38
AAC Acoustic Technologies Holdings Inc. (1)		27,066,000			44,458			1.35
Rovi Corp. (3)		1,347,989			42,960			1.31
Kingboard Laminates Holdings Ltd. (1)		59,286,509			40,924			1.25
Hittite Microwave Corp. (3)		525,000			21,394			.65
VTech Holdings Ltd. (1)		2,124,000			20,253			.62
Semtech Corp. (3)		1,170,000			19,902			.61
Global Unichip Corp. (1)		3,576,627			18,837			.57
Other securities					238,542			7.27
					492,515			15.01
Industrials  -  12.99%
Monster Worldwide, Inc. (3)		2,100,000			36,540			1.11
Intertek Group PLC (1)		1,385,000			27,923			.85
International Container Terminal Services, Inc. (1)		47,285,000			22,870			.70
MSC Industrial Direct Co., Inc., Class A		477,000			22,419			.68
Copart, Inc. (3)		540,000			19,780			.60
Other securities					296,786			9.05
					426,318			12.99
Health care  -  10.94%
Volcano Corp. (3)		2,295,478			39,895			1.22
Inverness Medical Innovations, Inc. (3)		784,577			32,568			.99
Myriad Genetics, Inc. (3)		1,031,900			26,933			.82
Talecris Biotherapeutics Holdings Corp. (3)		1,190,000			26,501			.81
Cochlear Ltd. (1)		320,899			19,814			.60
OJSC Pharmstandard (GDR) (1) (3)		946,865			19,006			.58
EGIS Nyrt. (1)		175,825			17,497			.53
Other securities					176,966			5.39
					359,180			10.94
Materials  -  10.86%
African Minerals Ltd. (1) (3)		7,905,000			47,404
African Minerals Ltd.  (1) (3) (4)		2,480,000			14,872			1.90
Jaguar Mining Inc. (3)		1,603,000			18,087
Jaguar Mining Inc. (3) (4)		952,500			10,747			.88
European Goldfields Ltd. (1) (3)		4,691,100			26,498			.81
Midas Holdings Ltd. (1)		40,325,000			26,176			.80
AK Steel Holding Corp.		1,055,000			22,524			.69
Other securities					190,055			5.78
					356,363			10.86
Financials  -  8.34%
Industrial and Commercial Bank of China (Asia) Ltd. (1)		16,535,611			35,788			1.09
SVB Financial Group (3)		625,000			26,056			.79
Other securities					211,758			6.46
					273,602			8.34
Energy  -  5.13%
Heritage Oil Ltd. (1) (3)		4,563,000			32,145			.98
BJ Services Co.		1,332,500			24,784			.76
Concho Resources Inc. (3)		454,000			20,385			.62
Karoon Gas Australia Ltd. (1) (3)		2,076,790			19,513			.59
Other securities					71,547			2.18
					168,374			5.13
Consumer staples  -  3.58%
Hite Brewery Co., Ltd. (1)		171,300			24,980			.76
Kernel Holding SA (1) (3)		1,555,000			22,666			.69
Hypermarcas SA, ordinary nominative (3)		883,000			20,270			.62
Other securities					49,455			1.51
					117,371			3.58
Utilities  -  3.53%
Xinao Gas Holdings Ltd. (1)		37,865,700			96,732			2.95
Hyflux Ltd (1)		7,612,000			19,112			.58
					115,844			3.53
Telecommunication services  -  1.24%
Other securities					40,733			1.24
Miscellaneous  -  4.95%
Other common stocks in initial period of acquisition					162,326			4.95
Total common stocks (cost: $2,710,231,000)					3,114,796			94.92
							Percent
				Value			of net
Rights & warrants  - 0.05%					(000	)	assets
Other  -  0.03%
Other securities					1,059			.03
Miscellaneous  -  0.02%
Other rights & warrants in initial period of acquisition					679			.02
Total rights & warrants (cost: $3,898,000)					1,738			.05
							Percent
				Value			of net
Convertible securities  - 0.43%					(000	)	assets
Other  -  0.43%
Other securities					14,191			.43
Total convertible securities (cost: $11,868,000)					14,191			.43
							Percent
				Value			of net
Bonds, notes & other debt instruments  - 0.37%					(000	)	assets
Financials  -  0.37%
Other securities					11,984			.37
Total bonds, notes & other debt instruments (cost: $12,283,000)					11,984			.37
	Principal						Percent
	amount			Value			of net
Short-term securities  - 4.20%		(000	)		(000	)	assets
Eni Finance USA Inc. 0.17% due 1/15/2010 (4)	$	25,100		$	25,098			.76
General Electric Capital Corp. 0.01% due 1/4/2010		24,300			24,300			.74
National Australia Funding (Delaware) Inc. 0.185% due 3/9/2010 (4)		19,800			19,792			.60
Other securities					68,561			2.10
Total short-term securities (cost: $137,750,000)					137,751			4.20
Total investment securities (cost: $2,876,030,000)					3,280,460			99.97
Other assets less liabilities					1,145			.03
Net assets				$	3,281,605			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. Some of these securities (with an aggregate value of $5,366,000, which represented .16% 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. The value of the fund's affiliated-company holdings is either shown in the summary investment portfolio or included in the value of "Other securities" under the respective industry sectors. Further details on such holdings and related transactions during the year ended December 31, 2009, appear below.

	Beginning shares		Additions		Reductions		Ending  shares		Dividend  income  (000)		Value of affiliates at  12/31/09  (000)
Jumbo SA (1)		7,800,170		-		658,837		7,141,333	$	2,159	$	90,647
Fourlis (1)		2,804,285		-		-		2,804,285		1,270		36,556
Allied Gold Ltd. (1) (3)		22,715,274		15,325,000		-		38,040,274		-		11,302
Allied Gold Ltd. (CDI) (1) (3)		-		12,000,000		-		12,000,000		-		3,663
Allied Gold Ltd. (GBP denominated) (1) (3)		3,800,000		-		-		3,800,000		-		1,160
JVM Co., Ltd. (1) (3)		411,500		-		-		411,500		-		13,010
Pursuit Dynamics PLC (1) (3)		-		4,229,200		-		4,229,200		-		10,258
Conquest Mining Ltd. (1) (3)		-		20,000,000		-		20,000,000		-		8,869
Airesis SA (1) (3)		3,294,151		-		-		3,294,151		-		4,186
African Minerals Ltd. (1) (3) (5)		6,905,000		1,000,000		-		7,905,000		-		-
African Minerals Ltd. (1) (3) (4) (5)		2,480,000		-		-		2,480,000		-		-
CallWave, Inc. (5)		1,348,700		-		1,348,700		-		-		-
Horizon North Logistics Inc. (3) (5)		5,700,000		-		3,000,000		2,700,000		-		-
Ondine Biopharma Corp. (3) (4) (5)		2,620,000		-		-		2,620,000		-		-
Ondine Biopharma Corp. (3) (5)		400,000		-		-		400,000		-		-
Ondine Biopharma Corp. (GBP denominated) (1) (3) (4) (5)		490,000		-		-		490,000		-		-
OSIM International Ltd. (5)		28,920,000		6,426,667		35,346,667		-		-		-
OSIM International Ltd., rights, expire 2009 (5)		-		6,426,667		6,426,667		-		-		-
Rambler Media Ltd. (5)		924,894		-		924,894		-		-		-
									$	3,429	$	179,651

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 $1,843,382,000, which represented 56.17% of the net assets of the fund. This amount includes $1,812,473,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

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

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

(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 $136,445,000, which represented 4.16% of the net assets of the fund.

(5) Unaffiliated issuer at 12/31/2009.

Key to abbreviations

CDI = CREST Depository Interest

GDR = Global Depositary Receipts

GBP = British pounds

See Notes to Financial Statements

Growth Fund

Investment portfolio

December 31, 2009

Common stocks — 96.10%	Shares			Value (000)
INFORMATION TECHNOLOGY — 19.72%
Google Inc., Class A1		1,049,000		$	650,359
Cisco Systems, Inc.1		23,315,000			558,161
Microsoft Corp.		17,830,000			543,637
Apple Inc.1		2,435,000			513,444
Oracle Corp.		16,040,540			393,635
Fidelity National Information Services, Inc.		12,040,000			282,218
QUALCOMM Inc.		5,180,000			239,627
Lender Processing Services, Inc.2		5,785,000			235,218
EMC Corp.1		10,000,000			174,700
Corning Inc.		7,700,000			148,687
Red Hat, Inc.1		4,318,300			133,436
International Business Machines Corp.		1,000,000			130,900
Texas Instruments Inc.		3,750,000			97,725
Palm, Inc.1,2		9,250,000			92,870
Samsung Electronics Co. Ltd.3		130,000			88,851
Linear Technology Corp.		2,895,000			88,413
Hewlett-Packard Co.		1,710,000			88,082
ASML Holding NV3		2,250,000			76,473
Juniper Networks, Inc.1		2,500,000			66,675
KLA-Tencor Corp.		1,610,000			58,218
Yahoo! Inc.1		2,465,000			41,363
Intuit Inc.1		1,295,000			39,769
Heartland Payment Systems, Inc.2		2,426,600			31,861
Avago Technologies Ltd.1		1,643,000			30,050
Digital River, Inc.1		1,020,000			27,530
Comverse Technology, Inc.1		2,827,300			26,718
Paychex, Inc.		848,250			25,990
Tyco Electronics Ltd.		949,125			23,301
Applied Materials, Inc.		1,045,000			14,567
AOL Inc.1		284,636			6,626
					4,929,104
ENERGY — 12.73%
Suncor Energy Inc.		13,764,081			489,311
Canadian Natural Resources, Ltd.		4,625,700			335,868
Petróleo Brasileiro SA — Petrobras, ordinary nominative (ADR)		4,260,000			203,117
Tenaris SA (ADR)		4,670,000			199,176
Pacific Rubiales Energy Corp.1,2		12,550,000			185,246
Noble Energy, Inc.		2,400,000			170,928
Devon Energy Corp.		2,324,700			170,865
Murphy Oil Corp.		2,698,800			146,275
Core Laboratories NV2		1,197,700			141,472
Petrohawk Energy Corp.1		5,490,000			131,705
EOG Resources, Inc.		1,198,328			116,597
Concho Resources Inc.1		2,500,000			112,250
Peabody Energy Corp.		1,720,000			77,761
Uranium One Inc.1		25,544,500			73,702
Diamond Offshore Drilling, Inc.		685,000			67,418
BG Group PLC3		3,050,000			54,690
Helmerich & Payne, Inc.		1,280,000			51,046
Smith International, Inc.		1,850,000			50,265
Halliburton Co.		1,630,000			49,047
Transocean Ltd.1		578,800			47,925
Arch Coal, Inc.		2,000,000			44,500
Plains Exploration & Production Co.1		1,364,700			37,748
Cobalt International Energy, Inc.1		2,401,300			33,234
Schlumberger Ltd.		500,000			32,545
OAO Gazprom (ADR)3		1,300,000			32,406
Rosetta Resources Inc.1		1,430,000			28,500
Apache Corp.		250,000			25,793
Hess Corp.		324,000			19,602
Niko Resources Ltd.		173,100			16,273
Cameco Corp.		500,000			16,085
Crescent Point Energy Corp.		275,000			10,375
Baker Hughes Inc.		232,026			9,392
					3,181,117
HEALTH CARE — 12.57%
Gilead Sciences, Inc.1		9,730,000			421,114
Intuitive Surgical, Inc.1		1,055,000			320,003
Roche Holding AG3		1,312,500			223,030
Vertex Pharmaceuticals Inc.1		4,257,000			182,412
Zimmer Holdings, Inc.1		2,960,000			174,966
Shire Ltd. (ADR)		2,700,000			158,490
Covidien PLC		2,875,000			137,684
UnitedHealth Group Inc.		4,165,000			126,949
Hospira, Inc.1		2,400,000			122,400
Human Genome Sciences, Inc.1		4,000,000			122,400
Covance Inc.1		2,040,000			111,323
Allergan, Inc.		1,620,000			102,076
Amgen Inc.1		1,775,197			100,423
Baxter International Inc.		1,565,000			91,834
Celgene Corp.1		1,600,000			89,088
Hologic, Inc.1		6,085,000			88,232
Medtronic, Inc.		2,000,000			87,960
Merck & Co., Inc.		2,195,788			80,234
Cardinal Health, Inc.		2,200,000			70,928
ResMed Inc.1		1,300,000			67,951
Grifols, SA3		3,400,000			59,204
Stryker Corp.		1,165,955			58,729
McKesson Corp.		665,000			41,562
St. Jude Medical, Inc.1		883,000			32,477
Aetna Inc.		1,000,000			31,700
Aveta Inc.1,3,4		3,893,000			23,358
Abbott Laboratories		185,000			9,988
Abraxis BioScience, Inc.1		166,975			6,771
Fresenius SE1		357,094			104
					3,143,390
FINANCIALS — 12.16%
Wells Fargo & Co.		17,770,296			479,620
Berkshire Hathaway Inc., Class A1		3,889			385,789
Bank of America Corp.		21,430,000			322,736
Fairfax Financial Holdings Ltd.		230,000			89,691
Fairfax Financial Holdings Ltd. (CAD denominated)		215,000			84,217
Citigroup Inc.		47,050,000			155,736
Goldman Sachs Group, Inc.		800,000			135,072
Aon Corp.		3,385,500			129,800
American Express Co.		3,000,000			121,560
XL Capital Ltd, Class A		5,900,000			108,147
Onex Corp.		4,600,500			103,728
Morgan Stanley		3,000,000			88,800
PNC Financial Services Group, Inc.		1,652,480			87,234
JPMorgan Chase & Co.		2,054,000			85,590
Hancock Holding Co.		1,680,000			73,567
Industrial and Commercial Bank of China Ltd., Class H3		89,000,000			73,047
Marsh & McLennan Companies, Inc.		2,753,600			60,799
New York Community Bancorp, Inc.		3,500,000			50,785
Old National Bancorp		4,077,000			50,677
People’s United Financial, Inc.		3,000,000			50,100
ACE Ltd.		965,000			48,636
AMP Ltd.3		8,039,725			48,418
MB Financial, Inc.		2,377,500			46,884
Northern Trust Corp.		892,000			46,741
Bank of New York Mellon Corp.		1,150,000			32,166
T. Rowe Price Group, Inc.		430,670			22,933
Toronto-Dominion Bank		300,000			18,905
Bank of Ireland1,3		9,096,177			16,964
Umpqua Holdings Corp.		1,234,175			16,550
Jefferies Group, Inc.1		170,400			4,044
					3,038,936
MATERIALS — 10.56%
Barrick Gold Corp.		10,000,000			393,800
Newmont Mining Corp.		7,305,000			345,600
Rio Tinto PLC3		5,902,955			318,561
Potash Corp. of Saskatchewan Inc.		2,800,000			303,800
Monsanto Co.		3,645,000			297,979
Freeport-McMoRan Copper & Gold Inc.1		2,000,000			160,580
Gold Fields Ltd.3		10,000,000			131,664
CRH PLC3		4,364,678			118,142
Walter Energy, Inc.		1,400,000			105,434
Shin-Etsu Chemical Co., Ltd.3		1,835,000			103,492
Praxair, Inc.		1,135,000			91,152
Cliffs Natural Resources Inc.		1,760,000			81,118
Minerals Technologies Inc.2		1,025,000			55,832
Vale SA, Class A, preferred nominative (ADR)		2,000,000			49,640
Alcoa Inc.		2,600,000			41,912
First Quantum Minerals Ltd.		473,700			36,323
Buzzi Unicem SpA, nonconvertible shares3		449,426			4,644
					2,639,673
CONSUMER DISCRETIONARY — 10.55%
Johnson Controls, Inc.		10,949,100			298,253
CarMax, Inc.1		7,842,500			190,181
Wynn Resorts, Ltd.1		3,220,000			187,501
Best Buy Co., Inc.		4,100,000			161,786
Starbucks Corp.1		6,993,000			161,259
lululemon athletica inc.1,2		4,000,000			120,400
NIKE, Inc., Class B		1,820,000			120,247
Target Corp.		2,401,400			116,156
Chipotle Mexican Grill, Inc.1		1,241,400			109,442
Lowe’s Companies, Inc.		4,546,000			106,331
Home Depot, Inc.		3,200,000			92,576
Time Warner Inc.		3,131,000			91,237
Las Vegas Sands Corp.1		5,962,500			89,080
News Corp., Class A		6,490,000			88,848
Strayer Education, Inc.		400,000			84,996
Shaw Communications Inc., Class B, nonvoting		3,500,000			71,995
Marriott International, Inc., Class A		2,514,430			68,518
Blue Nile, Inc.1,2		1,043,000			66,053
Penn National Gaming, Inc.1		2,363,000			64,226
Comcast Corp., Class A		3,145,000			53,025
Education Management Corp.1		2,261,000			49,765
Shimano Inc.3		1,100,000			44,052
Harman International Industries, Inc.		1,245,000			43,924
Magna International Inc., Class A		725,000			36,670
Toyota Motor Corp.3		765,000			32,161
Weight Watchers International, Inc.		1,062,000			30,968
Time Warner Cable Inc.		650,000			26,903
McGraw-Hill Companies, Inc.		650,000			21,782
Saks Inc.1		1,530,000			10,037
					2,638,372
INDUSTRIALS — 8.12%
First Solar, Inc.1		2,885,095			390,642
Boeing Co.		3,665,000			198,386
United Technologies Corp.		2,075,000			144,026
Lockheed Martin Corp.		1,820,000			137,137
Stericycle, Inc.1		2,365,000			130,477
KBR, Inc.		5,397,130			102,545
General Dynamics Corp.		1,300,000			88,621
Roper Industries, Inc.		1,540,000			80,650
Iron Mountain Inc.1		3,105,000			70,670
Graco Inc.		2,375,000			67,854
Northrop Grumman Corp.		1,150,000			64,228
Spirit AeroSystems Holdings, Inc., Class A1		3,103,600			61,637
TransDigm Group Inc.1		1,288,000			61,167
Republic Services, Inc.		1,659,600			46,983
General Electric Co.		3,000,000			45,390
United Parcel Service, Inc., Class B		745,000			42,741
MTU Aero Engines Holding AG3		737,629			40,446
Joy Global Inc.		710,000			36,629
Actuant Corp., Class A		1,763,027			32,669
Grafton Group PLC, units1,3		6,270,000			25,999
MSC Industrial Direct Co., Inc., Class A		550,000			25,850
Tyco International Ltd.		699,125			24,945
Norfolk Southern Corp.		400,000			20,968
W.W. Grainger, Inc.		210,000			20,334
Honeywell International Inc.		515,000			20,188
Vestas Wind Systems A/S1,3		275,000			16,824
Raytheon Co.		246,000			12,674
Fastenal Co.		295,000			12,284
Brady Corp., Class A, nonvoting shares		225,000			6,752
					2,029,716
CONSUMER STAPLES — 5.29%
Philip Morris International Inc.		5,930,000			285,767
Coca-Cola Co.		4,515,000			257,355
Wal-Mart Stores, Inc.		2,500,000			133,625
Anheuser-Busch InBev NV3		2,500,000			129,066
Estée Lauder Companies Inc., Class A		1,697,240			82,079
Altria Group, Inc.		4,050,000			79,501
Pernod Ricard SA3		899,015			77,111
PepsiCo, Inc.		1,220,000			74,176
Beiersdorf AG3		1,125,000			73,883
Bare Escentuals, Inc.1		4,270,000			52,222
CVS/Caremark Corp.		1,000,000			32,210
Colgate-Palmolive Co.		250,000			20,537
Procter & Gamble Co.		315,000			19,098
Cosan Ltd., Class A1		599,426			5,215
					1,321,845
TELECOMMUNICATION SERVICES — 1.76%
SOFTBANK CORP.3		5,600,000			130,965
Qwest Communications International Inc.		25,000,000			105,250
Telefónica, SA3		3,620,000			100,821
América Móvil, SAB de CV, Series L (ADR)		1,435,000			67,416
Telephone and Data Systems, Inc., special common shares		1,190,000			35,938
					440,390
UTILITIES — 1.29%
Edison International		2,400,000			83,472
Exelon Corp.		1,445,000			70,617
Allegheny Energy, Inc.		2,550,000			59,874
RRI Energy, Inc.1		5,696,500			32,584
NRG Energy, Inc.1		1,300,000			30,693
Dynegy Inc., Class A1		13,900,000			25,159
KGen Power Corp.1,2,3,4		3,166,128			18,997
					321,396
MISCELLANEOUS — 1.35%
Other common stocks in initial period of acquisition					336,519
Total common stocks (cost: $20,597,158,000)					24,020,458
Convertible securities — 0.04%
UTILITIES — 0.04%
Great Plains Energy Inc. 12.00% convertible preferred		175,000			11,550
Total convertible securities (cost: $8,750,000)					11,550
	Principal amount
Short-term securities — 3.98%		(000	)
U.S. Treasury Bills 0.17%–0.287% due 6/10–8/26/2010	$	285,600			285,270
Freddie Mac 0.085%–0.25% due 1/27–6/23/2010		191,000			190,935
JPMorgan Chase Funding Inc. 0.18% due 1/19/20105		31,100			31,096
Park Avenue Receivables Co., LLC 0.19% due 1/7/20105		26,022			26,021
JPMorgan Chase & Co. 0.18% due 1/6/2010		24,900			24,899
Jupiter Securitization Co., LLC 0.17% due 2/22/20105		24,000			23,994
General Electric Capital Corp. 0.01%–0.20% due 1/4–1/19/2010		89,000			88,989
Straight-A Funding LLC 0.16%–0.20% due 2/12/20105		69,037			69,023
Coca-Cola Co. 0.13%–0.24% due 1/12–5/11/20105		50,300			50,286
Procter & Gamble International Funding S.C.A. 0.10%–0.23% due 1/8–2/4/20105		42,900			42,897
Federal Home Loan Bank 0.10%–0.18% due 2/5–3/22/2010		27,700			27,697
NetJets Inc. 0.10% due 1/11/20105		25,000			24,999
Federal Farm Credit Banks 0.13% due 3/19/2010		25,000			24,997
Variable Funding Capital Company LLC 0.21% due 1/14/20105		23,900			23,896
Fannie Mae 0.08% due 1/28/2010		21,800			21,799
Bank of America Corp. 0.21% due 1/13/2010		18,400			18,398
Abbott Laboratories 0.15% due 1/4/20105		17,500			17,500
Johnson & Johnson 0.08% due 1/11/20105		2,400			2,400
Total short-term securities (cost: $995,076,000)					995,096
Total investment securities (cost: $21,600,984,000)					25,027,104
Other assets less liabilities					(31,022	)
Net assets				$	24,996,082

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

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

2Represents an affiliated company as defined under the Investment Company Act of 1940.

3Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities , including those in “Miscellaneous,” was $2,273,022,000, which represented 9.09% of the net assets of the fund. This amount includes $2,230,667,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

4Purchased 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
Aveta Inc.	12/21/2005	$	52,556	$	23,358		.09	%
KGen Power Corp.	12/19/2006		44,326		18,997		.08
Total restricted securities		$	96,882	$	42,355		.17	%

5Purchased 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 $312,112,000, which represented 1.25% of the net assets of the fund.

Key to abbreviations

ADR = American Depositary Receipts

CAD = Canadian dollars

Growth Fund

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
Google		2.60	%
Cisco Systems		2.23
Microsoft		2.18
Apple		2.05
Suncor		1.96
Wells Fargo		1.92
Gilead Sciences		1.68
Barrick Gold		1.58
Oracle		1.57
First Solar		1.56

							Percent
				Value			of net
Common stocks  - 96.10%	Shares				(000	)	assets
Information technology  - 19.72%
Google Inc., Class A (1)		1,049,000		$	650,359			2.60	%
Cisco Systems, Inc. (1)		23,315,000			558,161			2.23
Microsoft Corp.		17,830,000			543,637			2.18
Apple Inc. (1)		2,435,000			513,444			2.05
Oracle Corp.		16,040,540			393,635			1.57
Fidelity National Information Services, Inc.		12,040,000			282,218			1.13
QUALCOMM Inc.		5,180,000			239,627			.96
Lender Processing Services, Inc.  (2)		5,785,000			235,218			.94
EMC Corp. (1)		10,000,000			174,700			.70
Corning Inc.		7,700,000			148,687			.60
Other securities					1,189,418			4.76
					4,929,104			19.72
Energy  - 12.73%
Suncor Energy Inc.		13,764,081			489,311			1.96
Canadian Natural Resources, Ltd.		4,625,700			335,868			1.34
Petróleo Brasileiro SA - Petrobras, ordinary nominative (ADR)		4,260,000			203,117			.81
Tenaris SA (ADR)		4,670,000			199,176			.80
Pacific Rubiales Energy Corp. (1)  (2)		12,550,000			185,246			.74
Noble Energy, Inc.		2,400,000			170,928			.68
Devon Energy Corp.		2,324,700			170,865			.68
Murphy Oil Corp.		2,698,800			146,275			.59
Core Laboratories NV  (2)		1,197,700			141,472			.57
Other securities					1,138,859			4.56
					3,181,117			12.73
Health care  - 12.57%
Gilead Sciences, Inc. (1)		9,730,000			421,114			1.68
Intuitive Surgical, Inc. (1)		1,055,000			320,003			1.28
Roche Holding AG (3)		1,312,500			223,030			.89
Vertex Pharmaceuticals Inc. (1)		4,257,000			182,412			.73
Zimmer Holdings, Inc. (1)		2,960,000			174,966			.70
Shire Ltd. (ADR)		2,700,000			158,490			.64
Covidien PLC		2,875,000			137,684			.55
Other securities					1,525,691			6.10
					3,143,390			12.57
Financials  - 12.16%
Wells Fargo & Co.		17,770,296			479,620			1.92
Berkshire Hathaway Inc., Class A (1)		3,889			385,789			1.54
Bank of America Corp.		21,430,000			322,736			1.29
Fairfax Financial Holdings Ltd.		230,000			89,691
Fairfax Financial Holdings Ltd. (CAD denominated)		215,000			84,217			.70
Citigroup Inc.		47,050,000			155,736			.62
Goldman Sachs Group, Inc.		800,000			135,072			.54
Other securities					1,386,075			5.55
					3,038,936			12.16
Materials  - 10.56%
Barrick Gold Corp.		10,000,000			393,800			1.58
Newmont Mining Corp.		7,305,000			345,600			1.38
Rio Tinto PLC (3)		5,902,955			318,561			1.27
Potash Corp. of Saskatchewan Inc.		2,800,000			303,800			1.22
Monsanto Co.		3,645,000			297,979			1.19
Freeport-McMoRan Copper & Gold Inc. (1)		2,000,000			160,580			.64
Other securities					819,353			3.28
					2,639,673			10.56
Consumer discretionary  - 10.55%
Johnson Controls, Inc.		10,949,100			298,253			1.19
CarMax, Inc. (1)		7,842,500			190,181			.76
Wynn Resorts, Ltd. (1)		3,220,000			187,501			.75
Best Buy Co., Inc.		4,100,000			161,786			.65
Starbucks Corp. (1)		6,993,000			161,259			.65
Other securities					1,639,392			6.55
					2,638,372			10.55
Industrials  - 8.12%
First Solar, Inc. (1)		2,885,095			390,642			1.56
Boeing Co.		3,665,000			198,386			.79
United Technologies Corp.		2,075,000			144,026			.58
Lockheed Martin Corp.		1,820,000			137,137			.55
Other securities					1,159,525			4.64
					2,029,716			8.12
Consumer staples  - 5.29%
Philip Morris International Inc.		5,930,000			285,767			1.14
Coca-Cola Co.		4,515,000			257,355			1.03
Wal-Mart Stores, Inc.		2,500,000			133,625			.54
Other securities					645,098			2.58
					1,321,845			5.29
Telecommunication services - 1.76%
Other securities					440,390			1.76
Utilities - 1.29%
Other securities					321,396			1.29
Miscellaneous  -  1.35%
Other common stocks in initial period of acquisition					336,519			1.35
Total common stocks (cost: $20,597,158,000)					24,020,458			96.10
Convertible securities  - 0.04%
Other - 0.04%
Other securities					11,550			.04
Total convertible securities (cost: $8,750,000)					11,550			.04
	Principal
	amount
Short-term securities  - 3.98%		(000	)
U.S. Treasury Bills 0.17%-0.287% due 6/10-8/26/2010	$	285,600			285,270			1.14
Freddie Mac 0.085%-0.25% due 1/27-6/23/2010		191,000			190,935			.76
Coca-Cola Co. 0.13%-0.24% due 1/12-5/11/2010 (4)		50,300			50,286			.20
NetJets Inc. 0.10% due 1/11/2010 (4)		25,000			24,999			.10
Variable Funding Capital Company LLC 0.21% due 1/14/2010 (4)		23,900			23,896			.10
Bank of America Corp. 0.21% due 1/13/2010		18,400			18,398			.07
Other securities					401,312			1.61
Total short-term securities (cost: $995,076,000)					995,096			3.98
Total investment securities (cost: $21,600,984,000)					25,027,104			100.12
Other assets less liabilities					(31,022	)		(.12	)
Net assets				$	24,996,082			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. The value of the fund's affiliated-company holdings is either shown in the summary investment portfolio or included in the value of "Other securities" under the respective industry sectors. Further details on such holdings and related transactions during the year ended December 31, 2009, appear below.

									Dividend			Value of affiliates
	Beginning						Ending		income			at 12/31/09
	shares		Additions		Reductions		shares			(000	)		(000	)
Lender Processing Services, Inc.		5,785,000		-		-		5,785,000	$	2,314		$	235,218
Pacific Rubiales Energy Corp. (1)		12,550,000		-		-		12,550,000		-			185,246
Core Laboratories NV		1,197,700		-		-		1,197,700		1,171			141,472
lululemon athletica inc. (1)		4,185,000		-		185,000		4,000,000		-			120,400
Palm, Inc. (1)		-		9,250,000		-		9,250,000		-			92,870
Blue Nile, Inc. (1)		1,043,000		-		-		1,043,000		-			66,053
Minerals Technologies Inc.		1,025,000		-		-		1,025,000		205			55,832
Heartland Payment Systems, Inc.		2,426,600		-		-		2,426,600		133			31,861
KGen Power Corp. (1) (3) (5)		3,166,128		-		-		3,166,128		-			18,997
Chipotle Mexican Grill, Inc. (1) (6)		920,000		781,400		460,000		1,241,400		-			-
Chipotle Mexican Grill, Inc., Class B (6)		1,195,200		-		1,195,200		-		-			-
DataPath, Inc. (6)		2,819,968		-		2,819,968		-		-			-
Digital River, Inc. (1) (6)		2,625,000		-		1,605,000		1,020,000		-			-
Graco Inc. (6)		3,018,707		-		643,707		2,375,000		2,060			-
Panalpina Welttransport (Holding) AG  (6)		1,483,282		60,970		1,544,252		-		2,250			-
Uranium One Inc. (1) (6)		24,544,500		1,000,000		-		25,544,500		-			-
									$	8,133		$	947,949

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

(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" and "Other securities," was $2,273,022,000, which represented 9.09% of the net assets of the fund. This amount includes $2,230,667,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

(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 $312,112,000, which represented 1.25% of the net assets of the fund.

(5) Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 12/19/2006 at a cost of $44,326,000) may be subject to legal or contractual restrictions on resale. The total value of all such securities, including those in "Other securities," was $42,355,000, which represented .17% of the net assets of the fund.

(6) Unaffiliated issuer at 12/31/2009.

Key to abbreviations

ADR = American Depositary Receipts

CAD = Canadian dollars

See Notes to Financial Statements

International Fund

Investment portfolio

December 31, 2009

Common stocks — 97.07%	Shares			Value (000)
FINANCIALS — 21.91%
Credit Suisse Group AG1		3,516,613		$	173,005
Banco Santander, SA1		9,719,011			159,565
BNP Paribas SA1		1,896,155			149,523
Prudential PLC1		14,584,470			148,766
Itaú Unibanco Holding SA, preferred nominative (ADR)		5,781,150			132,041
UniCredit SpA1,2		36,893,437			122,632
Erste Bank der oesterreichischen Sparkassen AG1		3,088,804			114,409
Bank of China Ltd., Class H1		207,848,000			111,297
AXA SA1		4,493,423			106,193
Lloyds Banking Group PLC1,2		123,074,399			98,932
Société Générale1		1,156,848			79,986
Nomura Holdings, Inc.1		7,947,700			58,606
Banco Bradesco SA, preferred nominative		2,750,000			57,415
UBS AG1,2		3,462,983			53,139
Sumitomo Mitsui Financial Group, Inc.1		1,788,300			51,014
Housing Development Finance Corp. Ltd.1		867,000			49,887
China Construction Bank Corp., Class H1		56,860,000			48,404
Ping An Insurance (Group) Co. of China, Ltd., Class H1		5,286,000			45,848
Banco do Brasil SA, ordinary nominative		2,445,000			41,674
Barclays PLC1,3		5,307,100			23,417
Barclays PLC1		3,230,000			14,252
OTP Bank PLC1,2		1,300,000			36,913
Bangkok Bank PCL, nonvoting depository receipt1		9,550,000			33,246
HSBC Holdings PLC (Hong Kong)1		2,500,000			28,464
Sampo Oyj, Class A1		941,723			22,838
CapitaMalls Asia Ltd.1,2		12,199,000			22,049
Admiral Group PLC1		787,000			15,032
Siam Commercial Bank PCL1		5,000,000			13,026
Industrial and Commercial Bank of China Ltd., Class H1		11,410,000			9,365
Shinhan Financial Group Co., Ltd.1		213,310			7,927
HDFC Bank Ltd.1		173,000			6,312
Sun Hung Kai Properties Ltd.1		364,000			5,402
Kerry Properties Ltd.1		651,180			3,288
Fortis SA/NV1,2		1,950,000			—
					2,043,867
HEALTH CARE — 12.96%
Bayer AG1		6,130,023			489,584
Novartis AG1		4,864,613			264,741
Teva Pharmaceutical Industries Ltd. (ADR)		2,928,000			164,495
Merck KGaA1		972,655			90,846
Richter Gedeon NYRT1		307,000			69,575
Terumo Corp.1		865,000			51,797
OJSC Pharmstandard (GDR)1,2		1,280,000			25,693
OJSC Pharmstandard (GDR)1,2,3		307,300			6,168
EGIS Nyrt.1		305,834			30,435
Essilor International1		272,000			16,181
					1,209,515
CONSUMER DISCRETIONARY — 12.56%
Industria de Diseño Textil, SA1		3,181,000			196,962
Daimler AG1		2,607,000			139,182
Fiat SpA1,2		7,507,800			109,187
British Sky Broadcasting Group PLC1		9,457,500			85,306
adidas AG1		1,566,000			84,489
Marks and Spencer Group PLC1		9,880,000			64,178
Honda Motor Co., Ltd.1		1,302,000			44,049
Esprit Holdings Ltd.1		6,666,614			43,881
H & M Hennes & Mauritz AB, Class B1		774,000			42,863
Bayerische Motoren Werke AG1		788,000			35,797
Peugeot SA1,2		1,042,000			34,882
Techtronic Industries Co. Ltd.1		40,554,000			33,594
Yamada Denki Co., Ltd.1		441,220			29,667
Yue Yuen Industrial (Holdings) Ltd.1		10,000,000			28,885
Renault SA1,2		551,000			28,037
Toyota Motor Corp.1		609,500			25,624
Cie. Générale des Établissements Michelin, Class B1		321,934			24,676
JCDecaux SA1,2		945,000			22,895
Kesa Electricals PLC1		9,575,630			22,865
Swatch Group Ltd, non-registered shares1		55,650			13,992
Swatch Group Ltd1		110,402			5,273
Porsche Automobil Holding SE, nonvoting preferred1		285,000			17,888
Carnival PLC1,2		350,000			11,968
OPAP SA1		429,330			9,392
Belle International Holdings Ltd.1		5,173,000			5,976
Multi Screen Media Private Ltd.1,2,4		82,217			5,389
Li & Fung Ltd.1		1,152,000			4,742
					1,171,639
TELECOMMUNICATION SERVICES — 8.82%
América Móvil, SAB de CV, Series L (ADR)		3,961,500			186,111
MTN Group Ltd.1		9,665,900			153,882
Telefónica, SA1		4,245,000			118,228
Philippine Long Distance Telephone Co.1		1,254,800			70,716
Philippine Long Distance Telephone Co. (ADR)		340,000			19,268
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B1		65,947,500			65,816
Telekom Austria AG, non-registered shares1		3,421,453			48,814
KDDI Corp.1		7,845			41,394
Millicom International Cellular SA		514,700			37,970
Bharti Airtel Ltd.1		3,587,800			25,521
NTT DoCoMo, Inc.1		17,300			24,114
Koninklijke KPN NV1		840,100			14,239
Vodafone Group PLC1		2,666,250			6,182
Orascom Telecom Holding SAE (GDR)1		262,262			5,938
France Télécom SA1		175,000			4,366
Bayan Telecommunications, Inc., Class A1,2,4		43,010			—
Bayan Telecommunications, Inc., Class B1,2,4		14,199			—
					822,559
INFORMATION TECHNOLOGY — 8.42%
SAP AG1		2,550,000			120,180
HOYA CORP.1		4,158,300			110,305
Canon, Inc.1		2,054,500			86,905
Delta Electronics, Inc.1		15,575,867			48,502
Tokyo Electron Ltd.1		700,000			44,787
Redecard SA, ordinary nominative		2,605,000			43,354
Acer Inc.1		13,316,760			39,827
Autonomy Corp. PLC1,2		1,600,000			39,062
Murata Manufacturing Co., Ltd.1		730,500			36,090
MediaTek Inc.1		1,902,297			33,071
Rohm Co., Ltd.1		461,900			30,013
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)		1,547,009			17,698
Taiwan Semiconductor Manufacturing Co. Ltd.1		5,847,497			11,743
Ibiden Co., Ltd.1		730,000			26,013
Cielo SA, ordinary nominative		2,776,900			24,446
Hirose Electric Co., Ltd.1		217,300			22,662
Infosys Technologies Ltd.1		308,207			17,202
Samsung Electronics Co. Ltd.1		19,000			12,986
Nippon Electric Glass Co., Ltd.1		746,000			10,183
NetEase.com, Inc. (ADR)2		152,000			5,717
Keyence Corp.1		24,000			4,951
					785,697
CONSUMER STAPLES — 8.10%
Nestlé SA1		3,404,800			165,231
Anheuser-Busch InBev NV1		2,612,414			134,869
Anheuser-Busch InBev NV1,2		1,189,792			9
Pernod Ricard SA1		1,211,473			103,911
Imperial Tobacco Group PLC1		3,200,000			100,980
Danone SA1		1,234,806			75,144
L’Oréal SA1		559,000			62,017
Koninklijke Ahold NV1		2,768,000			36,696
British American Tobacco PLC1		612,000			19,880
Wilmar International Ltd.1		3,528,000			16,006
Tesco PLC1		1,923,357			13,232
Wesfarmers Ltd.1		453,582			12,610
SABMiller PLC1		379,600			11,146
METRO AG1		62,543			3,809
					755,540
ENERGY — 7.77%
OAO Gazprom (ADR)1		11,474,300			286,026
Royal Dutch Shell PLC, Class B1		2,512,719			73,316
Royal Dutch Shell PLC, Class A1		372,000			11,244
Eni SpA1		2,806,000			71,386
Reliance Industries Ltd.1		3,055,000			71,294
Sasol Ltd.1		1,165,820			46,828
BP PLC1		3,583,137			34,698
OGX Petróleo e Gás Participações SA, ordinary nominative		3,194,500			31,349
Cameco Corp.		660,608			21,252
Woodside Petroleum Ltd.1		438,750			18,439
Petróleo Brasileiro SA — Petrobras, preferred nominative (ADR)		415,000			17,592
TOTAL SA1		256,000			16,393
BG Group PLC1		770,000			13,807
China National Offshore Oil Corp.1		7,250,000			11,289
					724,913
MATERIALS — 6.86%
ArcelorMittal1		4,775,220			216,421
Linde AG1		834,500			100,371
Impala Platinum Holdings Ltd.1		1,765,000			48,014
Syngenta AG1		170,200			47,640
Akzo Nobel NV1		693,000			45,644
Rio Tinto PLC1		691,394			37,312
CRH PLC1		1,282,514			34,715
POSCO1		63,560			33,484
Rio Tinto Ltd.1		320,000			21,172
Givaudan SA1		19,832			15,766
Shin-Etsu Chemical Co., Ltd.1		275,000			15,510
BASF SE1		210,000			13,016
First Quantum Minerals Ltd.		145,000			11,118
					640,183
INDUSTRIALS — 6.40%
BAE Systems PLC1		18,804,000			108,505
Ryanair Holdings PLC (ADR)2		3,311,400			88,812
Siemens AG1		901,000			82,582
Wolseley PLC1,2		3,188,152			63,862
Samsung Engineering Co., Ltd.1		665,000			61,380
SMC Corp.1		340,000			38,452
Air France1,2		2,372,000			36,957
Vallourec SA1		150,000			27,263
Schneider Electric SA1		232,000			26,858
Sandvik AB1		1,200,000			14,395
Geberit AG1		75,000			13,270
Qantas Airways Ltd.1		4,600,000			12,225
East Japan Railway Co.1		164,000			10,354
AB Volvo, Class B1		965,000			8,228
Daikin Industries, Ltd.1		108,300			4,229
					597,372
UTILITIES — 1.80%
GDF Suez1		2,409,264			104,446
Scottish and Southern Energy PLC1		1,196,800			22,394
SUEZ Environnement Co.1		942,250			21,752
RWE AG1		105,000			10,196
CEZ, a s1		205,000			9,614
					168,402
MISCELLANEOUS — 1.47%
Other common stocks in initial period of acquisition					137,058
Total common stocks (cost: $7,558,336,000)					9,056,745
Preferred stocks — 0.11%
FINANCIALS — 0.11%
Barclays Bank PLC 14.00%5		5,070,000			10,537
Total preferred stocks (cost: $8,575,000)					10,537
	Principal amount			Value
Bonds, notes & other debt instruments — 0.11%		(000	)		(000	)
FINANCIALS — 0.11%
WT Finance (Australia) Pty Ltd., Westfield Europe Finance PLC, and WEA Finance LLC 3.625% 2012	€	7,000		$	10,082
Total bonds, notes & other debt instruments (cost: $9,081,000)					10,082
Short-term securities — 2.75%
Federal Home Loan Bank 0.085%–0.10% due 3/12–3/17/2010	$	59,300			59,293
International Bank for Reconstruction and Development 0.10%–0.17% due 2/1–4/15/2010		49,800			49,793
Eni Finance USA Inc. 0.17%–0.18% due 1/6–1/29/20103		30,300			30,297
Freddie Mac 0.11%–0.23% due 3/29–6/23/2010		25,900			25,887
Caisse d’Amortissement de la Dette Sociale 0.21% due 2/1/2010		25,000			24,996
GDF SUEZ 0.19% due 1/25–1/29/20103		17,800			17,798
Société Générale North America, Inc. 0.21% due 1/7/2010		11,000			11,000
Fannie Mae 0.07% due 2/5/2010		10,700			10,699
KfW 0.20% due 2/19/20103		9,700			9,697
Bank of Nova Scotia 0.07% due 2/2/2010		7,500			7,499
General Electric Capital Corp. 0.01% due 1/4/2010		6,800			6,800
ANZ National (International) Ltd. 0.18% due 3/1/20103		2,300			2,299
Total short-term securities (cost: $256,048,000)					256,058
Total investment securities (cost: $7,832,040,000)					9,333,422
Other assets less liabilities					(3,333	)
Net assets				$	9,330,089

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

1Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $8,135,886,000, which represented 87.20% of the net assets of the fund. This amount includes $8,130,497,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

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

3Purchased 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 $89,676,000, which represented .96% of the net assets of the fund.

4Purchased 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	$	5,389		.06	%
Bayan Telecommunications, Inc., Class A	2/11/1998–8/31/1998		104		—		.00
Bayan Telecommunications, Inc., Class B	2/11/1998–8/31/1998		34		—		.00
Total restricted securities		$	32,657	$	5,389		.06	%

5Coupon rate may change periodically.

Key to abbreviations and symbol

ADR = American Depositary Receipts

GDR = Global Depositary Receipts

€ = Euros

International Fund

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
Bayer		5.25	%
Gazprom		3.07
Novartis		2.84
ArcelorMittal		2.32
Inditex		2.11
América Móvil		1.99
Credit Suisse		1.85
Nestlé		1.77
Teva Pharmaceutical Industries		1.76
Banco Santander		1.71

							Percent
				Value			of net
Common stocks  - 97.07%	Shares				(000	)	assets
Financials  - 21.91%
Credit Suisse Group AG (1)		3,516,613		$	173,005			1.85	%
Banco Santander, SA (1)		9,719,011			159,565			1.71
BNP Paribas SA (1)		1,896,155			149,523			1.60
Prudential PLC (1)		14,584,470			148,766			1.60
Itaú Unibanco Holding SA, preferred nominative (ADR)		5,781,150			132,041			1.42
UniCredit SpA (1) (2)		36,893,437			122,632			1.31
Erste Bank der oesterreichischen Sparkassen AG (1)		3,088,804			114,409			1.23
Bank of China Ltd., Class H (1)		207,848,000			111,297			1.19
AXA SA (1)		4,493,423			106,193			1.14
Lloyds Banking Group PLC (1) (2)		123,074,399			98,932			1.06
Société Générale (1)		1,156,848			79,986			.86
Nomura Holdings, Inc. (1)		7,947,700			58,606			.63
Other securities					588,912			6.31
					2,043,867			21.91
Health care  - 12.96%
Bayer AG (1)		6,130,023			489,584			5.25
Novartis AG (1)		4,864,613			264,741			2.84
Teva Pharmaceutical Industries Ltd. (ADR)		2,928,000			164,495			1.76
Merck KGaA (1)		972,655			90,846			.97
Richter Gedeon NYRT (1)		307,000			69,575			.74
Other securities					130,274			1.40
					1,209,515			12.96
Consumer discretionary  - 12.56%
Industria de Diseño Textil, SA (1)		3,181,000			196,962			2.11
Daimler AG (1)		2,607,000			139,182			1.49
Fiat SpA (1) (2)		7,507,800			109,187			1.17
British Sky Broadcasting Group PLC (1)		9,457,500			85,306			.91
adidas AG (1)		1,566,000			84,489			.91
Marks and Spencer Group PLC (1)		9,880,000			64,178			.69
Other securities					492,335			5.28
					1,171,639			12.56
Telecommunication services  - 8.82%
América Móvil, SAB de CV, Series L (ADR)		3,961,500			186,111			1.99
MTN Group Ltd. (1)		9,665,900			153,882			1.65
Telefónica, SA (1)		4,245,000			118,228			1.27
Philippine Long Distance Telephone Co. (1)		1,254,800			70,716
Philippine Long Distance Telephone Co. (ADR)		340,000			19,268			.96
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B (1)		65,947,500			65,816			.71
Other securities					208,538			2.24
					822,559			8.82
Information technology  - 8.42%
SAP AG (1)		2,550,000			120,180			1.29
HOYA CORP. (1)		4,158,300			110,305			1.18
Canon, Inc. (1)		2,054,500			86,905			.93
Other securities					468,307			5.02
					785,697			8.42
Consumer staples  - 8.10%
Nestlé SA (1)		3,404,800			165,231			1.77
Anheuser-Busch InBev NV (1)		2,612,414			134,869
Anheuser-Busch InBev NV (1) (2)		1,189,792			9			1.45
Pernod Ricard SA (1)		1,211,473			103,911			1.11
Imperial Tobacco Group PLC (1)		3,200,000			100,980			1.08
Danone SA (1)		1,234,806			75,144			.81
L'Oréal SA (1)		559,000			62,017			.66
Other securities					113,379			1.22
					755,540			8.10
Energy  - 7.77%
OAO Gazprom (ADR) (1)		11,474,300			286,026			3.07
Royal Dutch Shell PLC, Class B (1)		2,512,719			73,316			.79
Eni SpA (1)		2,806,000			71,386			.76
Reliance Industries Ltd. (1)		3,055,000			71,294			.76
Other securities					222,891			2.39
					724,913			7.77
Materials  - 6.86%
ArcelorMittal (1)		4,775,220			216,421			2.32
Linde AG (1)		834,500			100,371			1.07
Other securities					323,391			3.47
					640,183			6.86
Industrials  - 6.40%
BAE Systems PLC (1)		18,804,000			108,505			1.16
Ryanair Holdings PLC (ADR) (2)		3,311,400			88,812			.95
Siemens AG (1)		901,000			82,582			.89
Wolseley PLC (1) (2)		3,188,152			63,862			.68
Samsung Engineering Co., Ltd. (1)		665,000			61,380			.66
Other securities					192,231			2.06
					597,372			6.40
Utilities  - 1.80%
GDF Suez (1)		2,409,264			104,446			1.12
Other securities					63,956			.68
					168,402			1.80
Miscellaneous  -  1.47%
Other common stocks in initial period of acquisition					137,058			1.47
Total common stocks (cost: $7,558,336,000)					9,056,745			97.07
Preferred stocks  - 0.11%
Financials - 0.11%
Other securities					10,537			.11
Total preferred stocks (cost: $8,575,000)					10,537			.11
Bonds, notes & other debt instruments  - 0.11%
Financials - 0.11%
Other securities					10,082			.11
Total bonds, notes & other debt instruments (cost: $9,081,000)					10,082			.11
	Principal
	amount
Short-term securities  - 2.75%		(000	)
Federal Home Loan Bank 0.085%-0.10% due 3/12-3/17/2010	$	59,300			59,293			.64
Eni Finance USA Inc. 0.17%-0.18% due 1/6-1/29/2010 (3)		30,300			30,297			.33
GDF SUEZ 0.19% due 1/25-1/29/2010 (3)		17,800			17,798			.19
Other securities					148,670			1.59
Total short-term securities (cost: $256,048,000)					256,058			2.75
Total investment securities (cost: $7,832,040,000)					9,333,422			100.04
Other assets less liabilities					(3,333	)		(.04	)
Net assets				$	9,330,089			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.  Some of these securities (with an aggregate value of $5,389,000, which represented .06% of the net assets of the fund) may be subject to legal or contractual restrictions on resale.

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 $8,135,886,000, which represented 87.20% of the net assets of the fund.  This amount includes $8,130,497,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

(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 $89,676,000, which represented .96% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

New World Fund

Investment portfolio

December 31, 2009

Common stocks — 83.35%	Shares			Value (000)
CONSUMER STAPLES — 15.57%
Tesco PLC1		4,242,418		$	29,187
Anheuser-Busch InBev NV1		546,000			28,188
Wal-Mart de México, SAB de CV, Series V (ADR)1		393,000			17,643
Wal-Mart de México, SAB de CV, Series V		705,000			3,165
Nestlé SA1		380,000			18,441
China Yurun Food Group Ltd.1		6,119,000			18,099
Coca-Cola Co.		287,000			16,359
SABMiller PLC1		529,000			15,533
Pernod Ricard SA1		176,297			15,121
United Spirits Ltd.1		550,142			14,783
Beiersdorf AG1		220,000			14,448
OJSC Magnit (GDR)1		750,000			11,878
OJSC Magnit (GDR)1,2,3		64,500			1,016
British American Tobacco PLC1		393,000			12,766
Unilever NV, depository receipts1		354,500			11,543
X5 Retail Group NV (GDR)1,2,3		281,776			8,985
X5 Retail Group NV (GDR)1,3		74,200			2,366
Procter & Gamble Co.		145,000			8,791
PepsiCo, Inc.		135,000			8,208
IOI Corp. Bhd.1		5,097,066			8,145
Grupo Nacional de Chocolates SA		782,500			8,035
Avon Products, Inc.		232,200			7,314
Olam International Ltd.1		3,365,382			6,301
BIM Birlesik Magazalar AS1		133,000			6,167
Cia. de Bebidas das Américas — AmBev, preferred nominative (ADR)		60,000			6,065
Kimberly-Clark de México, SAB de CV, Class A		1,300,000			5,822
Danone SA1		51,872			3,157
Poslovni sistem Mercator, dd1		11,274			2,471
Cosan Ltd., Class A3		23,793			207
					310,204
FINANCIALS — 12.79%
Itaú Unibanco Holding SA, preferred nominative (ADR)		559,082			12,769
Itaú Unibanco Holding SA, preferred nominative		497,950			11,056
Amil Participações SA, ordinary nominative		2,697,410			21,207
PT Bank Rakyat Indonesia (Persero) Tbk1		25,653,150			20,673
Banco Santander, SA1		1,256,360			20,627
China Life Insurance Co. Ltd., Class H1		4,195,000			20,530
Türkiye Garanti Bankasi AS1		4,510,000			19,160
DLF Ltd.1		2,350,000			18,092
Housing Development Finance Corp. Ltd.1		260,000			14,960
Industrial and Commercial Bank of China Ltd., Class H1		14,550,000			11,942
Bancolombia SA (ADR)		210,000			9,557
Kasikornbank PCL, nonvoting depository receipt1		3,660,000			9,299
Itaúsa — Investimentos Itaú SA, preferred nominative		1,358,661			9,240
Sberbank (Savings Bank of the Russian Federation) (GDR)1		27,300			7,652
Land and Houses PCL, nonvoting depositary receipt1		34,000,000			6,395
CIMB Group Holdings Bhd.1		1,500,000			5,626
FirstRand Ltd.1		1,915,127			4,755
Royal Bank of Scotland Group PLC1,3		9,675,000			4,544
Kotak Mahindra Bank Ltd.1		259,943			4,484
Bank of the Philippine Islands1		3,656,246			3,759
Bank Hapoalim BM1,3		830,000			3,598
Banco Industrial e Comercial SA, preferred nominative		512,900			3,577
Bank Pekao SA1,3		60,000			3,388
BankMuscat (SAOG) (GDR)1		331,655			2,786
Erste Bank der oesterreichischen Sparkassen AG1		69,377			2,570
China Construction Bank Corp., Class H1		2,950,500			2,512
					254,758
INFORMATION TECHNOLOGY — 8.44%
Samsung Electronics Co. Ltd.1		46,725			31,935
Google Inc., Class A3		45,000			27,899
Infosys Technologies Ltd.1		410,200			22,895
HTC Corp.1		1,345,100			15,325
Cielo SA, ordinary nominative		1,581,600			13,923
Micron Technology, Inc.3		1,200,000			12,672
Corning Inc.		460,000			8,883
Kingboard Chemical Holdings Ltd.1		1,859,000			7,326
Cisco Systems, Inc.3		281,500			6,739
Yahoo! Inc.3		370,000			6,209
NetEase.com, Inc. (ADR)3		120,000			4,513
HOYA CORP.1		164,400			4,361
Venture Corp. Ltd.1		440,000			2,758
Nokia Corp.1		200,000			2,566
Kingboard Laminates Holdings Ltd.1		84,500			58
					168,062
INDUSTRIALS — 8.35%
Murray & Roberts Holdings Ltd.1		3,375,000			21,103
Boart Longyear Ltd.1,3		62,900,000			19,772
Schneider Electric SA1		144,335			16,709
Enka Insaat ve Sanayi AS1		2,904,999			13,364
Container Corp. of India Ltd.1		455,735			12,842
United Technologies Corp.		173,000			12,008
Cia. de Concessões Rodoviárias, ordinary nominative		490,000			11,217
Siemens AG1		103,100			9,450
China Railway Construction Corp. Ltd., Class H1		7,150,000			9,107
Outotec Oyj1		235,000			8,269
Intertek Group PLC1		395,200			7,968
Suzlon Energy Ltd.1,3		2,740,000			5,289
SembCorp Industries Ltd1		2,000,000			5,222
Bidvest Group Ltd.1		223,114			3,900
Jiangsu Expressway Co. Ltd., Class H1		2,900,000			2,569
KBR, Inc.		124,900			2,373
IJM Corp. Bhd.1		1,405,320			1,839
Daelim Industrial Co., Ltd.1		21,484			1,527
Italian-Thai Development PCL1,3		15,221,100			1,338
Doosan Heavy Industries and Construction Co., Ltd.1		8,070			559
					166,425
TELECOMMUNICATION SERVICES — 7.54%
América Móvil, SAB de CV, Series L (ADR)		864,875			40,632
Telefónica, SA1		1,317,000			36,680
Telefónica 02 Czech Republic, AS1		685,000			15,568
China Telecom Corp. Ltd., Class H1		27,870,000			11,533
Cellcom Israel Ltd.		322,000			10,323
Telekom Austria AG, non-registered shares1		705,000			10,058
Partner Communications Co. Ltd.1		350,000			7,101
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B1		5,440,000			5,429
Vodafone Group PLC1		2,132,500			4,945
China Mobile Ltd.1		500,000			4,661
Telekomunikacja Polska SA1		600,000			3,311
					150,241
MATERIALS — 7.23%
Holcim Ltd1,3		407,011			31,515
Anglo American PLC (ZAR denominated)1,3		401,850			17,183
Fibria Celulose SA, ordinary nominative (ADR)3		746,138			17,042
Linde AG1		109,000			13,110
Sigma-Aldrich Corp.		205,000			10,359
Vale SA, Class A, preferred nominative		252,000			6,103
Vale SA, Class A, preferred nominative (ADR)		130,000			3,227
BHP Billiton PLC1		262,664			8,401
Israel Chemicals Ltd.1		635,000			8,290
PT Semen Gresik1		9,825,000			7,843
Rio Tinto PLC1		122,000			6,584
Antofagasta PLC1		250,000			3,969
OCI Co. Ltd.1		19,500			3,669
Kumba Iron Ore Ltd.1		70,000			2,869
Buzzi Unicem SpA1		74,340			1,193
Buzzi Unicem SpA, nonconvertible shares1		72,270			747
Anhui Conch Cement Co. Ltd., Class H1		295,500			1,887
					143,991
ENERGY — 6.14%
Petróleo Brasileiro SA — Petrobras, ordinary nominative (ADR)		413,520			19,717
OAO Gazprom (ADR)1		650,000			16,203
Oil Search Ltd.1		2,040,000			11,130
Cairn India Ltd.1,3		1,507,000			9,087
Tenaris SA (ADR)		212,500			9,063
Eurasia Drilling Co. Ltd. (GDR)1,2		254,800			4,362
Eurasia Drilling Co. Ltd. (GDR)1		249,350			4,268
Saipem SpA, Class S1		233,000			7,998
Noble Energy, Inc.		100,000			7,122
TOTAL SA1		75,000			4,803
TOTAL SA (ADR)		32,500			2,081
Niko Resources Ltd.		65,000			6,111
Nexen Inc.		228,582			5,508
Oil and Gas Development Co. Ltd.1		4,000,000			5,233
Reliance Industries Ltd.1		160,000			3,734
Chevron Corp.		45,000			3,464
OAO TMK (GDR)1,2,3		142,826			2,503
					122,387
CONSUMER DISCRETIONARY — 5.93%
Toyota Motor Corp.1		721,300			30,324
Truworths International Ltd.1		3,232,000			18,939
Honda Motor Co., Ltd.1		455,000			15,394
McDonald’s Corp.		205,000			12,800
Parkson Holdings Bhd.1		5,312,600			8,240
Nitori Co., Ltd.1		100,000			7,445
Swatch Group Ltd1		95,000			4,537
Swatch Group Ltd, non-registered shares1		10,450			2,627
Desarrolladora Homex, SA de CV (ADR)3		160,000			5,379
Grupo Televisa, SAB de CV, ordinary participation certificates (ADR)		215,000			4,463
Li & Fung Ltd.1		886,600			3,649
TVN SA1		500,000			2,476
Central European Media Enterprises Ltd., Class A3		75,000			1,771
					118,044
HEALTH CARE — 4.65%
Cochlear Ltd.1		475,000			29,329
Novo Nordisk A/S, Class B1		310,020			19,834
Krka, dd, Novo mesto1		209,640			19,231
Teva Pharmaceutical Industries Ltd. (ADR)		200,000			11,236
Baxter International Inc.		170,000			9,976
Novartis AG1		57,500			3,129
					92,735
UTILITIES — 1.83%
Cia. Energética de Minas Gerais — Cemig, preferred nominative		775,000			14,054
China Resources Power Holdings Co. Ltd.1		3,924,000			7,765
CLP Holdings Ltd.1		1,122,000			7,582
Cheung Kong Infrastructure Holdings Ltd.1		1,840,000			6,985
					36,386
MISCELLANEOUS — 4.88%
Other common stocks in initial period of acquisition					97,193
Total common stocks (cost: $1,272,958,000)					1,660,426
Rights & warrants — 0.00%
FINANCIALS — 0.00%
IJM Land Bhd., warrants, expire 20133		100,380			41
MISCELLANEOUS — 0.00%
Other rights & warrants in initial period of acquisition					46
Total rights & warrants (cost: $21,000)					87
	Principal amount
Bonds, notes & other debt instruments — 9.29%		(000	)
BONDS & NOTES OF GOVERNMENTS OUTSIDE THE U.S. — 8.54%
Brazilian Treasury Bill 6.00% 20101,4	BRL7,258				4,210
Brazil (Federal Republic of) Global 9.25% 2010	$	2,200			2,368
Brazilian Treasury Bill 6.00% 20111,4	BRL 946				545
Brazil (Federal Republic of) 10.00% 20141		5,600			2,959
Brazilian Treasury Bill 6.00% 20151,4		4,451			2,479
Brazil (Federal Republic of) Global 12.50% 2016		1,500			977
Brazil (Federal Republic of) Global 6.00% 2017	$	2,175			2,360
Brazil (Federal Republic of) 10.00% 20171	BRL12,500				6,163
Brazil (Federal Republic of) Global 8.00% 20185	$	3,574			4,096
Brazil (Federal Republic of) Global 5.875% 2019		850			910
Brazil (Federal Republic of) Global 8.875% 2019		1,000			1,295
Brazil (Federal Republic of) Global 12.50% 2022	BRL2,600				1,694
Brazil (Federal Republic of) Global 8.875% 2024	$	100			131
Brazil (Federal Republic of) Global 10.125% 2027		1,425			2,102
Brazil (Federal Republic of) Global 7.125% 2037		400			461
Brazil (Federal Republic of) Global 11.00% 2040		13,375			17,889
Brazilian Treasury Bill 6.00% 20451,4	BRL3,709				2,018
Turkey (Republic of) 14.00% 2011	TRY7,400				5,260
Turkey (Republic of) 10.00% 20121,4		3,645			2,797
Turkey (Republic of) 16.00% 2012		2,500			1,870
Turkey (Republic of) 16.00% 2013		2,350			1,854
Turkey (Republic of) 7.25% 2015	$	1,700			1,913
Turkey (Republic of) 7.00% 2016		2,800			3,108
Turkey (Republic of) 7.50% 2017		1,500			1,710
Turkey (Republic of) 6.75% 2018		2,500			2,716
Turkey (Republic of) 7.00% 2019		1,000			1,095
Turkey (Republic of) 6.875% 2036		1,200			1,227
United Mexican States Government Global 9.875% 2010		4,125			4,177
United Mexican States Government 9.00% 2012	MXN7,500				608
United Mexican States Government Global 6.375% 2013	$	4,375			4,856
United Mexican States Government, Series MI10, 8.00% 2013	MXN 7,671				605
United Mexican States Government, Series MI10, 9.50% 2014		33,500			2,782
United Mexican States Government, Series M10, 8.00% 2015		23,000			1,790
United Mexican States Government Global 5.625% 2017	$	2,500			2,619
United Mexican States Government, Series M10, 7.75% 2017	MXN14,000				1,066
United Mexican States Government, Series M20, 10.00% 2024		15,000			1,317
United Mexican States Government Global 7.50% 2033	$	350			403
United Mexican States Government Global 6.05% 2040		780			754
Colombia (Republic of) Global 11.75% 2010	COP6,000,000				2,984
Colombia (Republic of) Global 10.00% 2012	$	3,300			3,811
Colombia (Republic of) Global 10.75% 2013		1,360			1,659
Colombia (Republic of) Global 8.25% 2014		700			826
Colombia (Republic of) Global 12.00% 2015	COP3,072,000				1,853
Colombia (Republic of) Global 7.375% 2017	$	2,800			3,171
Colombia (Republic of) Global 7.375% 2019		350			398
Colombia (Republic of) Global 11.75% 2020		315			456
Colombia (Republic of) Global 8.125% 2024		500			595
Colombia (Republic of) Global 9.85% 2027	COP1,810,000				1,031
Colombia (Republic of) Global 7.375% 2037	$	2,499			2,736
Peru (Republic of) 8.375% 2016		5,453			6,612
Peru (Republic of) 7.125% 2019		400			462
Peru (Republic of) 7.35% 2025		500			575
Peru (Republic of) 6.55% 20375		782			817
Russian Federation 8.25% 20105		800			820
Russian Federation 8.25% 20102,5		63			64
Russian Federation 7.50% 20302,5		3,202			3,626
Russian Federation 7.50% 20305		3,102			3,513
Croatian Government 6.75% 20192		7,000			7,553
Philippines (Republic of) 8.25% 2014		1,000			1,165
Philippines (Republic of) 9.875% 2019		2,200			2,882
Philippines (Republic of) 7.75% 2031		2,235			2,531
Panama (Republic of) Global 7.25% 2015		1,175			1,342
Panama (Republic of) Global 7.125% 2026		890			1,008
Panama (Republic of) Global 8.875% 2027		300			391
Panama (Republic of) Global 9.375% 2029		1,148			1,533
Panama (Republic of) Global 6.70% 20365		1,824			1,933
Polish Government 5.00% 2013	PLN4,805				1,650
Polish Government 5.25% 2013		4,550			1,590
Polish Government 5.00% 2015	$	300			317
Polish Government 5.25% 2017	PLN1,200				397
Polish Government 6.375% 2019	$	1,970			2,153
South Africa (Republic of) 6.50% 2014		700			770
South Africa (Republic of) 6.875% 2019		1,550			1,748
Argentina (Republic of) 0.354% 20121,5,6		1,750			599
Argentina (Republic of) 5.83% 20331,4,5,7	ARS 6,758				1,045
Argentina (Republic of) GDP-Linked 2035		43,865			544
Malaysian Government 3.756% 2011	MYR6,300				1,874
Malaysian Government 5.094% 2014		1,000			309
Dominican Republic 9.50% 20115	$	154			161
Dominican Republic 9.04% 20185		437			476
Dominican Republic 8.625% 20272,5		1,150			1,208
Egypt (Arab Republic of) 9.10% 2010	EGP1,000				184
Egypt (Arab Republic of) 8.60% 2011		4,560			839
Egypt (Arab Republic of) 8.75% 2012		3,000			550
Hungarian Government 6.00% 2012	HUF50,300				260
					170,205
ENERGY — 0.32%
Gaz Capital SA, Series 9, 6.51% 2022	$	1,500			1,380
Gaz Capital SA 6.51% 20222		600			552
Gaz Capital SA 7.288% 2037		1,200			1,113
Pemex Project Funding Master Trust 6.625% 2035		1,800			1,716
Petrobras International 5.75% 2020		1,300			1,329
Petrobras International 6.875% 2040		300			310
					6,400
MATERIALS — 0.26%
CEMEX Finance LLC 9.50% 20162		2,900			3,052
C10 Capital (SPV) Ltd. 6.722% (undated)2,6		1,000			706
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		975			1,064
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		370			406
					5,228
UTILITIES — 0.11%
AES Panamá, SA 6.35% 20162		1,100			1,092
Enersis SA 7.375% 2014		650			726
AES Gener SA 7.50% 2014		250			273
					2,091
TELECOMMUNICATION SERVICES — 0.04%
Orascom Telecom 7.875% 20142		850			773
INDUSTRIALS — 0.02%
TFM, SA de CV 9.375% 2012		400			417
Total bonds, notes & other debt instruments (cost: $171,310,000)					185,114
Short-term securities — 7.36%
Caisse d’Amortissement de la Dette Sociale 0.14%–0.21% due 1/20–2/2/2010		34,400			34,395
Fannie Mae 0.09%–0.195% due 3/10–6/23/2010		18,800			18,786
U.S. Treasury Bills 0.10%–0.20% due 5/13–7/15/2010		18,500			18,485
KfW 0.20% due 1/29/20102		17,000			16,998
ING (U.S.) Funding LLC 0.17% due 1/4/2010		13,800			13,800
GDF SUEZ 0.20% due 1/19/20102		13,700			13,699
Eni Finance USA Inc. 0.15% due 1/26/20102		10,100			10,099
Calyon North America Inc. 0.16% due 1/28/2010		10,000			9,999
Freddie Mac 0.13% due 3/2/2010		5,700			5,700
Barclays U.S. Funding Corp. 0.18% due 3/3/2010		4,600			4,598
Total short-term securities (cost: $146,559,000)					146,559
Total investment securities (cost: $1,590,848,000)					1,992,186
Other assets less liabilities					(50	)
Net assets				$	1,992,136

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

1Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $1,203,824,000, which represented 60.43% of the net assets of the fund. This amount includes $1,155,714,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

2Purchased 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 $76,288,000, which represented 3.83% of the net assets of the fund.

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

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

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

6Coupon rate may change periodically.

7Payment 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

EGP = Egyptian pounds

HUF = Hungarian forints

MXN = Mexican pesos

MYR = Malaysian ringgits

PLN = Polish zloty

TRY = New Turkish liras

ZAR = South African rand

New World Fund

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
America Movil		2.04	%
Telefonica		1.84
Samsung Electronics		1.60
Holcim		1.58
Toyota Motor		1.52
Cochlear		1.47
Tesco		1.47
Anheuser-Busch InBev		1.41
Google		1.40
Itau Unibanco Holding		1.20

Common stocks - 83.35%	Shares		Value  (000)			Percent of net  assets
Consumer staples - 15.57%
Tesco PLC (1)		4,242,418	$	29,187			1.47	%
Anheuser-Busch InBev NV (1)		546,000		28,188			1.41
Wal-Mart de México, SAB de CV, Series V (ADR) (1)		393,000		17,643
Wal-Mart de México, SAB de CV, Series V		705,000		3,165			1.04
Nestlé SA (1)		380,000		18,441			.93
China Yurun Food Group Ltd. (1)		6,119,000		18,099			.91
Coca-Cola Co.		287,000		16,359			.82
SABMiller PLC (1)		529,000		15,533			.78
Pernod Ricard SA (1)		176,297		15,121			.76
United Spirits Ltd. (1)		550,142		14,783			.74
Beiersdorf AG (1)		220,000		14,448			.73
Other securities				119,237			5.98
				310,204			15.57
Financials - 12.79%
Itaú Unibanco Holding SA, preferred nominative (ADR)		559,082		12,769
Itaú Unibanco Holding SA, preferred nominative		497,950		11,056			1.20
Amil Participações SA, ordinary nominative		2,697,410		21,207			1.06
PT Bank Rakyat Indonesia (Persero) Tbk (1)		25,653,150		20,673			1.04
Banco Santander, SA (1)		1,256,360		20,627			1.04
China Life Insurance Co. Ltd., Class H (1)		4,195,000		20,530			1.03
Türkiye Garanti Bankasi AS (1)		4,510,000		19,160			.96
DLF Ltd. (1)		2,350,000		18,092			.91
Housing Development Finance Corp. Ltd. (1)		260,000		14,960			.75
Other securities				95,684			4.80
				254,758			12.79
Information technology - 8.44%
Samsung Electronics Co. Ltd. (1)		46,725		31,935			1.60
Google Inc., Class A (2)		45,000		27,899			1.40
Infosys Technologies Ltd. (1)		410,200		22,895			1.15
HTC Corp. (1)		1,345,100		15,325			.77
Cielo SA, ordinary nominative		1,581,600		13,923			.70
Other securities				56,085			2.82
				168,062			8.44
Industrials - 8.35%
Murray & Roberts Holdings Ltd. (1)		3,375,000		21,103			1.06
Boart Longyear Ltd. (1) (2)		62,900,000		19,772			.99
Schneider Electric SA (1)		144,335		16,709			.84
Enka Insaat ve Sanayi AS (1)		2,904,999		13,364			.67
Other securities				95,477			4.79
				166,425			8.35
Telecommunication services - 7.54%
América Móvil, SAB de CV, Series L (ADR)		864,875		40,632			2.04
Telefónica, SA (1)		1,317,000		36,680			1.84
Telefónica 02 Czech Republic, AS (1)		685,000		15,568			.78
Other securities				57,361			2.88
				150,241			7.54
Materials - 7.23%
Holcim Ltd (1) (2)		407,011		31,515			1.58
Anglo American PLC (ZAR denominated) (1) (2)		401,850		17,183			.86
Fibria Celulose SA, ordinary nominative (ADR) (2)		746,138		17,042			.86
Linde AG (1)		109,000		13,110			.66
Other securities				65,141			3.27
				143,991			7.23
Energy - 6.14%
Petróleo Brasileiro SA - Petrobras, ordinary nominative (ADR)		413,520		19,717			.99
OAO Gazprom (ADR) (1)		650,000		16,203			.81
Other securities				86,467			4.34
				122,387			6.14
Consumer discretionary - 5.93%
Toyota Motor Corp. (1)		721,300		30,324			1.52
Truworths International Ltd. (1)		3,232,000		18,939			.95
Honda Motor Co., Ltd. (1)		455,000		15,394			.78
Other securities				53,387			2.68
				118,044			5.93
Health care - 4.65%
Cochlear Ltd. (1)		475,000		29,329			1.47
Novo Nordisk A/S, Class B (1)		310,020		19,834			1.00
Krka, dd, Novo mesto (1)		209,640		19,231			.96
Other securities				24,341			1.22
				92,735			4.65
Utilities - 1.83%
Cia. Energética de Minas Gerais - Cemig, preferred nominative		775,000		14,054			.71
Other securities				22,332			1.12
				36,386			1.83
Miscellaneous - 4.88%
Other common stocks in initial period of acquisition				97,193			4.88
Total common stocks (cost: $1,272,958,000)				1,660,426			83.35
Rights & warrants - 0.00%
Financials- 0.00%
Other securities				41			.00
Miscellaneous - 0.00%
Other rights & warrants in initial period of acquisition				46			.00
Total rights & warrants (cost: $21,000)				87			.00
Bonds, notes & other debt instruments - 9.29%	Principal amount  (000)
Bonds & notes of governments outside the U.S. - 8.54%
Brazil (Federal Republic of) Global:
11.00% 2040	$	13,375		17,889
5.875%-10.125% 2010-2037 (3)		11,724		13,723
12.50% 2016-2022	BRL 4,100			2,671
Brazilian Treasury Bill 6.00% 2010-2045 (1) (4)		16,364		9,252
Brazil (Federal Republic of) 10.00% 2014-2017 (1)		18,100		9,122			2.64
Turkey (Republic of):
10.00%-16.00% 2011-2013 (1) (4)	TRY 15,895			11,781
6.75%-7.50% 2015-2036	$	10,700		11,769			1.18
United Mexican States Government Global 5.625%-9.875% 2010-2040		12,130		12,809
United Mexican States Government 7.75%-10.00% 2012-2024	MXN 100,671			8,168			1.05
Other securities				73,021			3.67
				170,205			8.54
Energy - 0.32%
Petrobras International 5.75%-6.875% 2020-2040	$	1,600		1,639			.08
Other securities				4,761			.24
				6,400			.32
Other - 0.43%
Other securities				8,509			.43
Total bonds, notes & other debt instruments (cost: $171,310,000)				185,114			9.29
Short-term securities - 7.36%
Caisse d'Amortissement de la Dette Sociale 0.14%-0.21% due 1/20-2/2/2010		34,400		34,395			1.73
Fannie Mae 0.09%-0.195% due 3/10-6/23/2010		18,800		18,786			.94
U.S. Treasury Bills 0.10%-0.20% due 5/13-7/15/2010		18,500		18,485			.93
KfW 0.20% due 1/29/2010 (5)		17,000		16,998			.85
ING (U.S.) Funding LLC 0.17% due 1/4/2010		13,800		13,800			.69
GDF SUEZ 0.20% due 1/19/2010 (5)		13,700		13,699			.69
Other securities				30,396			1.53
Total short-term securities (cost: $146,559,000)				146,559			7.36
Total investment securities (cost: $1,590,848,000)				1,992,186			100.00
Other assets less liabilities				(50	)		.00
Net assets			$	1,992,136			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.

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 $1,203,824,000, which represented 60.43% of the net assets of the fund. This amount includes $1,155,714,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

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

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

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

(5) 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 $76,288,000, which represented 3.83% of the net assets of the fund.

Key to abbreviations

ADR = American Depositary Receipts

BRL = Brazilian reais

MXN = Mexican pesos

TRY = New Turkish liras

ZAR = South African rand

See Notes to Financial Statements

Blue Chip Income and Growth Fund

Investment portfolio

December 31, 2009

Common stocks — 92.88%	Shares			Value (000)
INFORMATION TECHNOLOGY — 21.60%
Microsoft Corp.		5,990,000		$	182,635
Hewlett-Packard Co.		3,070,000			158,136
Oracle Corp.		4,830,000			118,528
International Business Machines Corp.		830,000			108,647
Nokia Corp. (ADR)		5,500,000			70,675
Intel Corp.		2,200,000			44,880
Texas Instruments Inc.		1,250,000			32,575
Cisco Systems, Inc.1		1,300,000			31,122
Yahoo! Inc.1		1,380,000			23,156
Linear Technology Corp.		550,000			16,797
SAP AG (ADR)		175,000			8,192
Maxim Integrated Products, Inc.		400,000			8,120
Google Inc., Class A1		11,000			6,820
					810,283
INDUSTRIALS — 15.72%
Boeing Co.		1,725,000			93,374
United Technologies Corp.		760,000			52,752
United Parcel Service, Inc., Class B		850,000			48,764
General Electric Co.		3,100,000			46,903
CSX Corp.		895,000			43,399
Rockwell Automation		700,000			32,886
Illinois Tool Works Inc.		650,000			31,193
Norfolk Southern Corp.		592,800			31,075
Burlington Northern Santa Fe Corp.		270,000			26,627
Emerson Electric Co.		600,000			25,560
Union Pacific Corp.		375,000			23,963
Ingersoll-Rand PLC		600,000			21,444
Avery Dennison Corp.		550,000			20,070
Eaton Corp.		300,000			19,086
Waste Management, Inc.		500,000			16,905
Southwest Airlines Co.		1,000,000			11,430
Pitney Bowes Inc.		485,400			11,048
Tyco International Ltd.		300,000			10,704
General Dynamics Corp.		120,000			8,180
3M Co.		90,000			7,440
Lockheed Martin Corp.		95,000			7,158
					589,961
HEALTH CARE — 14.42%
Merck & Co., Inc.		3,510,000			128,255
Medtronic, Inc.		1,900,000			83,562
Abbott Laboratories		1,050,000			56,689
Amgen Inc.1		875,000			49,499
AstraZeneca PLC (ADR)		975,000			45,767
Eli Lilly and Co.		1,125,000			40,174
Pfizer Inc		1,900,000			34,561
Bristol-Myers Squibb Co.		1,355,000			34,214
Cardinal Health, Inc.		700,000			22,568
Aetna Inc.		667,800			21,169
Novartis AG (ADR)		300,000			16,329
Covidien PLC		175,000			8,381
					541,168
CONSUMER DISCRETIONARY — 9.66%
CBS Corp., Class B, nonvoting shares		5,000,000			70,250
Target Corp.		1,350,000			65,299
Lowe’s Companies, Inc.		2,300,000			53,797
Leggett & Platt, Inc.		2,000,000			40,800
Time Warner Inc.		1,000,000			29,140
Harley-Davidson, Inc.		910,000			22,932
Carnival Corp., units1		650,000			20,599
Mattel, Inc.		700,000			13,986
Royal Caribbean Cruises Ltd.1		500,000			12,640
Johnson Controls, Inc.		337,675			9,198
Home Depot, Inc.		300,000			8,679
Honda Motor Co., Ltd. (ADR)		250,000			8,475
McGraw-Hill Companies, Inc.		200,000			6,702
					362,497
ENERGY — 7.56%
ConocoPhillips		2,245,000			114,652
Schlumberger Ltd.		950,000			61,835
Royal Dutch Shell PLC, Class A (ADR)		900,000			54,099
Exxon Mobil Corp.		200,000			13,638
Spectra Energy Corp		541,700			11,110
Marathon Oil Corp.		332,700			10,387
Devon Energy Corp.		110,000			8,085
Baker Hughes Inc.		160,000			6,477
Eni SpA (ADR)		70,000			3,543
					283,826
FINANCIALS — 7.31%
Bank of America Corp.		4,846,113			72,983
JPMorgan Chase & Co.		1,485,000			61,880
American Express Co.		1,500,000			60,780
Capital One Financial Corp.		1,010,000			38,723
HSBC Holdings PLC (ADR)		318,749			18,197
Wells Fargo & Co.		375,000			10,121
Bank of New York Mellon Corp.		250,000			6,993
Banco Santander, SA (ADR)		280,000			4,603
					274,280
TELECOMMUNICATION SERVICES — 6.99%
AT&T Inc.		6,180,000			173,225
Verizon Communications Inc.		2,000,000			66,260
CenturyTel, Inc.		342,500			12,402
Qwest Communications International Inc.		2,500,000			10,525
					262,412
CONSUMER STAPLES — 5.06%
Walgreen Co.		1,107,083			40,652
Kimberly-Clark Corp.		555,000			35,359
PepsiCo, Inc.		550,000			33,440
Kellogg Co.		592,000			31,495
ConAgra Foods, Inc.		1,200,000			27,660
General Mills, Inc.		250,000			17,702
H.J. Heinz Co.		80,000			3,421
					189,729
UTILITIES — 1.95%
Southern Co.		750,000			24,990
FPL Group, Inc.		400,000			21,128
FirstEnergy Corp.		370,000			17,186
Xcel Energy Inc.		250,000			5,305
Duke Energy Corp.		260,000			4,475
					73,084
MATERIALS — 0.54%
Air Products and Chemicals, Inc.		250,000			20,265
MISCELLANEOUS — 2.07%
Other common stocks in initial period of acquisition					77,624
Total common stocks (cost: $3,110,805,000)					3,485,129
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 — 0.33%
MISCELLANEOUS — 0.33%
Other convertible securities in initial period of acquisition					12,442
Total convertible securities (cost: $12,508,000)					12,442
	Principal amount
Short-term securities — 7.35%		(000	)
U.S. Treasury Bills 0.20%–0.30% due 6/10–7/15/2010	$	60,800			60,750
Freddie Mac 0.07%–0.22% due 1/4–3/29/2010		45,600			45,595
Fannie Mae 0.09%–0.165% due 1/19–3/31/2010		44,900			44,895
Jupiter Securitization Co., LLC 0.21% due 1/14/20103		15,600			15,597
Park Avenue Receivables Co., LLC 0.22% due 1/14/20103		13,600			13,599
Walt Disney Co. 0.11% due 1/21/20103		21,900			21,898
Harvard University 0.13% due 1/21/2010		19,700			19,699
Abbott Laboratories 0.08% due 1/8/20103		15,800			15,800
Paccar Financial Corp. 0.20% due 1/26/2010		12,000			11,999
Procter & Gamble International Funding S.C.A. 0.23% due 1/8/20103		9,800			9,799
Private Export Funding Corp. 0.24% due 3/16/20103		9,400			9,397
Medtronic Inc. 0.10% due 1/27/20103		5,300			5,300
Federal Home Loan Bank 0.11% due 2/8/2010		1,600			1,600
Total short-term securities (cost: $275,906,000)					275,928
Total investment securities (cost: $3,399,449,000)					3,773,499
Other assets less liabilities					(21,186	)
Net assets				$	3,752,313

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

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

2Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities represented less than .01% of the net assets of the fund.

3Purchased 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 $91,390,000, which represented 2.44% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

Blue Chip Income and Growth Fund

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
Microsoft		4.87	%
AT&T		4.62
Hewlett-Packard		4.21
Merck		3.42
Oracle		3.16
ConocoPhillips		3.06
IBM		2.90
Boeing		2.49
Medtronic		2.23
Bank of America		1.94

							Percent
				Value			of net
Common stocks  - 92.88%	Shares				(000	)	assets
Information technology  - 21.60%
Microsoft Corp.		5,990,000		$	182,635			4.87	%
Hewlett-Packard Co.		3,070,000			158,136			4.21
Oracle Corp.		4,830,000			118,528			3.16
International Business Machines Corp.		830,000			108,647			2.90
Nokia Corp. (ADR)		5,500,000			70,675			1.88
Intel Corp.		2,200,000			44,880			1.20
Texas Instruments Inc.		1,250,000			32,575			.87
Cisco Systems, Inc. (1)		1,300,000			31,122			.83
Other securities					63,085			1.68
					810,283			21.60
Industrials  - 15.72%
Boeing Co.		1,725,000			93,374			2.49
United Technologies Corp.		760,000			52,752			1.40
United Parcel Service, Inc., Class B		850,000			48,764			1.30
General Electric Co.		3,100,000			46,903			1.25
CSX Corp.		895,000			43,399			1.16
Rockwell Automation		700,000			32,886			.88
Illinois Tool Works Inc.		650,000			31,193			.83
Norfolk Southern Corp.		592,800			31,075			.83
Burlington Northern Santa Fe Corp.		270,000			26,627			.71
Emerson Electric Co.		600,000			25,560			.68
Other securities					157,428			4.19
					589,961			15.72
Health care  - 14.42%
Merck & Co., Inc.		3,510,000			128,255			3.42
Medtronic, Inc.		1,900,000			83,562			2.23
Abbott Laboratories		1,050,000			56,689			1.51
Amgen Inc. (1)		875,000			49,499			1.32
AstraZeneca PLC (ADR)		975,000			45,767			1.22
Eli Lilly and Co.		1,125,000			40,174			1.07
Pfizer Inc		1,900,000			34,561			.92
Bristol-Myers Squibb Co.		1,355,000			34,214			.91
Other securities					68,447			1.82
					541,168			14.42
Consumer discretionary  - 9.66%
CBS Corp., Class B, nonvoting shares		5,000,000			70,250			1.87
Target Corp.		1,350,000			65,299			1.74
Lowe's Companies, Inc.		2,300,000			53,797			1.43
Leggett & Platt, Inc.		2,000,000			40,800			1.09
Time Warner Inc.		1,000,000			29,140			.78
Other securities					103,211			2.75
					362,497			9.66
Energy  - 7.56%
ConocoPhillips		2,245,000			114,652			3.06
Schlumberger Ltd.		950,000			61,835			1.64
Royal Dutch Shell PLC, Class A (ADR)		900,000			54,099			1.44
Other securities					53,240			1.42
					283,826			7.56
Financials  - 7.31%
Bank of America Corp.		4,846,113			72,983			1.94
JPMorgan Chase & Co.		1,485,000			61,880			1.65
American Express Co.		1,500,000			60,780			1.62
Capital One Financial Corp.		1,010,000			38,723			1.03
Other securities					39,914			1.07
					274,280			7.31
Telecommunication services  - 6.99%
AT&T Inc.		6,180,000			173,225			4.62
Verizon Communications Inc.		2,000,000			66,260			1.76
Other securities					22,927			.61
					262,412			6.99
Consumer staples  - 5.06%
Walgreen Co.		1,107,083			40,652			1.09
Kimberly-Clark Corp.		555,000			35,359			.94
PepsiCo, Inc.		550,000			33,440			.89
Kellogg Co.		592,000			31,495			.84
ConAgra Foods, Inc.		1,200,000			27,660			.74
Other securities					21,123			.56
					189,729			5.06
Utilities  - 1.95%
Southern Co.		750,000			24,990			.67
Other securities					48,094			1.28
					73,084			1.95
Materials - 0.54%
Other securities					20,265			.54
Miscellaneous  -  2.07%
Other common stocks in initial period of acquisition					77,624			2.07
Total common stocks (cost: $3,110,805,000)					3,485,129			92.88
Rights & warrants  - 0.00%
Financials - 0.00%
Other securities					-			.00
Total rights & warrants (cost: $230,000)					-			.00
Convertible securities  - 0.33%
Miscellaneous  -  0.33%
Other convertible securities in initial period of acquisition					12,442			.33
Total convertible securities (cost: $12,508,000)					12,442			.33
	Principal
	amount
Short-term securities  - 7.35%		(000	)
U.S. Treasury Bills 0.20%-0.30% due 6/10-7/15/2010	$	60,800			60,750			1.62
Freddie Mac 0.07%-0.22% due 1/4-3/29/2010		45,600			45,595			1.22
Fannie Mae 0.09%-0.165% due 1/19-3/31/2010		44,900			44,895			1.20
Jupiter Securitization Co., LLC 0.21% due 01/14/2010 (2)		15,600			15,597
Park Avenue Receivables Co., LLC 0.22% due 1/14/2010 (2)		13,600			13,599			.78
Abbott Laboratories 0.08% due 1/8/2010 (2)		15,800			15,800			.42
Medtronic Inc. 0.10% due 1/27/2010 (2)		5,300			5,300			.14
Other securities					74,392			1.97
Total short-term securities (cost: $275,906,000)					275,928			7.35
Total investment securities (cost: $3,399,449,000)					3,773,499			100.56
Other assets less liabilities					(21,186	)		(.56	)
Net assets				$	3,752,313			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 (which represented less than .01% of the net assets of the fund) was valued under fair value procedures adopted by authority of the board of trustees.

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) 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 $91,390,000, which represented 2.44% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

Global Growth and Income Fund

Investment portfolio

December 31, 2009

Common stocks — 90.22%	Shares			Value (000)
FINANCIALS — 16.79%
Australia and New Zealand Banking Group Ltd.1		1,574,121		$	32,025
Macquarie Group Ltd.1		676,661			28,969
Industrial and Commercial Bank of China Ltd., Class H1		34,482,000			28,301
JPMorgan Chase & Co.		573,200			23,885
HSBC Holdings PLC (Hong Kong)1		1,020,000			11,613
HSBC Holdings PLC (ADR)		200,000			11,418
Marsh & McLennan Companies, Inc.		800,000			17,664
Absa Group Ltd.1		930,000			16,115
BNP Paribas SA1		187,999			14,825
Prudential PLC1		1,434,931			14,637
QBE Insurance Group Ltd.1		585,000			13,352
People’s United Financial, Inc.		701,000			11,707
Macquarie International Infrastructure Fund Ltd.1		36,200,164			11,606
China Life Insurance Co. Ltd., Class H1		2,297,000			11,241
Fairfax Financial Holdings Ltd.		27,000			10,576
Bank of America Corp.		700,000			10,542
PNC Financial Services Group, Inc.		198,704			10,490
AXA SA1		441,157			10,426
Hospitality Properties Trust		375,000			8,891
Berkshire Hathaway Inc., Class B2		2,480			8,149
Unibail-Rodamco SE, non-registered shares1		35,500			7,809
Bank of Nova Scotia		165,000			7,759
Banco Santander, SA1		303,296			4,979
Indiabulls Real Estate Ltd.1,2		980,000			4,760
Hang Seng Bank Ltd.1		250,000			3,678
ING Groep NV, depository receipts1,2		371,426			3,588
UBS AG1,2		220,000			3,376
Citigroup Inc.		1,000,000			3,310
Itaú Unibanco Holding SA, preferred nominative (ADR)		137,500			3,141
First Southern Bancorp, Inc.1,2,3		122,265			2,580
Bank of China Ltd., Class H1		4,400,000			2,356
Société Générale1		10,588			732
					354,500
MATERIALS — 11.28%
Yamana Gold Inc.		4,000,000			45,859
Newmont Mining Corp.		800,000			37,848
Barrick Gold Corp.		890,000			35,048
Rio Tinto PLC1		550,000			29,682
United States Steel Corp.		500,000			27,560
Monsanto Co.		200,000			16,350
Grupo México, SAB de CV, Series B		4,500,000			10,328
Impala Platinum Holdings Ltd.1		316,648			8,614
CRH PLC1		300,000			8,120
BHP Billiton Ltd. (ADR)		100,000			7,658
Gold Fields Ltd.1		500,000			6,583
Praxair, Inc.		30,000			2,409
Potash Corp. of Saskatchewan Inc.		20,000			2,170
					238,229
INFORMATION TECHNOLOGY — 11.14%
Microsoft Corp.		2,360,000			71,956
International Business Machines Corp.		200,000			26,180
Google Inc., Class A2		36,750			22,784
Nintendo Co., Ltd.1		93,000			22,060
KLA-Tencor Corp.		500,000			18,080
Samsung Electronics Co. Ltd.1		18,000			12,303
Cisco Systems, Inc.2		512,000			12,257
HTC Corp.1		960,230			10,940
Automatic Data Processing, Inc.		205,000			8,778
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)		616,310			7,051
MediaTek Inc.1		299,500			5,207
Oracle Corp.		200,000			4,908
Apple Inc.2		20,000			4,217
Cielo SA, ordinary nominative		358,100			3,153
Yahoo! Inc.2		165,750			2,781
Tyco Electronics Ltd.		100,000			2,455
					235,110
CONSUMER STAPLES — 9.50%
Anheuser-Busch InBev NV1		719,000			37,119
Kraft Foods Inc., Class A		1,048,000			28,485
British American Tobacco PLC1		715,000			23,225
Tesco PLC1		3,003,000			20,660
C&C Group PLC1		4,054,794			17,486
Coca-Cola Amatil Ltd.1		1,087,699			11,208
Pernod Ricard SA1		112,200			9,624
Sysco Corp.		325,000			9,080
Coca-Cola Co.		143,000			8,151
Shoppers Drug Mart Corp.		150,000			6,508
Philip Morris International Inc.		130,000			6,265
Beiersdorf AG1		95,000			6,239
Unilever NV, depository receipts1		155,000			5,047
Avon Products, Inc.		133,000			4,189
SABMiller PLC1		100,000			2,936
Colgate-Palmolive Co.		35,000			2,875
Procter & Gamble Co.		25,000			1,516
					200,613
INDUSTRIALS — 9.02%
Joy Global Inc.		550,000			28,375
Schneider Electric SA1		222,353			25,741
General Electric Co.		1,000,000			15,130
Lockheed Martin Corp.		200,000			15,070
Geberit AG1		83,387			14,754
Waste Management, Inc.		425,000			14,369
Emerson Electric Co.		290,000			12,354
Tyco International Ltd.		300,000			10,704
United Technologies Corp.		140,000			9,717
Vallourec SA1		50,000			9,088
Rickmers Maritime1,4		27,420,000			7,294
Finmeccanica SpA1		382,583			6,097
Boeing Co.		100,000			5,413
URS Corp.2		99,000			4,407
Siemens AG1		46,500			4,262
Capita Group PLC1		342,000			4,131
Caterpillar Inc.		60,000			3,420
					190,326
TELECOMMUNICATION SERVICES — 8.75%
Telefónica, SA1		2,288,000			63,723
AT&T Inc.		1,125,000			31,534
Koninklijke KPN NV1		1,482,000			25,119
Verizon Communications Inc.		525,000			17,393
SOFTBANK CORP.1		567,000			13,260
China Telecom Corp. Ltd., Class H1		25,000,000			10,345
Bell Aliant Regional Communications Income Fund		380,000			10,176
KDDI Corp.1		1,785			9,419
Telefónica 02 Czech Republic, AS1		165,000			3,750
					184,719
HEALTH CARE — 7.46%
Merck & Co., Inc.		1,305,350			47,697
UCB SA1		500,000			20,923
Roche Holding AG1		117,850			20,026
Bayer AG1		205,500			16,413
Johnson & Johnson		172,000			11,078
Sonic Healthcare Ltd.1		750,000			10,329
Novo Nordisk A/S, Class B1		140,000			8,956
Smith & Nephew PLC1		750,000			7,711
CSL Ltd.1		250,000			7,273
Abbott Laboratories		130,000			7,019
					157,425
CONSUMER DISCRETIONARY — 6.51%
Virgin Media Inc.2		2,015,000			33,913
Toyota Motor Corp.1		438,000			18,414
Carphone Warehouse Group PLC1		5,691,100			17,177
Carnival Corp., units2		500,000			15,845
McDonald’s Corp.		230,000			14,361
Saks Inc.2		1,200,000			7,872
Honda Motor Co., Ltd.1		218,000			7,375
News Corp., Class A		425,000			5,818
Time Warner Inc.		180,500			5,260
adidas AG1		82,700			4,462
H & M Hennes & Mauritz AB, Class B1		73,805			4,087
Pearson PLC1		200,000			2,879
					137,463
ENERGY — 5.00%
TOTAL SA1		490,000			31,377
Baker Hughes Inc.		500,000			20,240
Royal Dutch Shell PLC, Class A (ADR)		129,000			7,754
Royal Dutch Shell PLC, Class B (ADR)		125,000			7,266
Saipem SpA, Class S1		271,800			9,330
EnCana Corp.		267,000			8,701
Cenovus Energy Inc.		267,000			6,760
Tenaris SA (ADR)		141,000			6,014
Reliance Industries Ltd.1		176,000			4,108
Diamond Offshore Drilling, Inc.		41,000			4,035
					105,585
UTILITIES — 4.15%
GDF Suez1		415,201			18,000
SUEZ Environnement Co.1		616,026			14,221
Duke Energy Corp.		812,200			13,978
Hongkong Electric Holdings Ltd.1		2,289,000			12,439
Exelon Corp.		150,000			7,330
Snam Rete Gas SpA1		1,435,000			7,131
DUET Group1		4,418,377			7,106
E.ON AG1		110,000			4,589
RRI Energy, Inc.2		500,000			2,860
					87,654
MISCELLANEOUS — 0.62%
Other common stocks in initial period of acquisition					13,171
Total common stocks (cost: $1,761,796,000)					1,904,795
Preferred stocks — 0.09%
FINANCIALS — 0.09%
Resona Preferred Global Securities (Cayman) Ltd. 7.191%5,6		2,355,000			1,928
Total preferred stocks (cost: $1,103,000)					1,928
	Shares or
Convertible securities — 0.75%	principal amount
MATERIALS — 0.74%
Alcoa Inc. 5.25% convertible notes 2014	$	6,000,000			15,593
FINANCIALS — 0.01%
First Southern Bancorp, Inc., Series C, convertible preferred1,2,3		209			209
Total convertible securities (cost: $6,209,000)					15,802
	Principal amount
Bonds, notes & other debt instruments — 2.85%		(000	)
INFORMATION TECHNOLOGY — 0.88%
NXP BV and NXP Funding LLC 3.034% 20136	$	7,200			6,003
NXP BV and NXP Funding LLC 7.875% 2014		11,550			10,539
Freescale Semiconductor, Inc., Term Loan B, 1.985% 20136,7,8		2,405			2,111
					18,653
CONSUMER DISCRETIONARY — 0.54%
Royal Caribbean Cruises Ltd. 11.875% 2015		5,100			5,922
NTL Cable PLC 9.50% 2016		5,000			5,394
					11,316
TELECOMMUNICATION SERVICES — 0.44%
Digicel Group Ltd. 12.00% 20145		8,225			9,263
	Principal amount			Value
Bonds, notes & other debt instruments		(000	)		(000	)
FINANCIALS — 0.43%
Zions Bancorporation 5.65% 2014	$	1,310		$	976
Zions Bancorporation 5.50% 2015		5,880			4,162
Zions Bancorporation 6.00% 2015		3,955			2,801
Resona Bank, Ltd. 5.85% (undated)5,6		1,290			1,127
					9,066
BONDS & NOTES OF GOVERNMENTS OUTSIDE THE U.S. — 0.38%
Brazil (Federal Republic of) 10.00% 20171	BRL16,500				8,135
BONDS & NOTES OF U.S. GOVERNMENT AGENCIES — 0.18%
CoBank ACB 0.854% 20225,6	$	5,050			3,761
Total bonds, notes & other debt instruments (cost: $45,509,000)					60,194
Short-term securities — 6.25%
Caisse d’Amortissement de la Dette Sociale 0.14%–0.21% due 1/20–2/2/2010		43,800			43,793
Fannie Mae 0.09%–0.195% due 3/10–6/23/2010		33,500			33,488
Freddie Mac 0.17% due 5/4/2010		16,200			16,192
Calyon North America Inc. 0.16% due 1/28/2010		13,800			13,798
U.S. Treasury Bill 0.199% due 7/15/2010		9,500			9,490
Eni Finance USA Inc. 0.15% due 1/26/20105		9,200			9,199
Denmark (Kingdom of) 0.15% due 1/4/2010		6,100			6,100
Total short-term securities (cost: $132,057,000)					132,060
Total investment securities (cost: $1,946,674,000)					2,114,779
Other assets less liabilities					(3,459	)
Net assets				$	2,111,320

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

1Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $923,675,000, which represented 43.75% of the net assets of the fund. This amount includes $912,751,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

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

3Purchased 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
First Southern Bancorp, Series C	12/17/2009	$	2,580	$	2,580		.12	%
First Southern Bancorp	12/17/2009		209		209		.01
Total restricted securities		$	2,789	$	2,789		.13	%

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

5Purchased 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 $25,278,000, which represented 1.20% of the net assets of the fund.

6Coupon rate may change periodically.

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

8Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $2,111,000, which represented 0.10% of the net assets of the fund.

Key to abbreviations
ADR = American Depositary Receipts	BRL = Brazilian reais

Global Growth and Income Fund

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
Microsoft		3.41	%
Telefónica		3.02
Merck		2.26
Yamana Gold		2.17
Newmont Mining		1.79
Anheuser-Busch InBev		1.76
Barrick Gold		1.66
Virgin Media		1.61
Australia and New Zealand Banking Group		1.52
AT&T		1.49

							Percent
				Value			of net
Common stocks  - 90.22%	Shares				(000	)	assets
Financials  - 16.79%
Australia and New Zealand Banking Group Ltd. (1)		1,574,121		$	32,025			1.52	%
Macquarie Group Ltd. (1)		676,661			28,969			1.37
Industrial and Commercial Bank of China Ltd., Class H (1)		34,482,000			28,301			1.34
JPMorgan Chase & Co.		573,200			23,885			1.13
HSBC Holdings PLC (Hong Kong) (1)		1,020,000			11,613
HSBC Holdings PLC (ADR)		200,000			11,418			1.09
Marsh & McLennan Companies, Inc.		800,000			17,664			.84
Absa Group Ltd. (1)		930,000			16,115			.76
BNP Paribas SA (1)		187,999			14,825			.70
Prudential PLC (1)		1,434,931			14,637			.69
Other securities					155,048			7.35
					354,500			16.79
Materials  - 11.28%
Yamana Gold Inc.		4,000,000			45,859			2.17
Newmont Mining Corp.		800,000			37,848			1.79
Barrick Gold Corp.		890,000			35,048			1.66
Rio Tinto PLC (1)		550,000			29,682			1.41
United States Steel Corp.		500,000			27,560			1.31
Monsanto Co.		200,000			16,350			.77
Other securities					45,882			2.17
					238,229			11.28
Information technology  - 11.14%
Microsoft Corp.		2,360,000			71,956			3.41
International Business Machines Corp.		200,000			26,180			1.24
Google Inc., Class A (2)		36,750			22,784			1.08
Nintendo Co., Ltd. (1)		93,000			22,060			1.04
KLA-Tencor Corp.		500,000			18,080			.86
Other securities					74,050			3.51
					235,110			11.14
Consumer staples  - 9.50%
Anheuser-Busch InBev NV (1)		719,000			37,119			1.76
Kraft Foods Inc., Class A		1,048,000			28,485			1.35
British American Tobacco PLC (1)		715,000			23,225			1.10
Tesco PLC (1)		3,003,000			20,660			.98
C&C Group PLC (1)		4,054,794			17,486			.83
Other securities					73,638			3.48
					200,613			9.50
Industrials  - 9.02%
Joy Global Inc.		550,000			28,375			1.34
Schneider Electric SA (1)		222,353			25,741			1.22
General Electric Co.		1,000,000			15,130			.72
Lockheed Martin Corp.		200,000			15,070			.71
Geberit AG (1)		83,387			14,754			.70
Waste Management, Inc.		425,000			14,369			.68
Other securities					76,887			3.65
					190,326			9.02
Telecommunication services  - 8.75%
Telefónica, SA (1)		2,288,000			63,723			3.02
AT&T Inc.		1,125,000			31,534			1.49
Koninklijke KPN NV (1)		1,482,000			25,119			1.19
Verizon Communications Inc.		525,000			17,393			.82
Other securities					46,950			2.23
					184,719			8.75
Health care  - 7.46%
Merck & Co., Inc.		1,305,350			47,697			2.26
UCB SA (1)		500,000			20,923			.99
Roche Holding AG (1)		117,850			20,026			.95
Bayer AG (1)		205,500			16,413			.78
Other securities					52,366			2.48
					157,425			7.46
Consumer discretionary  - 6.51%
Virgin Media Inc. (2)		2,015,000			33,913			1.61
Toyota Motor Corp. (1)		438,000			18,414			.87
Carphone Warehouse Group PLC (1)		5,691,100			17,177			.81
Carnival Corp., units (2)		500,000			15,845			.75
Other securities					52,114			2.47
					137,463			6.51
Energy  - 5.00%
TOTAL SA (1)		490,000			31,377			1.49
Baker Hughes Inc.		500,000			20,240			.96
Other securities					53,968			2.55
					105,585			5.00
Utilities  - 4.15%
GDF Suez (1)		415,201			18,000			.85
Other securities					69,654			3.30
					87,654			4.15
MISCELLANEOUS  -  0.62%
Other common stocks in initial period of acquisition					13,171			.62
Total common stocks (cost: $1,761,796,000)					1,904,795			90.22
Preferred stocks  - 0.09%
Financials - 0.09%
Other securities					1,928			.09
Total preferred stocks (cost: $1,103,000)					1,928			.09
	Principal
		amount
Convertible securities  - 0.75%		(000	)
Materials  - 0.74%
Alcoa Inc. 5.25% convertible notes 2014	$	6,000			15,593			.74
Financials - 0.01%
Other securities					209			.01
Total convertible securities (cost: $6,209,000)					15,802			.75
Bonds, notes & other debt instruments - 2.85%
Consumer discretionary  - 0.54%
NTL Cable PLC 9.50% 2016		5,000			5,394			.26
Other securities					5,922			.28
					11,316			.54
Other - 2.31%
Other securities					48,878			2.31
Total bonds, notes & other debt instruments (cost: $45,509,000)					60,194			2.85
Short-term securities  - 6.25%
Caisse d'Amortissement de la Dette Sociale 0.14%-0.21% due 1/20-2/2/2010		43,800			43,793			2.07
Fannie Mae 0.09%-0.195% due 3/10-6/23/2010		33,500			33,488			1.58
Freddie Mac 0.17% due 5/4/2010		16,200			16,192			.77
Other securities					38,587			1.83
Total short-term securities (cost: $132,057,000)					132,060			6.25
Total investment securities (cost: $1,946,674,000)					2,114,779			100.16
Other assets less liabilities					(3,459	)		(.16	)
Net assets				$	2,111,320			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.  Some of these securities (with an aggregate value of $25,278,000, which represented 1.20% of the net assets of the fund) may be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. Some of these securities (with an aggregate value of $2,789,000, which represented .13% 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. The value of the fund's affiliated-company holdings is included in "Other securities" under the respective industry sector in the summary investment portfolio . Further details on such holdings and related transactions during the year ended December 31, 2009, appear below.

	Beginning  shares		Additions		Reductions		Ending  shares		Dividend  income  (000)		Value of affiliate at  12/31/09 (000)
Rickmers Maritime (1)		24,370,000		3,050,000		-		27,420,000	$	1,465	$	7,294

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 $923,675,000, which represented 43.75% of the net assets of the fund. This amount includes $912,751,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

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

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

Growth-Income Fund

Investment portfolio

December 31, 2009

Common stocks — 91.55%	Shares			Value (000)
INFORMATION TECHNOLOGY — 24.29%
Microsoft Corp.		28,810,100		$	878,420
Oracle Corp.		29,417,500			721,905
Hewlett-Packard Co.		9,185,000			473,119
Google Inc., Class A1		662,500			410,737
Yahoo! Inc.1		24,371,300			408,950
Intel Corp.		16,011,900			326,643
International Business Machines Corp.		2,306,200			301,882
Cisco Systems, Inc.1		12,000,000			287,280
Corning Inc.		12,000,000			231,720
Accenture PLC, Class A		5,475,000			227,213
Flextronics International Ltd.1		28,587,764			208,977
MasterCard Inc., Class A		500,000			127,990
SAP AG2		1,780,000			83,890
SAP AG (ADR)		920,000			43,065
Nokia Corp.2		8,905,000			114,237
NVIDIA Corp.1		5,800,000			108,344
Linear Technology Corp.		3,500,000			106,890
Xilinx, Inc.		3,540,100			88,715
McAfee, Inc.1		1,920,000			77,895
Texas Instruments Inc.		2,625,000			68,408
eBay Inc.1		2,750,000			64,735
Paychex, Inc.		2,025,141			62,050
Analog Devices, Inc.		1,750,000			55,265
Maxim Integrated Products, Inc.		2,700,000			54,810
Dell Inc.1		3,800,000			54,568
QUALCOMM Inc.		1,150,000			53,199
HOYA CORP.2		2,000,000			53,053
Nintendo Co., Ltd.2		205,000			48,627
KLA-Tencor Corp.		1,200,000			43,392
Automatic Data Processing, Inc.		955,000			40,893
Affiliated Computer Services, Inc., Class A1		613,400			36,614
Autodesk, Inc.1		1,400,000			35,574
Microchip Technology Inc.		820,000			23,829
Advanced Micro Devices, Inc.1		2,000,000			19,360
Canon, Inc.2		300,000			12,690
Motorola, Inc.1		1,362,500			10,573
Western Union Co.		400,000			7,540
					5,973,052
INDUSTRIALS — 12.15%
United Technologies Corp.		4,075,000			282,846
Union Pacific Corp.		4,008,200			256,124
CSX Corp.		4,503,023			218,351
United Parcel Service, Inc., Class B		3,800,000			218,006
Precision Castparts Corp.		1,865,000			205,803
3M Co.		2,401,000			198,491
Norfolk Southern Corp.		3,565,300			186,893
General Dynamics Corp.		2,707,000			184,536
Boeing Co.		3,200,000			173,216
General Electric Co.		10,500,000			158,865
Avery Dennison Corp.		3,955,000			144,318
Southwest Airlines Co.		10,945,000			125,101
Lockheed Martin Corp.		1,250,000			94,188
Rockwell Automation		1,900,000			89,262
Waste Management, Inc.		2,150,000			72,692
Burlington Northern Santa Fe Corp.		700,000			69,034
Ingersoll-Rand PLC		1,900,000			67,906
Emerson Electric Co.		1,400,000			59,640
Eaton Corp.		800,000			50,896
Tyco International Ltd.		1,000,000			35,680
Pitney Bowes Inc.		1,552,200			35,328
Alstom SA2		435,000			30,201
Continental Airlines, Inc., Class B1		989,200			17,726
AMR Corp.1		1,500,000			11,595
					2,986,698
CONSUMER DISCRETIONARY — 10.34%
Time Warner Inc.		11,394,989			332,050
News Corp., Class A		14,500,200			198,508
Lowe’s Companies, Inc.		8,430,477			197,189
Best Buy Co., Inc.		4,800,000			189,408
Target Corp.		3,840,000			185,741
Time Warner Cable Inc.		3,827,242			158,409
Apollo Group, Inc., Class A1		2,250,000			136,305
Royal Caribbean Cruises Ltd.1		4,805,000			121,470
Mattel, Inc.		5,400,000			107,892
Omnicom Group Inc.		2,590,000			101,398
Staples, Inc.		3,900,000			95,901
Magna International Inc., Class A		1,762,400			89,142
McDonald’s Corp.		1,400,000			87,416
Fiat SpA1,2		6,000,000			87,259
Carnival Corp., units1		2,124,200			67,316
Carnival PLC1,2		1,750,000			59,838
VF Corp.		800,000			58,592
D.R. Horton, Inc.		5,000,000			54,350
Harley-Davidson, Inc.		1,950,000			49,140
Comcast Corp., Class A		1,800,000			30,348
Comcast Corp., Class A, special nonvoting shares		1,000,000			16,010
Toyota Motor Corp.2		900,000			37,837
Kohl’s Corp.1		600,000			32,358
Home Depot, Inc.		600,000			17,358
SEGA SAMMY HOLDINGS INC.2		1,450,000			17,292
Office Depot, Inc.1		1,250,000			8,062
Harman International Industries, Inc.		185,000			6,527
					2,543,116
HEALTH CARE — 8.92%
Merck & Co., Inc.		10,990,361			401,588
Abbott Laboratories		5,380,000			290,466
Medtronic, Inc.		5,115,000			224,958
Roche Holding AG2		845,000			143,589
Medco Health Solutions, Inc.1		1,800,000			115,038
McKesson Corp.		1,750,000			109,375
UnitedHealth Group Inc.		3,500,000			106,680
Aetna Inc.		3,250,000			103,025
Hologic, Inc.1		5,661,300			82,089
Cardinal Health, Inc.		2,400,000			77,376
Johnson & Johnson		1,125,000			72,461
Novartis AG (ADR)		1,300,000			70,759
Pfizer Inc		3,460,000			62,937
CIGNA Corp.		1,741,600			61,426
Amgen Inc.1		1,084,700			61,361
ResMed Inc.1		800,000			41,816
CareFusion Corp.1		1,200,000			30,012
Teva Pharmaceutical Industries Ltd. (ADR)		515,000			28,933
Covidien PLC		531,250			25,442
Eli Lilly and Co.		650,000			23,211
Masimo Corp.1		750,000			22,815
Thermo Fisher Scientific Inc.1		390,000			18,599
Myriad Genetics, Inc.1		711,800			18,578
					2,192,534
ENERGY — 8.40%
ConocoPhillips		7,003,000			357,643
Schlumberger Ltd.		4,725,000			307,550
Royal Dutch Shell PLC, Class A (ADR)		3,835,000			230,522
Royal Dutch Shell PLC, Class B (ADR)		1,190,391			69,197
Royal Dutch Shell PLC, Class B2		139,816			4,080
Baker Hughes Inc.		5,844,700			236,594
Chevron Corp.		2,738,200			210,814
Devon Energy Corp.		1,693,000			124,436
Marathon Oil Corp.		3,125,000			97,563
Halliburton Co.		2,530,000			76,128
Canadian Natural Resources, Ltd.		1,020,000			74,061
Diamond Offshore Drilling, Inc.		600,000			59,052
Eni SpA2		2,250,000			57,241
China National Offshore Oil Corp.2		35,000,000			54,496
BP PLC2		3,684,409			35,679
EOG Resources, Inc.		345,000			33,568
Exxon Mobil Corp.		250,000			17,047
Hess Corp.		165,000			9,982
Spectra Energy Corp		332,500			6,820
OAO Gazprom (ADR)2		142,100			3,542
					2,066,015
FINANCIALS — 7.63%
Bank of America Corp.		13,341,452			200,922
Capital One Financial Corp.		5,000,000			191,700
HSBC Holdings PLC (Hong Kong)2		8,105,309			92,284
HSBC Holdings PLC (ADR)		1,538,570			87,837
JPMorgan Chase & Co.		4,247,900			177,010
Citigroup Inc.		49,875,775			165,089
Moody’s Corp.		5,448,300			146,015
UBS AG1,2		7,534,450			115,615
State Street Corp.		2,480,700			108,010
Marsh & McLennan Companies, Inc.		4,455,000			98,366
Banco Santander, SA2		4,739,010			77,804
Credit Suisse Group AG2		1,570,000			77,238
First American Corp.		2,251,680			74,553
Arthur J. Gallagher & Co.		2,925,000			65,842
Bank of New York Mellon Corp.		2,263,405			63,308
Bank of China Ltd., Class H2		71,260,000			38,158
Chimera Investment Corp.		8,000,000			31,040
American International Group, Inc.1		693,335			20,786
Allstate Corp.		635,000			19,075
XL Capital Ltd, Class A		662,440			12,143
Genworth Financial, Inc., Class A1		634,200			7,198
Radian Group Inc.		660,000			4,825
Indiabulls Real Estate Ltd. (GDR)1,2		387,915			1,884
					1,876,702
CONSUMER STAPLES — 6.80%
Philip Morris International Inc.		6,819,500			328,632
PepsiCo, Inc.		5,318,419			323,360
Molson Coors Brewing Co., Class B		5,084,900			229,634
CVS/Caremark Corp.		5,000,000			161,050
Colgate-Palmolive Co.		1,767,323			145,186
Wal-Mart Stores, Inc.		2,000,000			106,900
Avon Products, Inc.		3,005,000			94,657
Sara Lee Corp.		7,000,000			85,260
Kraft Foods Inc., Class A		3,025,000			82,219
Walgreen Co.		1,000,000			36,720
Kellogg Co.		590,000			31,388
Altria Group, Inc.		1,475,000			28,954
Kimberly-Clark Corp.		280,000			17,839
					1,671,799
MATERIALS — 4.38%
Air Products and Chemicals, Inc.		2,807,909			227,609
Freeport-McMoRan Copper & Gold Inc.1		1,520,400			122,073
ArcelorMittal2		2,540,000			115,117
Monsanto Co.		1,151,900			94,168
Rio Tinto PLC2		1,720,375			92,842
Sealed Air Corp.		3,200,000			69,952
Ecolab Inc.		1,500,000			66,870
SSAB Svenskt Stål AB, Class A2		3,276,684			55,439
Barrick Gold Corp.		1,325,000			52,179
Salzgitter AG2		511,743			49,986
Praxair, Inc.		499,624			40,125
Celanese Corp., Series A		1,075,000			34,507
Syngenta AG2		83,000			23,232
Akzo Nobel NV2		247,000			16,269
MeadWestvaco Corp.		258,200			7,392
Potash Corp. of Saskatchewan Inc.		63,300			6,868
Weyerhaeuser Co.		34,600			1,493
					1,076,121
TELECOMMUNICATION SERVICES — 4.00%
AT&T Inc.		14,350,000			402,231
Verizon Communications Inc.		5,150,000			170,619
Telephone and Data Systems, Inc.		2,997,100			101,662
Telephone and Data Systems, Inc., special common shares		2,277,900			68,792
Qwest Communications International Inc.		26,710,200			112,450
CenturyTel, Inc.		2,048,775			74,186
América Móvil, SAB de CV, Series L (ADR)		775,000			36,409
Sprint Nextel Corp., Series 11		4,795,000			17,550
					983,899
UTILITIES — 2.12%
Exelon Corp.		3,035,000			148,320
Dominion Resources, Inc.		2,500,000			97,300
Scottish and Southern Energy PLC2		4,265,000			79,805
FirstEnergy Corp.		1,430,000			66,424
Public Service Enterprise Group Inc.		1,785,000			59,351
PPL Corp.		1,700,000			54,927
Duke Energy Corp.		665,000			11,445
American Electric Power Co., Inc.		67,900			2,362
					519,934
MISCELLANEOUS — 2.52%
Other common stocks in initial period of acquisition					619,271
Total common stocks (cost: $20,694,646,000)					22,509,141
Preferred stocks — 0.05%
FINANCIALS — 0.05%
Wells Fargo & Co. 7.98%3		9,530,000			9,602
Wachovia Capital Trust III 5.80%3		4,345,000			3,367
Total preferred stocks (cost: $9,983,000)					12,969
Rights & warrants — 0.00%
FINANCIALS — 0.00%
Washington Mutual, Inc., warrants, expire 20131,2,4		1,600,000			—
Total rights & warrants (cost: $6,131,000)					—
	Shares or
Convertible securities — 0.57%	principal amount
FINANCIALS — 0.47%
Citigroup Inc. 7.50% convertible preferred 20121		526,000			54,883
Bank of America Corp., Series S, 10.00% convertible preferred1		2,500,000			37,300
SLM Corp., Series C, 7.25% convertible preferred 2010		33,900			20,570
American International Group, Inc. 8.50% convertible preferred 2011, units		152,950			1,733
					114,486
INDUSTRIALS — 0.06%
AMR Corp. 6.25% convertible notes 2014	$	14,250,000			14,838
MISCELLANEOUS — 0.04%
Other convertible securities in initial period of acquisition					9,990
Total convertible securities (cost: $139,776,000)					139,314
	Principal amount			Value
Bonds, notes & other debt instruments — 0.01%		(000	)		(000	)
FINANCIALS — 0.01%
Bank of America Corp. 4.25% 2010	$	310		$	318
Bank of America Corp. 4.375% 2010		2,085			2,153
Total bonds, notes & other debt instruments (cost: $2,268,000)					2,471
Short-term securities — 7.84%
Freddie Mac 0.08%–0.43% due 1/4–9/15/2010		498,971			498,841
U.S. Treasury Bills 0.06%–0.287% due 2/4–8/26/2010		314,200			313,983
Fannie Mae 0.09%–0.55% due 1/5–8/5/2010		246,100			245,940
Bank of America Corp. 0.25% due 2/9/2010		54,300			54,286
Ranger Funding Co. LLC 0.23% due 1/20–2/5/20104		80,066			80,050
JPMorgan Chase Funding Inc. 0.18% due 1/19/20104		98,900			98,887
Park Avenue Receivables Co., LLC 0.19% due 1/7/20104		25,000			24,999
Federal Home Loan Bank 0.065%–0.16% due 1/8–5/18/2010		121,100			121,081
Private Export Funding Corp. 0.13%–0.16% due 2/24–3/10/20104		81,250			81,229
Straight-A Funding LLC 0.17%–0.18% due 2/3–3/2/20104		73,100			73,084
Coca-Cola Co. 0.10%–0.24% due 1/12–2/10/20104		65,600			65,588
General Electric Capital Services, Inc. 0.17% due 2/18/2010		30,000			29,991
General Electric Capital Corp. 0.20% due 1/22/2010		28,800			28,796
Paccar Financial Corp. 0.16%–0.20% due 1/26–3/1/2010		45,300			45,290
NetJets Inc. 0.13% due 1/15/20104		38,200			38,196
Variable Funding Capital Corp. 0.21% due 1/26/20104		37,759			37,749
Procter & Gamble International Funding S.C.A. 0.23% due 1/8/20104		36,400			36,399
Walt Disney Co. 0.11% due 1/25/20104		30,000			29,998
Medtronic Inc. 0.11% due 3/1/20104		21,500			21,493
Johnson & Johnson 0.08% due 1/11/20104		1,600			1,600
Total short-term securities (cost: $1,927,221,000)					1,927,480
Total investment securities (cost: $22,780,025,000)					24,591,375
Other assets less liabilities					(4,682	)
Net assets				$	24,586,693

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

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

2Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $1,835,244,000, which represented 7.46% of the net assets of the fund. This amount includes $1,833,361,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

3Coupon rate may change periodically.

4Purchased 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 $589,272,000, which represented 2.40% of the net assets of the fund.

Key to abbreviations

ADR = American Depositary Receipts

GDR = Global Depositary Receipts

Growth-Income Fund

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
Microsoft		3.57	%
Oracle		2.94
Hewlett-Packard		1.92
Google		1.67
Yahoo		1.66
AT&T		1.64
Merck		1.63
ConocoPhillips		1.45
Time Warner		1.35
Philip Morris International		1.34

							Percent
				Value			of net
Common stocks  - 91.55%	Shares				(000	)	assets
Information technology  - 24.29%
Microsoft Corp.		28,810,100		$	878,420			3.57	%
Oracle Corp.		29,417,500			721,905			2.94
Hewlett-Packard Co.		9,185,000			473,119			1.92
Google Inc., Class A (1)		662,500			410,737			1.67
Yahoo! Inc. (1)		24,371,300			408,950			1.66
Intel Corp.		16,011,900			326,643			1.33
International Business Machines Corp.		2,306,200			301,882			1.23
Cisco Systems, Inc. (1)		12,000,000			287,280			1.17
Corning Inc.		12,000,000			231,720			.94
Accenture PLC, Class A		5,475,000			227,213			.92
Flextronics International Ltd. (1)		28,587,764			208,977			.85
Other securities					1,496,206			6.09
					5,973,052			24.29
Industrials  - 12.15%
United Technologies Corp.		4,075,000			282,846			1.15
Union Pacific Corp.		4,008,200			256,124			1.04
CSX Corp.		4,503,023			218,351			.89
United Parcel Service, Inc., Class B		3,800,000			218,006			.89
Precision Castparts Corp.		1,865,000			205,803			.84
3M Co.		2,401,000			198,491			.81
Norfolk Southern Corp.		3,565,300			186,893			.76
General Dynamics Corp.		2,707,000			184,536			.75
Boeing Co.		3,200,000			173,216			.70
General Electric Co.		10,500,000			158,865			.65
Other securities					903,567			3.67
					2,986,698			12.15
Consumer discretionary  - 10.34%
Time Warner Inc.		11,394,989			332,050			1.35
News Corp., Class A		14,500,200			198,508			.81
Lowe's Companies, Inc.		8,430,477			197,189			.80
Best Buy Co., Inc.		4,800,000			189,408			.77
Target Corp.		3,840,000			185,741			.76
Time Warner Cable Inc.		3,827,242			158,409			.64
Other securities					1,281,811			5.21
					2,543,116			10.34
Health care  - 8.92%
Merck & Co., Inc.		10,990,361			401,588			1.63
Abbott Laboratories		5,380,000			290,466			1.18
Medtronic, Inc.		5,115,000			224,958			.92
Other securities					1,275,522			5.19
					2,192,534			8.92
Energy  - 8.40%
ConocoPhillips		7,003,000			357,643			1.45
Schlumberger Ltd.		4,725,000			307,550			1.25
Royal Dutch Shell PLC, Class A (ADR)		3,835,000			230,522
Royal Dutch Shell PLC, Class B (ADR)		1,190,391			69,197
Royal Dutch Shell PLC, Class B (2)		139,816			4,080			1.24
Baker Hughes Inc.		5,844,700			236,594			.96
Chevron Corp.		2,738,200			210,814			.86
Other securities					649,615			2.64
					2,066,015			8.40
Financials  - 7.63%
Bank of America Corp.		13,341,452			200,922			.82
Capital One Financial Corp.		5,000,000			191,700			.78
HSBC Holdings PLC (Hong Kong) (2)		8,105,309			92,284
HSBC Holdings PLC (ADR)		1,538,570			87,837			.73
JPMorgan Chase & Co.		4,247,900			177,010			.72
Citigroup Inc.		49,875,775			165,089			.67
Other securities					961,860			3.91
					1,876,702			7.63
Consumer staples  - 6.80%
Philip Morris International Inc.		6,819,500			328,632			1.34
PepsiCo, Inc.		5,318,419			323,360			1.32
Molson Coors Brewing Co., Class B		5,084,900			229,634			.93
CVS/Caremark Corp.		5,000,000			161,050			.65
Other securities					629,123			2.56
					1,671,799			6.80
Materials  - 4.38%
Air Products and Chemicals, Inc.		2,807,909			227,609			.93
Other securities					848,512			3.45
					1,076,121			4.38
Telecommunication services  - 4.00%
AT&T Inc.		14,350,000			402,231			1.64
Verizon Communications Inc.		5,150,000			170,619			.69
Other securities					411,049			1.67
					983,899			4.00
Utilities  - 2.12%
Other securities					519,934			2.12
Miscellaneous  -  2.52%
Other common stocks in initial period of acquisition					619,271			2.52
Total common stocks (cost: $20,694,646,000)					22,509,141			91.55
Preferred stocks  - 0.05%
Financials - 0.05%
Other securities					12,969			.05
Total preferred stocks (cost: $9,983,000)					12,969			.05
Rights & warrants  - 0.00%
Financials - 0.00%
Other securities					-			.00
Total rights & warrants (cost: $6,131,000)					-			.00
Convertible securities  - 0.57%
Financials  - 0.47%
Bank of America Corp., Series S, 10.00% convertible preferred (1)		2,500,000			37,300			.15
Other securities					77,186			.32
					114,486			.47
Industrials- 0.06%
Other securities					14,838			.06
Miscellaneous  -  0.04%
Other convertible securities in initial period of acquisition					9,990			.04
Total convertible securities (cost: $139,776,000)					139,314			.57
	Principal
	amount
Bonds, notes & other debt instruments  - 0.01%		(000	)
Financials  - 0.01%
Bank of America Corp. 4.25%-4.375% 2010	$	2,395			2,471			.01
Total bonds, notes & other debt instruments (cost: $2,268,000)					2,471			.01
Short-term securities  - 7.84%
Freddie Mac 0.08%-0.43% due 1/4-9/15/2010		498,971			498,841			2.03
U.S. Treasury Bills 0.06%-0.287% due 2/4-8/26/2010		314,200			313,983			1.28
Fannie Mae 0.09%-0.55% due 1/5-8/5/2010		246,100			245,940			1.00
Bank of America Corp. 0.25% due 2/9/2010		54,300			54,286
Ranger Funding Co. LLC 0.23% due 1/20-2/5/2010 (3)		80,066			80,050			.55
JPMorgan Chase Funding Inc. 0.18% due 1/19/2010 (3)		98,900			98,887
Park Avenue Receivables Co., LLC 0.19% due 1/7/2010 (3)		25,000			24,999			.50
Medtronic Inc. 0.11% due 3/1/2010 (3)		21,500			21,493			.09
Other securities					589,001			2.39
Total short-term securities (cost: $1,927,221,000)					1,927,480			7.84
Total investment securities (cost: $22,780,025,000)					24,591,375			100.02
Other assets less liabilities					(4,682	)		(.02	)
Net assets				$	24,586,693			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.

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 $1,835,244,000, which represented 7.46% of the net assets of the fund. This amount includes $1,833,361,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

(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 $589,272,000, which represented 2.40% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

International Growth and Income Fund

Investment portfolio

December 31, 2009

Common stocks — 89.72%	Shares			Value (000)
FINANCIALS — 23.04%
Société Générale1		46,123		$	3,189
Aviva PLC1		399,000			2,530
Barclays PLC1		490,000			2,162
Prudential PLC1		203,251			2,073
China Construction Bank Corp., Class H1		2,269,000			1,932
Banco Santander, SA1		90,700			1,489
Sumitomo Mitsui Financial Group, Inc.1		49,500			1,412
AXA SA1		54,898			1,297
HSBC Holdings PLC (Hong Kong)1		107,600			1,225
Raiffeisen International Bank-Holding AG1		17,000			961
Erste Bank der oesterreichischen Sparkassen AG1		24,629			912
CapitaMall Trust, units1		650,000			824
Bank of Cyprus PCL1		118,000			822
UBS AG1,2		50,489			775
Itaú Unibanco Holding SA, preferred nominative		30,250			672
BNP Paribas SA1		8,402			663
Bank of China Ltd., Class H1		1,200,000			643
Deutsche Bank AG1		9,000			634
UniCredit SpA1,2		169,200			562
Bangkok Bank PCL, nonvoting depository receipt1		148,400			517
Bangkok Bank PCL1		2,600			9
Japan Real Estate Investment Corp.1		61			448
CIMB Group Holdings Bhd.1		119,000			446
Industrial and Commercial Bank of China Ltd., Class H1		453,000			372
Australia and New Zealand Banking Group Ltd.1		18,000			366
Hang Seng Bank Ltd.1		22,000			324
PT Bank Rakyat Indonesia (Persero) Tbk1		350,000			282
Admiral Group PLC1		14,607			279
QBE Insurance Group Ltd.1		11,700			267
CapitaMalls Asia Ltd.1,2		147,000			266
Banco Bradesco SA, preferred nominative (ADR)		11,500			251
Kasikornbank PCL, nonvoting depository receipt1		95,900			244
Credit Suisse Group AG1		2,800			138
Unibail-Rodamco SE, non-registered shares1		600			132
Sberbank (Savings Bank of the Russian Federation) (GDR)1		300			84
					29,202
INFORMATION TECHNOLOGY — 10.02%
Quanta Computer Inc.1		1,088,340			2,361
MediaTek Inc.1		125,000			2,173
Acer Inc.1		717,120			2,145
Nintendo Co., Ltd.1		8,600			2,040
NetEase.com, Inc. (ADR)2		28,500			1,072
Redecard SA, ordinary nominative		60,160			1,001
Wistron Corp.1		323,216			625
Taiwan Semiconductor Manufacturing Co. Ltd.1		204,014			410
HTC Corp.1		25,200			287
Cielo SA, ordinary nominative		32,500			286
Konica Minolta Holdings, Inc.1		17,000			174
Delta Electronics, Inc.1		38,760			121
					12,695
MATERIALS — 9.13%
ArcelorMittal1		98,400			4,460
Rio Tinto PLC1		20,904			1,128
Linde AG1		8,580			1,032
Syngenta AG1		3,330			932
Akzo Nobel NV1		11,800			777
Koninklijke DSM NV1		15,500			759
CRH PLC1		28,018			758
Impala Platinum Holdings Ltd.1		21,300			579
Israel Chemicals Ltd.1		40,200			525
Givaudan SA1		397			316
BASF SE1		5,000			310
					11,576
TELECOMMUNICATION SERVICES — 8.74%
América Móvil, SAB de CV, Series L (ADR)		45,100			2,119
Telefónica, SA1		61,525			1,714
Telekom Austria AG, non-registered shares1		101,927			1,454
BCE Inc.		36,660			1,016
Philippine Long Distance Telephone Co.1		13,870			782
Türk Telekomünikasyon AS, Class D1		252,400			768
Telekomunikacja Polska SA1		122,500			676
Advanced Info Service PCL1		230,000			596
Taiwan Mobile Co., Ltd.1		266,000			517
Millicom International Cellular SA		6,000			443
Maxis Bhd.1		241,200			378
Chunghwa Telecom Co., Ltd.1		176,000			327
Telecom Italia SpA, nonvoting1		255,000			281
					11,071
HEALTH CARE — 8.38%
Bayer AG1		62,030			4,954
Novartis AG1		61,225			3,332
Sonic Healthcare Ltd.1		54,175			746
Cochlear Ltd.1		10,190			629
Teva Pharmaceutical Industries Ltd. (ADR)		10,900			613
Orion Oyj, Class B1		16,230			349
					10,623
CONSUMER STAPLES — 8.28%
Philip Morris International Inc.		66,770			3,218
Wilmar International Ltd.1		410,000			1,860
Anheuser-Busch InBev NV1		35,120			1,813
British American Tobacco PLC1		40,000			1,299
Nestlé SA1		21,800			1,058
Pernod Ricard SA1		8,195			703
Wesfarmers Ltd.1		13,000			362
Danone SA1		2,964			180
					10,493
CONSUMER DISCRETIONARY — 7.43%
Daimler AG1		45,260			2,416
Yue Yuen Industrial (Holdings) Ltd.1		497,000			1,436
Fiat SpA1,2		66,700			970
Peugeot SA1,2		18,250			611
Esprit Holdings Ltd.1		84,537			556
Accor SA1		9,400			510
Industria de Diseño Textil, SA1		7,150			443
adidas AG1		8,000			432
TUI Travel PLC1		103,000			424
Toyota Motor Corp.1		8,100			341
Honda Motor Co., Ltd.1		8,000			271
Marks and Spencer Group PLC1		37,400			243
OPAP SA1		9,513			208
Li & Fung Ltd.1		50,000			206
Swatch Group Ltd, non-registered shares1		740			186
H & M Hennes & Mauritz AB, Class B1		3,000			166
					9,419
INDUSTRIALS — 6.81%
BAE Systems PLC1		751,350			4,336
AB Volvo, Class B1		140,000			1,194
Qantas Airways Ltd.1		323,000			858
Alstom SA1		12,130			842
Sandvik AB1		35,522			426
Schneider Electric SA1		3,520			407
Embraer — Empresa Brasileira de Aeronáutica SA, ordinary nominative		72,000			393
Geberit AG1		1,000			177
					8,633
UTILITIES — 5.42%
Scottish and Southern Energy PLC1		223,700			4,186
GDF Suez1		27,250			1,181
Hongkong Electric Holdings Ltd.1		95,500			519
CEZ, a s1		10,545			495
RWE AG1		5,020			487
					6,868
ENERGY — 2.21%
OAO Gazprom (ADR)1		45,900			1,144
Eni SpA1		21,650			551
China National Offshore Oil Corp.1		340,000			529
Woodside Petroleum Ltd.1		8,179			344
BP PLC1		23,600			229
					2,797
MISCELLANEOUS — 0.26%
Other common stocks in initial period of acquisition					323
Total common stocks (cost: $96,028,000)					113,700
Preferred stocks — 0.35%
FINANCIALS — 0.35%
Mizuho Capital Investment (USD) 2 Ltd. 14.95%3,4		200,000			244
Barclays Bank PLC 14.00%4		100,000			208
Total preferred stocks (cost: $370,000)					452
				Value
Convertible securities — 0.13%	Shares				(000	)
MATERIALS — 0.13%
Vale SA 6.75% convertible preferred 2012		2,000		$	166
Total convertible securities (cost: $100,000)					166
	Principal amount
Bonds, notes & other debt instruments — 1.64%		(000	)
TELECOMMUNICATION SERVICES — 0.81%
Telecom Italia Capital SA, Series B, 5.25% 2013	$	645			679
Telecom Italia Capital SA 4.95% 2014		330			342
					1,021
FINANCIALS — 0.80%
Westfield Group 5.40% 20123		295			313
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20143		40			42
Westfield Group 5.70% 20163		10			10
Westfield Group 7.125% 20183		335			367
Royal Bank of Scotland Group PLC 5.00% 2014		322			285
					1,017
ENERGY — 0.03%
Husky Energy Inc. 5.90% 2014		20			22
Husky Energy Inc. 7.25% 2019		15			17
					39
Total bonds, notes & other debt instruments (cost: $1,721,000)					2,077
Short-term securities — 7.26%
Freddie Mac 0.07%–0.14% due 3/24–4/19/2010		2,899			2,899
Bank of Nova Scotia 0.15% due 1/19/2010		1,900			1,900
Abbott Laboratories 0.08% due 1/8/20103		1,800			1,800
NetJets Inc. 0.11% due 1/29/20103		1,400			1,400
GDF SUEZ 0.19% due 1/7/20103		1,200			1,200
Total short-term securities (cost: $9,199,000)					9,199
Total investment securities (cost: $107,418,000)					125,594
Other assets less liabilities					1,138
Net assets				$	126,732

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

1Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $102,616,000, which represented 80.97% of the net assets of the fund. This amount includes $102,532,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

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

3Purchased 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 $5,376,000, which represented 4.24% of the net assets of the fund.

4Coupon rate may change periodically.

Key to abbreviations
ADR = American Depositary Receipts	GDR = Global Depositary Receipts

International Growth and Income

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
Bayer		3.91	%
ArcelorMittal		3.52
BAE Systems		3.42
Scottish and Southern Energy		3.30
Novartis		2.63
Philip Morris International		2.54
Société Générale		2.52
Aviva		2.00
Daimler		1.91
Barclays		1.87

						Percent
			Value			of net
Common stocks  - 89.72%	Shares			(000	)	assets
Financials  - 23.04%
Société Générale (1)		46,123	$	3,189			2.52	%
Aviva PLC (1)		399,000		2,530			2.00
Barclays PLC (1)		490,000		2,162			1.71
Prudential PLC (1)		203,251		2,073			1.64
China Construction Bank Corp., Class H (1)		2,269,000		1,932			1.52
Banco Santander, SA (1)		90,700		1,489			1.17
Sumitomo Mitsui Financial Group, Inc. (1)		49,500		1,412			1.11
AXA SA (1)		54,898		1,297			1.02
HSBC Holdings PLC (Hong Kong) (1)		107,600		1,225			.97
Raiffeisen International Bank-Holding AG (1)		17,000		961			.76
Erste Bank der oesterreichischen Sparkassen AG (1)		24,629		912			.72
CapitaMall Trust, units (1)		650,000		824			.65
Bank of Cyprus PCL (1)		118,000		822			.65
Other securities				8,374			6.60
				29,202			23.04
Information technology  - 10.02%
Quanta Computer Inc. (1)		1,088,340		2,361			1.86
MediaTek Inc. (1)		125,000		2,173			1.71
Acer Inc. (1)		717,120		2,145			1.69
Nintendo Co., Ltd. (1)		8,600		2,040			1.61
NetEase.com, Inc. (ADR) (2)		28,500		1,072			.85
Redecard SA, ordinary nominative		60,160		1,001			.79
Other securities				1,903			1.51
				12,695			10.02
Materials  - 9.13%
ArcelorMittal (1)		98,400		4,460			3.52
Rio Tinto PLC (1)		20,904		1,128			.89
Linde AG (1)		8,580		1,032			.81
Syngenta AG (1)		3,330		932			.74
Other securities				4,024			3.17
				11,576			9.13
Telecommunication services  - 8.74%
América Móvil, SAB de CV, Series L (ADR)		45,100		2,119			1.67
Telefónica, SA (1)		61,525		1,714			1.35
Telekom Austria AG, non-registered shares (1)		101,927		1,454			1.15
BCE Inc.		36,660		1,016			.80
Philippine Long Distance Telephone Co. (1)		13,870		782			.62
Telecom Italia SpA, nonvoting (1)		255,000		281			.22
Other securities				3,705			2.93
				11,071			8.74
Health care  - 8.38%
Bayer AG (1)		62,030		4,954			3.91
Novartis AG (1)		61,225		3,332			2.63
Other securities				2,337			1.84
				10,623			8.38
Consumer staples  - 8.28%
Philip Morris International Inc.		66,770		3,218			2.54
Wilmar International Ltd. (1)		410,000		1,860			1.47
Anheuser-Busch InBev NV (1)		35,120		1,813			1.43
British American Tobacco PLC (1)		40,000		1,299			1.02
Nestlé SA (1)		21,800		1,058			.84
Other securities				1,245			.98
				10,493			8.28
Consumer discretionary  - 7.43%
Daimler AG (1)		45,260		2,416			1.91
Yue Yuen Industrial (Holdings) Ltd. (1)		497,000		1,436			1.13
Fiat SpA (1)  (2)		66,700		970			.77
Other securities				4,597			3.62
				9,419			7.43
Industrials  - 6.81%
BAE Systems PLC (1)		751,350		4,336			3.42
AB Volvo, Class B (1)		140,000		1,194			.94
Qantas Airways Ltd. (1)		323,000		858			.68
Alstom SA (1)		12,130		842			.66
Other securities				1,403			1.11
				8,633			6.81
Utilities  - 5.42%
Scottish and Southern Energy PLC (1)		223,700		4,186			3.30
GDF Suez (1)		27,250		1,181			.93
Other securities				1,501			1.19
				6,868			5.42
Energy  - 2.21%
OAO Gazprom (ADR) (1)		45,900		1,144			.90
Other securities				1,653			1.31
				2,797			2.21
Miscellaneous  -  0.26%
Other common stocks in initial period of acquisition				323			.26
Total common stocks (cost: $96,028,000)				113,700			89.72
Preferred stocks  - 0.35%
Financials  - 0.35%
Barclays Bank PLC 14.00% (3)		100,000		208			.16
Other securities				244			.19
				452			.35
Total preferred stocks (cost: $370,000)				452			.35
Convertible securities  - 0.13%
Materials - 0.13%
Other securities				166			.13
Total convertible securities (cost: $100,000)				166			.13
	Principal
Bonds, notes & other debt instruments   - 1.64%	amount  (000)
Other - 1.64%
Telecom Italia Capital SA 4.95%-5.25% 2013-2014	$	975		1,021			.81
Other securities				1,056			.83
				2,077			1.64
Total bonds, notes & other debt instruments (cost: $1,721,000)				2,077			1.64
Short-term securities  - 7.26%
Freddie Mac 0.07%-0.14% due 3/24-4/19/2010		2,899		2,899			2.29
Bank of Nova Scotia 0.15% due 1/19/2010		1,900		1,900			1.50
Abbott Laboratories 0.08% due 1/8/2010 (4)		1,800		1,800			1.42
NetJets Inc. 0.11% due 1/29/2010 (4)		1,400		1,400			1.10
GDF SUEZ 0.19% due 1/7/2010 (4)		1,200		1,200			.95
Total short-term securities (cost: $9,199,000)				9,199			7.26
Total investment securities (cost: $107,418,000)				125,594			99.10
Other assets less liabilities				1,138			.90
Net assets			$	126,732			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.

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 $102,616,000, which represented 80.97% of the net assets of the fund. This amount includes $102,532,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

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

(3) Coupon rate may change periodically.

(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 $5,376,000, which represented 4.24% of the net assets of the fund.

Key to abbreviation

ADR = American Depositary Receipts

See Notes to Financial Statements

Asset Allocation Fund

Investment portfolio

December 31, 2009

Common stocks — 70.24%	Shares			Value (000)
INFORMATION TECHNOLOGY — 15.19%
Cisco Systems, Inc.1		7,310,000		$	175,001
Hewlett-Packard Co.		3,230,000			166,377
International Business Machines Corp.		1,180,000			154,462
Oracle Corp.		5,722,500			140,430
Microsoft Corp.		4,500,000			137,205
Google Inc., Class A1		170,000			105,397
Apple Inc.1		380,000			80,127
Corning Inc.		4,100,000			79,171
Paychex, Inc.		2,420,000			74,149
KLA-Tencor Corp.		1,750,000			63,280
Avnet, Inc.1		2,000,000			60,320
Texas Instruments Inc.		2,000,000			52,120
Xilinx, Inc.		2,000,000			50,120
SAP AG (ADR)		1,000,000			46,810
Yahoo! Inc.1		2,500,000			41,950
Lexmark International, Inc., Class A1		1,100,000			28,578
EMC Corp.1		1,300,000			22,711
					1,478,208
HEALTH CARE — 10.51%
Johnson & Johnson		2,540,000			163,601
Amgen Inc.1		2,050,000			115,969
Abbott Laboratories		2,090,000			112,839
Cardinal Health, Inc.		2,800,000			90,272
Zimmer Holdings, Inc.1		1,250,000			73,888
Eli Lilly and Co.		2,000,000			71,420
Gilead Sciences, Inc.1		1,500,000			64,920
UnitedHealth Group Inc.		2,000,000			60,960
Medtronic, Inc.		1,250,000			54,975
Bristol-Myers Squibb Co.		2,000,000			50,500
Boston Scientific Corp.1		5,500,000			49,500
Aetna Inc.		1,394,000			44,190
Pfizer Inc		1,970,000			35,834
Roche Holding AG2		200,000			33,985
					1,022,853
MATERIALS — 7.87%
BHP Billiton Ltd.2		4,340,000			166,186
Monsanto Co.		1,940,000			158,595
Dow Chemical Co.		4,000,000			110,520
Rio Tinto PLC2		1,681,753			90,758
Newmont Mining Corp.		1,500,000			70,965
Praxair, Inc.		700,000			56,217
Sigma-Aldrich Corp.		920,000			46,487
Alcoa Inc.		2,500,000			40,300
Barrick Gold Corp.		660,000			25,991
					766,019
FINANCIALS — 7.59%
ACE Ltd.		2,320,000			116,928
T. Rowe Price Group, Inc.		1,700,000			90,525
Wells Fargo & Co.		3,200,000			86,368
Moody’s Corp.		3,135,000			84,018
JPMorgan Chase & Co.		2,000,000			83,340
Marsh & McLennan Companies, Inc.		2,940,000			64,915
Progressive Corp.1		2,950,000			53,070
Aon Corp.		1,270,000			48,692
Allstate Corp.		1,500,000			45,060
People’s United Financial, Inc.		2,000,000			33,400
Berkshire Hathaway Inc., Class A1		300			29,760
Citigroup Inc.		767,307			2,540
					738,616
INDUSTRIALS — 6.94%
Boeing Co.		2,250,000			121,792
IDEX Corp.		1,950,000			60,742
Deere & Co.		1,100,000			59,499
Robert Half International Inc.		2,150,000			57,470
Tyco International Ltd.		1,600,000			57,088
Roper Industries, Inc.		935,000			48,966
United Parcel Service, Inc., Class B		820,000			47,043
Danaher Corp.		610,000			45,872
Expeditors International of Washington, Inc.		1,266,245			43,977
URS Corp.1		900,000			40,068
ITT Corp.		700,000			34,818
Waste Management, Inc.		1,000,000			33,810
De La Rue PLC2		1,500,000			23,846
UAL Corp.1		910			12
					675,003
ENERGY — 6.78%
Chevron Corp.		1,700,000			130,883
Smith International, Inc.		4,045,000			109,903
Schlumberger Ltd.		1,350,000			87,871
Suncor Energy Inc.		2,150,000			76,432
Apache Corp.		640,000			66,029
Petróleo Brasileiro SA — Petrobras, ordinary nominative (ADR)		1,000,000			47,680
Tenaris SA (ADR)		800,000			34,120
Occidental Petroleum Corp.		400,000			32,540
Petrohawk Energy Corp.1		1,200,000			28,788
Transocean Ltd.1		300,000			24,840
Uranium One Inc.1		5,300,000			15,292
Baker Hughes Inc.		131,377			5,318
					659,696
CONSUMER DISCRETIONARY — 6.29%
Comcast Corp., Class A		5,500,000			92,730
McDonald’s Corp.		1,330,000			83,045
Home Depot, Inc.		2,500,000			72,325
Johnson Controls, Inc.		2,650,000			72,186
Best Buy Co., Inc.		1,705,350			67,293
Carnival Corp., units1		1,560,000			49,436
Lowe’s Companies, Inc.		1,810,000			42,336
Amazon.com, Inc.1		300,000			40,356
Target Corp.		750,000			36,278
Magna International Inc., Class A		600,000			30,348
Toyota Motor Corp.2		600,000			25,225
American Media Operations, Inc.1,2,3		85,421			1
					611,559
CONSUMER STAPLES — 3.34%
Coca-Cola Co.		2,000,000			114,000
Unilever NV (New York registered)		1,980,000			64,014
PepsiCo, Inc.		1,000,000			60,800
Philip Morris International Inc.		1,000,000			48,190
Colgate-Palmolive Co.		400,000			32,860
Origin Enterprises PLC1,2		1,773,300			5,422
					325,286
UTILITIES — 1.96%
Exelon Corp.		1,850,000			90,410
Entergy Corp.		450,000			36,828
FirstEnergy Corp.		750,000			34,837
RRI Energy, Inc.1		5,000,000			28,600
					190,675
TELECOMMUNICATION SERVICES — 1.37%
AT&T Inc.		3,100,000			86,893
Vodafone Group PLC2		20,000,000			46,374
American Tower Corp., Class A1		7,045			304
COLT Telecom Group SA1,2		51,200			109
					133,680
MISCELLANEOUS — 2.40%
Other common stocks in initial period of acquisition					233,658
Total common stocks (cost: $6,017,544,000)					6,835,253
Preferred stocks — 0.08%
FINANCIALS — 0.08%
BNP Paribas 7.195%3,4		4,000,000			3,720
QBE Capital Funding II LP 6.797%3,4		3,250,000			2,783
AXA SA, Series B, 6.379%3,4		1,315,000			1,065
Total preferred stocks (cost: $8,261,000)					7,568
Rights & warrants — 0.00%
TELECOMMUNICATION SERVICES — 0.00%
GT Group Telecom Inc., warrants, expire 20101,2,3		2,250			—
INDUSTRIALS — 0.00%
Atrium Corp., warrants, expire 20181,2,3		1,024			—
Total rights & warrants (cost: $117,000)					—
	Principal amount			Value
Bonds, notes & other debt instruments — 23.14%		(000	)		(000	)
BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 8.88%
U.S. Treasury 1.50% 2010	$	31,375		$	31,654
U.S. Treasury 3.875% 2010		164,000			167,992
U.S. Treasury 4.625% 2011		149,000			159,220
U.S. Treasury 3.00% 20122,5		28,103			30,285
U.S. Treasury 4.875% 2012		40,000			43,047
U.S. Treasury 1.875% 20132,5		753			795
U.S. Treasury 2.75% 2013		3,190			3,268
U.S. Treasury 3.50% 2013		23,000			24,242
U.S. Treasury 3.625% 2013		17,125			18,136
U.S. Treasury 1.875% 2014		92,000			90,124
U.S. Treasury 1.875% 20152,5		22,644			23,900
U.S. Treasury 7.25% 2016		2,000			2,477
U.S. Treasury 4.75% 2017		6,500			7,055
U.S. Treasury 8.875% 2017		7,000			9,546
U.S. Treasury 1.625% 20182,5		28,103			24,336
U.S. Treasury 3.50% 2018		1,630			1,617
U.S. Treasury 7.875% 2021		12,000			16,136
U.S. Treasury 6.25% 2023		8,235			9,841
U.S. Treasury 6.625% 2027		35,000			43,736
U.S. Treasury 4.50% 2036		35,000			34,497
U.S. Treasury 4.375% 2038		6,100			5,860
U.S. Treasury 3.50% 2039		62,500			51,231
Fannie Mae 6.25% 2029		15,575			17,855
Federal Home Loan Bank 5.25% 2014		10,875			12,034
United States Government Agency-Guaranteed (FDIC insured), Regions Bank 3.25% 2011		6,000			6,210
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp., Series L, 3.125% 2012		6,000			6,209
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.875% 2011		6,000			6,171
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.20% 2012		5,750			5,825
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012		4,250			4,359
United States Government Agency-Guaranteed (FDIC insured), PNC Funding Corp. 2.30% 2012		2,875			2,920
CoBank ACB 0.854% 20223,4		3,805			2,834
Federal Agricultural Mortgage Corp. 5.125% 2011		605			639
					864,051
MORTGAGE-BACKED OBLIGATIONS6 — 5.12%
Fannie Mae 4.89% 2012		10,000			10,505
Fannie Mae 4.00% 2015		3,210			3,307
Fannie Mae 5.50% 2017		1,465			1,559
Fannie Mae 5.00% 2018		3,972			4,190
Fannie Mae 5.50% 2020		7,877			8,407
Fannie Mae 6.00% 2021		353			380
Fannie Mae 6.00% 2021		315			338
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022		2,570			2,662
Fannie Mae 4.00% 2024		19,102			19,248
Fannie Mae 4.00% 2024		13,595			13,699
Fannie Mae 4.00% 2024		6,924			6,976
Fannie Mae 4.00% 2024		4,910			4,947
Fannie Mae 4.50% 2024		36,467			37,565
Fannie Mae 4.50% 2025		15,000			15,431
Fannie Mae 6.00% 2026		2,707			2,886
Fannie Mae 5.50% 2033		6,372			6,700
Fannie Mae 5.50% 2033		3,921			4,123
Fannie Mae 4.50% 2035		14,894			14,945
Fannie Mae, Series 2006-43, Class JO, principal only, 0% 2036		706			561
Fannie Mae 6.00% 2036		13,441			14,309
Fannie Mae, Series 2006-49, Class PA, 6.00% 2036		2,438			2,612
Fannie Mae 5.00% 2037		2,714			2,789
Fannie Mae 5.50% 2037		11,228			11,809
Fannie Mae 5.50% 2037		593			624
Fannie Mae, Series 2007-40, Class PT, 5.50% 2037		553			585
Fannie Mae, Series 2007-33, Class HE, 5.50% 2037		267			282
Fannie Mae 5.50% 2037		78			82
Fannie Mae 6.00% 2037		26,883			28,686
Fannie Mae 6.00% 2037		2,865			3,041
Fannie Mae 6.00% 2037		702			745
Fannie Mae 4.50% 2038		2,674			2,673
Fannie Mae 4.50% 2039		2,459			2,458
Fannie Mae 5.00% 2040		3,892			3,994
Fannie Mae 6.00% 2040		1,275			1,351
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		605			673
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2041		155			175
Fannie Mae 7.00% 2047		3,537			3,855
Fannie Mae 7.00% 2047		985			1,074
Fannie Mae 7.00% 2047		98			107
Freddie Mac 5.00% 2018		1,361			1,436
Freddie Mac 5.00% 2023		3,147			3,302
Freddie Mac 5.00% 2023		700			734
Freddie Mac 6.00% 2026		11,443			12,214
Freddie Mac, Series T-041, Class 3-A, 7.50% 2032		713			800
Freddie Mac, Series 3233, Class PA, 6.00% 2036		4,924			5,280
Freddie Mac, Series 3312, Class PA, 5.50% 2037		4,931			5,196
Freddie Mac 5.00% 2038		20,066			20,603
Freddie Mac 5.00% 2038		2,225			2,285
Freddie Mac 5.474% 20384		396			415
Freddie Mac 5.50% 2038		908			952
Freddie Mac 6.50% 2038		4,575			4,902
Freddie Mac 5.00% 2040		43,450			44,557
CS First Boston Mortgage Securities Corp., Series 2001-CKN5, Class A-4, 5.435% 2034		4,486			4,597
CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034		1,259			1,147
CS First Boston Mortgage Securities Corp., Series 2001-CP4, Class A-4, 6.18% 2035		2,949			3,065
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 2036		4,842			5,044
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037		500			526
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-3B, 5.316% 20374		12,000			12,084
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-C1, Class A-3, 5.376% 2037		1,165			1,202
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-4, 5.265% 20444		10,000			9,779
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 5-A-1, 5.852% 20364		10,952			8,051
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.905% 20364		1,702			1,210
Salomon Brothers Commercial Mortgage Trust, Series 2000-C3, Class B, 6.758% 2033		1,000			987
Salomon Brothers Commercial Mortgage Trust, Series 2001-C1, Class A-3, 6.428% 2035		4,921			5,085
Salomon Brothers Commercial Mortgage Trust, Series 2001-C2, Class A-3, 6.499% 2036		2,796			2,909
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class III-A-1, 6.25% 2037		8,570			6,279
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class IV-A-1, 6.50% 2037		3,245			2,085
Commercial Mortgage Trust, Series 2000-C1, Class A-2, 7.416% 2033		1,322			1,330
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038		6,750			6,621
Residential Accredit Loans, Inc., Series 2004-QS6, Class A-1, 5.00% 2019		2,405			2,372
Residential Accredit Loans, Inc., Series 2004-QS16, Class 1-A-1, 5.50% 2034		70			65
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		5,635			4,846
Wells Fargo Mortgage-backed Securities Trust, Series 2006-1, Class A-3, 5.00% 2021		4,014			3,797
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.646% 20364		4,348			3,482
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20373		3,125			3,157
American Tower Trust I, Series 2007-1A, Class B, 5.537% 20373		2,125			2,185
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20373		1,875			1,928
Bear Stearns Asset-backed Securities I Trust, Series 2005-AC3, Class II-A-1, 5.25% 2020		6,131			5,576
Countrywide Alternative Loan Trust, Series 2005-6CB, Class 2-A-1, 5.00% 2020		3,822			3,310
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.581% 20374		3,990			1,804
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.334% 20454		5,000			5,096
Washington Mutual Mortgage, WMALT Series 2005-1, Class 5-A-1, 6.00% 2035		5,500			4,462
GE Capital Commercial Mortgage Corp., Series 2002-1, Class A-3, 6.269% 2035		3,338			3,519
GE Capital Commercial Mortgage Corp., Series 2002-2, Class A-3, 5.349% 2036		360			367
GE Capital Commercial Mortgage Corp., Series 2001-3, Class A-2, 6.07% 2038		500			524
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037		4,340			4,364
GS Mortgage Securities Corp. II, Series 2001-ROCK, Class D, 6.878% 20183		4,000			4,263
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.492% 20354		5,563			4,221
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 20353		3,800			3,913
Merrill Lynch Mortgage Trust, Series 2002-MW1, Class A-3, 5.403% 2034		2,130			2,178
Merrill Lynch Mortgage Trust, Series 2005-LC1, Class A-2, 5.202% 20444		1,581			1,611
MASTR Alternative Loan Trust, Series 2004-2, Class 2-A-1, 6.00% 2034		3,240			2,854
Four Times Square Trust, Series 2000-4TS, Class C, 7.86% 20153		2,500			2,550
Bank of America 5.50% 20123		2,240			2,391
Residential Asset Securitization Trust, Series 2005-A8CB, Class A-11, 6.00% 2035		2,642			1,731
BCAP LLC Trust, Series 2006-AA2, Class A-1, 0.401% 20374		3,278			1,566
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20263		1,587			1,507
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 2020		1,441			1,434
J.P. Morgan Mortgage Trust, Series 2006-A7, Class 2-A-4, 5.762% 20374		1,550			1,017
Structured Products Asset Return Certificates Trust, Series 2001-CF1, Class A, 6.36% 20332		632			635
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.245% 20273,4		345			311
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032		200			200
					498,266
FINANCIALS — 1.87%
CIT Group Inc., Series A, 7.00% 2013		7,100			6,674
CIT Group Inc., Series A, 7.00% 2014		6,950			6,472
CIT Group Inc., Series A, 7.00% 2015		6,665			5,999
CIT Group Inc., Series A, 7.00% 2016		2,175			1,925
Realogy Corp., Letter of Credit, 3.271% 20134,6,8		2,346			2,092
Realogy Corp., Term Loan B, 3.287% 20134,6,8		8,713			7,771
Realogy Corp., Term Loan DD, 3.287% 20134,6,8		2,864			2,554
Realogy Corp., Second Lien Term Loan A, 13.50% 20176,8		5,700			6,056
Ford Motor Credit Co. 7.375% 2011		1,625			1,659
Ford Motor Credit Co. 3.034% 20124		16,400			15,273
Hospitality Properties Trust 7.875% 2014		6,435			6,650
Hospitality Properties Trust 6.30% 2016		545			505
Hospitality Properties Trust 5.625% 2017		1,195			1,036
Hospitality Properties Trust 6.70% 2018		5,015			4,596
Developers Diversified Realty Corp. 4.625% 2010		2,130			2,117
Developers Diversified Realty Corp. 5.50% 2015		180			159
Developers Diversified Realty Corp. 9.625% 2016		8,500			8,884
International Lease Finance Corp., Series Q, 5.75% 2011		2,000			1,838
International Lease Finance Corp. 4.75% 2012		6,500			5,490
International Lease Finance Corp., Series R, 5.30% 2012		4,050			3,442
Simon Property Group, LP 5.875% 2017		1,500			1,504
Simon Property Group, LP 6.125% 2018		2,170			2,208
Simon Property Group, LP 10.35% 2019		2,000			2,516
Bank of America Corp. 5.75% 2017		5,600			5,744
Citigroup Inc. 6.125% 2017		3,105			3,135
Citigroup Inc. 6.125% 2018		2,555			2,573
Liberty Mutual Group Inc. 6.50% 20353		1,485			1,196
Liberty Mutual Group Inc. 7.50% 20363		4,855			4,457
Goldman Sachs Group, Inc. 6.15% 2018		5,265			5,645
Kimco Realty Corp. 6.875% 2019		5,375			5,475
Lazard Group LLC 7.125% 2015		4,000			4,157
Lazard Group LLC 6.85% 2017		395			398
Barclays Bank PLC 2.50% 2013		1,875			1,874
Barclays Bank PLC 5.20% 2014		2,500			2,653
JPMorgan Chase & Co. 6.30% 2019		4,070			4,485
SLM Corp., Series A, 5.00% 2015		5,000			4,361
Morgan Stanley 6.00% 2014		4,000			4,305
Wells Fargo & Co. 4.375% 2013		3,615			3,758
Wells Fargo & Co. 5.625% 2017		190			198
ProLogis 7.375% 2019		4,000			3,952
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 4.375% 20103		3,500			3,597
Westfield Group 5.40% 20123		295			313
HBOS PLC 6.75% 20183		4,200			3,903
Monumental Global Funding III 0.484% 20143,4		4,000			3,619
Rouse Co. 5.375% 20137		2,000			1,933
Rouse Co. 6.75% 20133,7		1,225			1,227
UniCredito Italiano SpA 5.584% 20173,4		3,200			3,050
Abbey National Treasury Services PLC 3.875% 20143		3,000			3,014
American Express Co. 8.15% 2038		2,075			2,604
Prudential Financial, Inc., Series D, 5.50% 2016		2,000			2,005
Assurant, Inc. 5.625% 2014		1,150			1,180
Korea Development Bank 5.30% 2013		100			105
					182,336
HEALTH CARE — 1.35%
Tenet Healthcare Corp. 7.375% 2013		12,810			12,906
Tenet Healthcare Corp. 9.25% 2015		3,215			3,440
Tenet Healthcare Corp. 8.875% 20193		3,450			3,743
Boston Scientific Corp. 6.00% 2011		1,875			1,969
Boston Scientific Corp. 5.45% 2014		500			527
Boston Scientific Corp. 4.50% 2015		2,000			2,006
Boston Scientific Corp. 7.375% 2040		11,500			12,394
Elan Finance PLC and Elan Finance Corp. 4.273% 20114		2,100			1,985
Elan Finance PLC and Elan Finance Corp. 8.875% 2013		1,645			1,645
Elan Finance PLC and Elan Finance Corp. 8.75% 20163		11,550			11,088
Bausch & Lomb Inc. 9.875% 2015		10,975			11,634
GlaxoSmithKline Capital Inc. 4.85% 2013		6,825			7,332
PTS Acquisition Corp. 10.25% 20154,9		3,637			3,301
PTS Acquisition Corp. 9.75% 2017	€	3,525			3,762
HCA Inc. 9.125% 2014	$	4,500			4,759
HCA Inc. 9.25% 2016		200			215
HCA Inc. 8.50% 20193		965			1,045
Roche Holdings Inc. 4.50% 20123		5,000			5,268
Pfizer Inc. 4.45% 2012		4,500			4,762
HealthSouth Corp. 10.75% 2016		4,350			4,752
Cardinal Health, Inc. 5.80% 2016		4,500			4,533
VWR Funding, Inc. 11.25% 20154,9		4,025			4,206
Symbion Inc. 11.75% 20154,9		4,723			3,589
Biogen Idec Inc. 6.00% 2013		2,560			2,721
Coventry Health Care, Inc. 5.875% 2012		2,629			2,668
Hospira, Inc. 5.55% 2012		2,470			2,634
Abbott Laboratories 5.125% 2019		2,400			2,515
Team Finance LLC and Health Finance Corp. 11.25% 2013		2,300			2,415
Surgical Care Affiliates, Inc. 9.625% 20153,4,9		2,549			2,357
Valeant Pharmaceuticals 8.375% 20163		1,950			2,018
Merck & Co., Inc. 5.00% 2019		1,875			1,953
Viant Holdings Inc. 10.125% 20173		1,621			1,621
					131,763
INDUSTRIALS — 1.23%
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		8,950			9,375
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014		425			480
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 201610		10,550			9,680
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016		3,690			4,142
Nortek, Inc. 11.00% 2013		16,523			17,349
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.231% 20144,6,8		15,534			11,742
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.231% 20144,6,8		922			697
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.50% 20144,6,8		2,993			2,862
US Investigations Services, Inc., Term Loan B, 3.253% 20154,6,8		735			661
US Investigations Services, Inc. 10.50% 20153		3,450			3,096
US Investigations Services, Inc. 11.75% 20163		1,735			1,503
TransDigm Inc. 7.75% 2014		5,125			5,215
Caterpillar Financial Services Corp., Series F, 4.85% 2012		3,790			4,078
Caterpillar Financial Services Corp., Series F, 6.20% 2013		1,000			1,115
Koninklijke Philips Electronics NV 5.75% 2018		4,800			5,116
General Electric Co. 5.25% 2017		4,500			4,606
Northwest Airlines, Inc., Term Loan B, 3.76% 20134,6,8		728			592
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20146		1,545			1,479
Northwest Airlines, Inc., Term Loan A, 2.01% 20184,6,8		2,009			1,587
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20246		774			688
Union Pacific Corp. 5.75% 2017		830			877
Union Pacific Corp. 5.70% 2018		3,205			3,363
Volvo Treasury AB 5.95% 20153		4,000			4,132
Ashtead Group PLC 8.625% 20153		1,800			1,818
Ashtead Capital, Inc. 9.00% 20163		2,150			2,163
Norfolk Southern Corp. 5.75% 2016		2,255			2,402
Norfolk Southern Corp. 5.75% 2018		1,075			1,139
Norfolk Southern Corp. 7.05% 2037		60			71
Burlington Northern Santa Fe Corp. 7.00% 2014		1,945			2,209
BNSF Funding Trust I 6.613% 20554		1,150			1,107
Kansas City Southern Railway Co. 13.00% 2013		2,475			2,883
Atlas Copco AB 5.60% 20173		2,750			2,777
DAE Aviation Holdings, Inc. 11.25% 20153		3,200			2,720
United Air Lines, Inc., Term Loan B, 2.313% 20144,6,8		2,160			1,711
United Air Lines, Inc., Series 1996-A2, 7.87% 20192,6,7		1,211			- 0
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20196		617			610
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20226		989			915
RailAmerica, Inc. 9.25% 2017		1,350			1,443
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20133,6		623			636
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20196		543			426
Raytheon Co. 6.40% 2018		120			137
Atrium Companies, Inc. 15.00% 20123,9		2,360			47
					119,649
CONSUMER DISCRETIONARY — 1.10%
Univision Communications, Inc., First Lien Term Loan B, 2.501% 20144,6,8		12,740			11,100
Univision Communications Inc. 12.00% 20143		1,500			1,659
Univision Communications Inc. 10.50% 20153,4,9		10,333			9,106
Allison Transmission Holdings, Inc. 11.00% 20153		750			791
Allison Transmission Holdings, Inc. 12.00% 20153,4,9		15,344			16,111
Comcast Corp. 6.45% 2037		1,750			1,810
Comcast Corp. 6.95% 2037		5,125			5,604
Time Warner Cable Inc. 6.75% 2018		3,345			3,681
Time Warner Cable Inc. 8.75% 2019		180			220
Time Warner Cable Inc. 5.00% 2020		3,000			2,915
Royal Caribbean Cruises Ltd. 6.875% 2013		1,500			1,481
Royal Caribbean Cruises Ltd. 11.875% 2015		4,425			5,139
Norwegian Cruise Lines 11.75% 20163		6,500			6,451
Mohegan Tribal Gaming Authority 8.00% 2012		3,700			3,168
Mohegan Tribal Gaming Authority 7.125% 2014		4,750			3,260
Toys “R” Us, Inc. 7.625% 2011		6,085			6,214
Michaels Stores, Inc. 10.00% 2014		4,850			5,044
News America Inc. 5.30% 2014		3,295			3,565
News America Inc. 6.90% 2019		500			564
Seneca Gaming Corp. 7.25% 2012		2,600			2,548
Seneca Gaming Corp., Series B, 7.25% 2012		1,125			1,102
Time Warner Inc. 5.875% 2016		2,760			2,984
AOL Time Warner Inc. 7.625% 2031		130			151
Staples, Inc. 9.75% 2014		2,500			3,049
Thomson Learning 10.50% 20153		2,150			2,067
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012		2,295			2,043
Thomson Reuters Corp. 5.95% 2013		1,575			1,726
Thomson Reuters Corp. 6.50% 2018		140			158
Vitamin Shoppe Industries Inc. 7.773% 20124		1,524			1,535
Cooper-Standard Automotive Inc. 7.00% 20127		375			357
Cooper-Standard Automotive Inc. 8.375% 20147		1,875			488
Local T.V. Finance LLC 10.00% 20153,4,9		1,290			561
Cox Communications, Inc. 7.75% 2010		125			131
Young Broadcasting Inc. 10.00% 20117		3,367			12
					106,795
TELECOMMUNICATION SERVICES — 1.01%
Cricket Communications, Inc. 9.375% 2014		9,660			9,757
Cricket Communications, Inc. 10.00% 2015		1,500			1,528
Cricket Communications, Inc. 7.75% 2016		8,050			8,070
Sprint Capital Corp. 8.375% 2012		11,150			11,596
Nextel Communications, Inc., Series E, 6.875% 2013		580			566
Nextel Communications, Inc., Series F, 5.95% 2014		5,480			5,144
MetroPCS Wireless, Inc. 9.25% 2014		8,850			9,005
MetroPCS Wireless, Inc. 9.25% 2014		4,400			4,477
Clearwire Communications LLC/Finance 12.00% 20153		5,000			5,100
Clearwire Communications LLC/Finance 12.00% 20153		3,750			3,825
Qwest Capital Funding, Inc. 7.90% 2010		700			718
Qwest Capital Funding, Inc. 7.25% 2011		6,175			6,299
Qwest Corp. 7.875% 2011		1,625			1,710
Centennial Communications Corp. 6.04% 20134		1,000			1,000
AT&T Inc. 6.70% 2013		4,340			4,901
SBC Communications Inc. 5.10% 2014		1,125			1,211
SBC Communications Inc. 5.625% 2016		125			134
Verizon Communications Inc. 5.25% 2013		50			54
Verizon Communications Inc. 5.50% 2017		4,125			4,359
Verizon Communications Inc. 6.35% 2019		2,340			2,586
American Tower Corp. 4.625% 20153		3,875			3,924
Telecom Italia Capital SA, Series B, 5.25% 2013		2,200			2,316
Telecom Italia Capital SA 5.25% 2015		920			963
Wind Acquisition SA 11.75% 20173		2,975			3,265
Deutsche Telekom International Finance BV 5.875% 2013		3,000			3,249
Millicom International Cellular SA 10.00% 2013		2,010			2,090
Hawaiian Telcom Communications, Inc. 8.765% 20134,7		175			4
Hawaiian Telcom Communications, Inc. 9.75% 20137		2,545			57
Hawaiian Telcom Communications, Inc., Term Loan C, 4.75% 20144,6,8,9		431			316
					98,224
UTILITIES — 0.65%
Intergen Power 9.00% 20173		12,725			13,329
Edison Mission Energy 7.50% 2013		4,020			3,799
Southern California Edison Co., First and Refunding Mortgage Bonds, Series 2005-A, 5.00% 2016		4,000			4,176
Midwest Generation, LLC, Series B, 8.56% 20166		3,214			3,246
MidAmerican Energy Co. 5.95% 2017		1,375			1,481
MidAmerican Energy Holdings Co. 5.75% 2018		1,330			1,404
MidAmerican Energy Holdings Co. 6.50% 2037		3,000			3,237
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 3.735% 20144,6,8		6,297			5,131
Electricité de France SA 6.50% 20193		170			191
Electricité de France SA 6.95% 20393		4,000			4,747
Alabama Power Co., Series 2008-B, 5.80% 2013		3,035			3,329
Alabama Power Co. 6.00% 2039		1,500			1,586
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		4,100			4,441
Veolia Environnement 5.25% 2013		3,775			3,996
Pacific Gas and Electric Co., First Mortgage Bonds, 4.20% 2011		150			155
PG&E Corp. 5.75% 2014		2,000			2,158
Pacific Gas and Electric Co. 8.25% 2018		210			257
Virginia Electric and Power Co., Series B, 5.95% 2017		1,800			1,954
Public Service Electric and Gas Co., Series E, 5.30% 2018		1,540			1,619
Appalachian Power Co., Series M, 5.55% 2011		1,500			1,560
Tri-State Generation and Transmission Assn. Inc., Pass Through Trust, Series 2003-A, 6.04% 20183,6		1,143			1,147
Consumers Energy Co., First Mortgage Bonds, 6.125% 2019		50			54
					62,997
INFORMATION TECHNOLOGY — 0.65%
NXP BV and NXP Funding LLC 3.034% 20134		3,000			2,501
NXP BV and NXP Funding LLC 7.875% 2014		13,625			12,433
NXP BV and NXP Funding LLC 8.625% 2015	€	2,550			2,721
NXP BV and NXP Funding LLC 9.50% 2015	$	5,665			4,858
Freescale Semiconductor, Inc. 4.129% 20144		2,725			2,211
Freescale Semiconductor, Inc. 8.875% 2014		7,725			7,126
Freescale Semiconductor, Inc. 9.875% 20144,9		4,250			3,777
Freescale Semiconductor, Inc., Term Loan B, 12.50% 20146,8		2,376			2,450
Freescale Semiconductor, Inc. 10.125% 2016		800			648
First Data Corp., Term Loan B2, 2.999% 20144,6,8		6,856			6,110
First Data Corp. 9.875% 2015		2,125			1,992
First Data Corp. 9.875% 2015		1,050			984
Sanmina-SCI Corp. 6.75% 2013		4,425			4,386
Sanmina-SCI Corp. 8.125% 2016		1,925			1,930
SunGard Data Systems Inc. 9.125% 2013		5,330			5,490
Hewlett-Packard Co. 5.50% 2018		3,100			3,302
					62,919
CONSUMER STAPLES — 0.38%
Rite Aid Corp. 8.625% 2015		5,000			4,375
Rite Aid Corp., Term Loan T4, 9.50% 20154,6,8		1,500			1,556
Rite Aid Corp. 9.75% 2016		7,750			8,448
Rite Aid Corp. 10.25% 20193		1,500			1,590
Stater Bros. Holdings Inc. 8.125% 2012		4,225			4,288
Stater Bros. Holdings Inc. 7.75% 2015		2,475			2,524
Duane Reade Inc. 11.75% 2015		3,420			3,728
British American Tobacco International Finance PLC 9.50% 20183		2,470			3,142
CVS Caremark Corp. 6.943% 20306		2,402			2,421
Delhaize Group 6.50% 2017		1,800			1,958
Smithfield Foods, Inc. 10.00% 20143		1,500			1,635
Elizabeth Arden, Inc. 7.75% 2014		1,500			1,485
					37,150
ENERGY — 0.35%
Kinder Morgan Energy Partners LP 6.00% 2017		6,620			6,960
Petroplus Finance Ltd. 6.75% 20143		3,775			3,567
Petroplus Finance Ltd. 7.00% 20173		2,350			2,127
Enbridge Energy Partners, LP, Series B, 6.50% 2018		3,050			3,267
Enbridge Energy Partners, LP, Series B, 7.50% 2038		2,000			2,284
Williams Companies, Inc. 8.75% 2020		2,000			2,390
Williams Companies, Inc. 7.875% 2021		2,223			2,555
TransCanada PipeLines Ltd. 7.625% 2039		4,000			4,943
Canadian Natural Resources Ltd. 5.70% 2017		3,000			3,210
Husky Energy Inc. 6.80% 2037		2,800			2,976
					34,279
ASSET-BACKED OBLIGATIONS6 — 0.26%
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-4-A, MBIA insured, 5.55% 2014		2,500			2,575
AmeriCredit Automobile Receivables Trust, Series 2007-D-F, Class A-4-A, FSA insured, 5.56% 2014		2,875			2,953
Citibank Credit Card Issuance Trust, Series 2008, Class A5, 4.85% 2015		2,875			3,054
Prestige Auto Receivables Trust, Series 2007-1, Class A-3, FSA insured, 5.58% 20143		2,758			2,843
Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 0.981% 20344		3,821			2,470
Drive Auto Receivables Trust, Series 2006-2, Class A-3, MBIA insured, 5.33% 20143		2,245			2,300
GE SeaCo Finance SRL, Series 2004-1, Class A, AMBAC insured, 0.533% 20193,4		2,167			1,792
Origen Manufactured Housing Contract Trust, Series 2004-B, Class A-4, 5.46% 2035		1,800			1,714
RAMP Trust, Series 2003-RS11, Class A-I-7, 4.828% 2033		1,568			1,330
CarMax Auto Owner Trust, Series 2007-2, Class A-3, 5.23% 2011		1,021			1,038
GMAC Mortgage Loan Trust, Series 2006-HE3, Class A-5, FGIC insured, 5.809% 20364		1,925			930
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-3, 5.12% 2014		500			538
CPS Auto Receivables Trust, Series 2004-B, Class A-2, XLCA insured, 3.56% 20113		62			62
CPS Auto Receivables Trust, Series 2006-A, Class 1-A-4, FSA insured, 5.33% 20123		355			361
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 20113		330			336
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20374		2,225			223
Impac CMB Grantor Trust, Series 2004-6, Class 1-A-1, 1.031% 20344		253			154
West Penn Funding LLC, Transition Bonds, Series 2005-A, Class A-1, 4.46% 20103		100			101
					24,774
MATERIALS — 0.23%
Georgia Gulf Corp. 9.00% 20173		5,850			5,938
Gerdau Holdings Inc. 7.00% 20203		3,700			3,820
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		3,075			3,372
International Paper Co. 7.30% 2039		2,500			2,660
BHP Billiton Finance (USA) Ltd. 5.50% 2014		2,200			2,415
Associated Materials Inc. 9.875% 20163		2,075			2,200
Rio Tinto Finance (USA) Ltd. 8.95% 2014		1,605			1,925
					22,330
BONDS & NOTES OF GOVERNMENTS OUTSIDE THE U.S. — 0.06%
Croatian Government 6.75% 20193		3,000			3,237
Polish Government 6.375% 2019		2,950			3,224
					6,461
Total bonds, notes & other debt instruments (cost: $2,218,919,000)					2,251,994
Short-term securities — 6.90%
Freddie Mac 0.07%–0.31% due 2/23–9/14/2010		175,200			175,122
Fannie Mae 0.15%–0.21% due 4/14–7/1/2010		83,200			83,149
JPMorgan Chase Funding Inc. 0.18% due 1/19/20103		30,000			29,996
Park Avenue Receivables Co., LLC 0.16% due 1/19/20103		23,400			23,398
JPMorgan Chase & Co. 0.03% due 1/4/2010		9,300			9,300
NetJets Inc. 0.11%–0.12% due 1/29–2/12/20103		54,500			54,493
Federal Home Loan Bank 0.095%–0.10% due 1/8–3/12/2010		46,700			46,696
General Electric Capital Corp. 0.01%–0.21% due 1/4–4/26/2010		40,100			40,096
Coca-Cola Co. 0.18%–0.23% due 1/6–1/7/20103		38,200			38,199
Emerson Electric Co. 0.08% due 1/19/20103		35,000			34,998
Walt Disney Co. 0.11% due 1/22/20103		25,000			24,998
Straight-A Funding LLC 0.18% due 3/8/20103		25,000			24,993
Medtronic Inc. 0.16% due 1/20/20103		17,700			17,698
Harvard University 0.16% due 1/19/2010		15,603			15,602
Paccar Financial Corp. 0.19% due 1/15/2010		14,600			14,599
U.S. Treasury Bill 0.166% due 6/10/2010		13,000			12,990
Abbott Laboratories 0.08% due 1/8/20103		11,700			11,700
Private Export Funding Corp. 0.15% due 3/4/20103		8,700			8,698
Variable Funding Capital Company LLC 0.16% due 1/15/20103		4,524			4,524
Total short-term securities (cost: $671,214,000)					671,249
Total investment securities (cost: $8,916,055,000)					9,766,064
Other assets less liabilities					(34,460	)
Net assets				$	9,731,604

“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.

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

2Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $576,180,000, which represented 5.92% of the net assets of the fund. This amount includes $496,228,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

3Purchased 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 $484,036,000, which represented 4.97% of the net assets of the fund.

4Coupon rate may change periodically.

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

6Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

7Scheduled interest and/or principal payment was not received.

8Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $64,988,000, which represented .67% of the net assets of the fund.

9Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

10Step bond; coupon rate will increase at a later date.

Key to abbreviation and symbol

ADR = American Depositary Receipts

€ = Euros

Asset Allocation Fund

Summary investment portfolio, December 31, 2009

Largest individual equity securities	Percent of net assets
Cisco Systems		1.80	%
Hewlett-Packard		1.71
BHP Billiton		1.71
Johnson & Johnson		1.68
Monsanto		1.63
IBM		1.59
Oracle		1.44
Microsoft		1.41
Chevron		1.34
Boeing		1.25

							Percent
				Value			of net
Common stocks  - 70.24%	Shares				(000	)	assets
Information technology  - 15.19%
Cisco Systems, Inc. (1)		7,310,000		$	175,001			1.80	%
Hewlett-Packard Co.		3,230,000			166,377			1.71
International Business Machines Corp.		1,180,000			154,462			1.59
Oracle Corp.		5,722,500			140,430			1.44
Microsoft Corp.		4,500,000			137,205			1.41
Google Inc., Class A (1)		170,000			105,397			1.08
Apple Inc. (1)		380,000			80,127			.82
Corning Inc.		4,100,000			79,171			.82
Paychex, Inc.		2,420,000			74,149			.76
KLA-Tencor Corp.		1,750,000			63,280			.65
Other securities					302,609			3.11
					1,478,208			15.19
Health care  - 10.51%
Johnson & Johnson		2,540,000			163,601			1.68
Amgen Inc. (1)		2,050,000			115,969			1.19
Abbott Laboratories		2,090,000			112,839			1.16
Cardinal Health, Inc.		2,800,000			90,272			.93
Zimmer Holdings, Inc. (1)		1,250,000			73,888			.76
Eli Lilly and Co.		2,000,000			71,420			.73
Gilead Sciences, Inc. (1)		1,500,000			64,920			.67
Other securities					329,944			3.39
					1,022,853			10.51
Materials  - 7.87%
BHP Billiton Ltd. (2)		4,340,000			166,186			1.71
Monsanto Co.		1,940,000			158,595			1.63
Dow Chemical Co.		4,000,000			110,520			1.13
Rio Tinto PLC (2)		1,681,753			90,758			.93
Newmont Mining Corp.		1,500,000			70,965			.73
Other securities					168,995			1.74
					766,019			7.87
Financials  - 7.59%
ACE Ltd.		2,320,000			116,928			1.20
T. Rowe Price Group, Inc.		1,700,000			90,525			.93
Wells Fargo & Co.		3,200,000			86,368			.89
Moody's Corp.		3,135,000			84,018			.86
JPMorgan Chase & Co.		2,000,000			83,340			.86
Marsh & McLennan Companies, Inc.		2,940,000			64,915			.67
Other securities					212,522			2.18
					738,616			7.59
Industrials  - 6.94%
Boeing Co.		2,250,000			121,792			1.25
Other securities					553,211			5.69
					675,003			6.94
Energy  - 6.78%
Chevron Corp.		1,700,000			130,883			1.34
Smith International, Inc.		4,045,000			109,903			1.13
Schlumberger Ltd.		1,350,000			87,871			.90
Suncor Energy Inc.		2,150,000			76,432			.79
Apache Corp.		640,000			66,029			.68
Other securities					188,578			1.94
					659,696			6.78
Consumer discretionary  - 6.29%
Comcast Corp., Class A		5,500,000			92,730			.95
McDonald's Corp.		1,330,000			83,045			.86
Home Depot, Inc.		2,500,000			72,325			.75
Johnson Controls, Inc.		2,650,000			72,186			.74
Best Buy Co., Inc.		1,705,350			67,293			.69
Other securities					223,980			2.30
					611,559			6.29
Consumer staples  - 3.34%
Coca-Cola Co.		2,000,000			114,000			1.17
Unilever NV (New York registered)		1,980,000			64,014			.66
Other securities					147,272			1.51
					325,286			3.34
Utilities  - 1.96%
Exelon Corp.		1,850,000			90,410			.93
Other securities					100,265			1.03
					190,675			1.96
Telecommunication services  - 1.37%
AT&T Inc.		3,100,000			86,893			.89
Other securities					46,787			.48
					133,680			1.37
Miscellaneous  -  2.40%
Other common stocks in initial period of acquisition					233,658			2.40
Total common stocks (cost: $6,017,544,000)					6,835,253			70.24
Preferred stocks  - 0.08%
Financials - 0.08%
Other securities					7,568			.08
Total preferred stocks (cost: $8,261,000)					7,568			.08
Rights & warrants  - 0.00%
Other - 0.00%
Other securities					-			.00
Total rights & warrants (cost: $117,000)					-			.00
	Principal
	amount
Bonds, notes & other debt instruments  - 23.14%		(000	)
Bonds & notes of U.S. government & government agencies - 8.88%
U.S. Treasury:
3.875% 2010	$	164,000			167,992
4.625% 2011		149,000			159,220			8.21
1.875% 2014		92,000			90,124
1.50%-8.875% 2010-2039 (2) (3)		370,258			381,659
Fannie Mae 6.25% 2029		15,575			17,855			.18
Other securities					47,201			.49
					864,051			8.88
Mortgage-backed obligations (4) - 5.12%
Fannie Mae 0%-7.50% 2012-2047		231,802			240,353			2.47
Freddie Mac 5.00%-7.50% 2018-2040 (5)		98,839			102,676			1.06
Other securities					155,237			1.59
					498,266			5.12
Financials  - 1.87%
JPMorgan Chase & Co. 6.30% 2019		4,070			4,485			.05
Other securities					177,851			1.82
					182,336			1.87
Health care  - 1.35%
Abbott Laboratories 5.125% 2019		2,400			2,515			.02
Other securities					129,248			1.33
					131,763			1.35
Industrials  - 1.23%
Other securities					119,649			1.23
Consumer discretionary  - 1.10%
Comcast Corp. 6.45 %-6.95% 2037		6,875			7,414			.08
Other securities					99,381			1.02
					106,795			1.10
Telecommunication services  - 1.01%
Other securities					98,224			1.01
Other - 2.58%
BHP Billiton Finance (USA) Ltd. 5.50% 2014		2,200			2,415			.03
Hewlett-Packard Co. 5.50% 2018		3,100			3,302			.03
Other securities					245,193			2.52
					250,910			2.58
Total bonds, notes & other debt instruments (cost: $2,218,919,000)					2,251,994			23.14
Short-term securities  - 6.90%
Freddie Mac 0.07%-0.31% due 2/23-9/14/2010		175,200			175,122			1.80
Fannie Mae 0.15%-0.21% due 4/14-7/1/2010		83,200			83,149			.86
Coca-Cola Co. 0.18%-0.23% due 1/6-1/7/2010 (6)		38,200			38,199			.39
JPMorgan Chase Funding Inc. 0.18% due 1/19/2010 (6)		30,000			29,996			.31
Park Avenue Receivables Co., LLC 0.16% due 1/19/2010 (6)		23,400			23,398			.24
U.S. Treasury Bill 0.166% due 6/10/2010		13,000			12,990			.13
Abbott Laboratories 0.08% due 1/8/2010 (6)		11,700			11,700			.12
JPMorgan Chase & Co. 0.03% due 1/4/2010		9,300			9,300			.10
Other securities					287,395			2.95
Total short-term securities (cost: $671,214,000)					671,249			6.90
Total investment securities (cost: $8,916,055,000)					9,766,064			100.36
Other assets less liabilities					(34,460	)		(.36	)
Net assets				$	9,731,604			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.

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 $576,180,000, which represented 5.92% of the net assets of the fund. This amount includes $496,228,000 related to certain securities trading outside the U.S. whose values were adjusted as a result of significant market movements following the close of local trading.

(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 $484,036,000, which represented 4.97% of the net assets of the fund.

See Notes to Financial Statements

Bond Fund

Investment portfolio

December 31, 2009

Bonds, notes & other debt instruments — 90.76%	Principal amount (000)			Value (000)
BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 31.36%
U.S. Treasury 1.00% 2011	$	25,000		$	24,979
U.S. Treasury 1.00% 2011		17,250			17,247
U.S. Treasury 1.75% 2011		67,140			67,994
U.S. Treasury 4.50% 2011		4,850			5,063
U.S. Treasury 1.375% 2012		3,000			2,986
U.S. Treasury 1.75% 2012		50,000			50,330
U.S. Treasury 3.00% 20121,2		11,121			11,985
U.S. Treasury 4.50% 2012		30,000			32,114
U.S. Treasury 2.00% 2013		136,795			136,089
U.S. Treasury 1.875% 20131,2		40,606			42,855
U.S. Treasury 3.125% 2013		25,000			25,985
U.S. Treasury 3.125% 2013		10,000			10,395
U.S. Treasury 3.375% 2013		105,760			111,031
U.S. Treasury 4.25% 2013		15,000			16,209
U.S. Treasury 1.75% 2014		147,660			144,885
U.S. Treasury 1.875% 2014		25,000			24,490
U.S. Treasury 2.25% 2014		52,500			52,151
U.S. Treasury 2.00% 20141,2		52,354			55,492
U.S. Treasury 4.00% 2014		18,200			19,465
U.S. Treasury 1.625% 20151,2		56,606			58,982
U.S. Treasury 4.00% 2015		38,480			40,908
U.S. Treasury 4.125% 2015		31,970			34,097
U.S. Treasury 4.25% 2015		89,250			95,553
U.S. Treasury 2.375% 2016		104,000			99,523
U.S. Treasury 3.00% 2016		77,760			76,490
U.S. Treasury 3.125% 2016		59,000			58,267
U.S. Treasury 3.25% 2016		96,000			96,187
U.S. Treasury 3.25% 2016		25,000			25,107
U.S. Treasury 5.125% 2016		34,750			38,763
U.S. Treasury 7.50% 2016		39,750			50,119
U.S. Treasury 9.25% 2016		11,000			14,823
U.S. Treasury 4.625% 2017		6,420			6,935
U.S. Treasury 8.75% 2017		75,000			101,431
U.S. Treasury 3.50% 2018		10,000			9,920
U.S. Treasury 3.75% 2018		122,750			122,765
U.S. Treasury 3.875% 2018		71,500			72,617
U.S. Treasury 2.75% 2019		56,120			51,681
U.S. Treasury 3.125% 2019		161,100			152,586
U.S. Treasury 3.625% 2019		64,705			63,626
U.S. Treasury 4.25% 2039		3,480			3,266
U.S. Treasury 4.50% 2039		47,500			46,446
Freddie Mac 3.125% 2010		18,070			18,121
Freddie Mac 5.25% 2011		15,250			16,222
Freddie Mac 2.125% 2012		50,000			50,441
Freddie Mac 5.75% 2012		40,000			43,532
Freddie Mac 2.50% 2014		30,000			29,855
Federal Home Loan Bank 1.75% 2012		44,000			43,998
Federal Home Loan Bank 2.25% 2012		20,000			20,333
Federal Home Loan Bank 3.625% 2013		25,000			26,153
Federal Home Loan Bank 4.00% 2013		30,000			31,770
Federal Home Loan Bank 5.125% 2016		5,250			5,665
Federal Home Loan Bank 5.375% 2016		5,000			5,521
Fannie Mae 5.50% 2011		5,000			5,286
Fannie Mae 5.25% 2012		5,300			5,617
Fannie Mae 3.25% 2013		30,000			31,078
Fannie Mae 4.625% 2013		6,700			7,006
Fannie Mae 2.50% 2014		6,250			6,221
Fannie Mae 2.625% 2014		9,000			8,915
Fannie Mae 3.00% 2014		8,250			8,327
United States Government Agency-Guaranteed (FDIC insured), JPMorgan Chase & Co. 0.501% 20123		15,000			15,123
United States Government Agency-Guaranteed (FDIC insured), JPMorgan Chase & Co. 2.20% 2012		12,000			12,195
CoBank ACB 7.875% 20184		9,260			10,049
CoBank ACB 0.854% 20223,4		21,925			16,330
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 1.875% 2012		10,000			9,990
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.125% 2012		9,000			9,087
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.25% 2012		10,000			10,145
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp. 2.375% 2012		8,000			8,141
United States Agency for International Development, Republic of Egypt 4.45% 2015		5,000			5,286
Federal Farm Credit Banks, Consolidated Systemwide Designated Bonds, 2.625% 2014		5,000			4,961
Small Business Administration, Series 2001-20J, 5.76% 20215		292			311
					2,637,516
MORTGAGE-BACKED OBLIGATIONS5 — 20.26%
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010		6,125			6,255
Fannie Mae, Series 2001-T11, Class B, 5.503% 2011		5,000			5,308
Fannie Mae, Series 2001-T6B, 6.088% 2011		6,750			7,109
Fannie Mae 4.50% 2021		65,874			68,334
Fannie Mae 5.50% 2021		1,125			1,201
Fannie Mae 5.00% 2023		3,855			4,033
Fannie Mae 5.00% 2023		3,232			3,382
Fannie Mae 5.00% 2023		2,739			2,866
Fannie Mae 5.00% 2023		2,602			2,723
Fannie Mae 5.00% 2023		2,364			2,473
Fannie Mae 5.50% 2023		4,051			4,290
Fannie Mae 5.50% 2023		3,849			4,075
Fannie Mae 5.50% 2023		3,199			3,388
Fannie Mae 5.50% 2023		1,525			1,615
Fannie Mae 4.50% 2024		33,131			34,128
Fannie Mae 4.50% 2024		32,922			33,925
Fannie Mae 4.50% 2024		24,987			25,748
Fannie Mae 4.50% 2024		19,723			20,324
Fannie Mae 4.50% 2024		18,529			19,087
Fannie Mae 4.50% 2024		12,893			13,281
Fannie Mae 4.50% 2024		8,731			8,994
Fannie Mae 4.50% 2024		6,681			6,882
Fannie Mae 4.50% 2024		6,656			6,859
Fannie Mae 4.50% 2024		5,322			5,482
Fannie Mae 4.50% 2024		5,236			5,394
Fannie Mae 4.50% 2024		5,016			5,168
Fannie Mae 4.50% 2024		4,683			4,824
Fannie Mae 4.50% 2024		4,671			4,812
Fannie Mae 4.50% 2024		2,761			2,844
Fannie Mae 4.50% 2024		1,836			1,891
Fannie Mae 4.50% 2025		174,515			179,532
Fannie Mae, Series 2001-4, Class GA, 10.037% 20253		78			89
Fannie Mae 6.00% 2026		2,405			2,564
Fannie Mae 5.50% 2027		6,452			6,805
Fannie Mae 6.00% 2027		13,525			14,418
Fannie Mae 6.00% 2028		3,542			3,763
Fannie Mae 5.50% 2033		11,566			12,162
Fannie Mae 6.50% 2034		9,497			10,233
Fannie Mae 5.00% 2035		2,186			2,249
Fannie Mae 5.50% 2035		996			1,047
Fannie Mae 5.50% 2036		2,626			2,757
Fannie Mae 6.00% 2036		5,383			5,731
Fannie Mae 5.378% 20373		9,045			9,479
Fannie Mae 5.785% 20373		8,551			9,048
Fannie Mae 6.00% 2037		46,511			49,345
Fannie Mae 6.00% 2037		8,636			9,179
Fannie Mae 6.00% 2037		4,495			4,770
Fannie Mae 6.00% 2037		2,941			3,106
Fannie Mae 6.155% 20373		10,685			11,285
Fannie Mae 6.50% 2037		14,357			15,402
Fannie Mae 6.50% 2037		6,929			7,431
Fannie Mae 6.50% 2037		2,802			2,991
Fannie Mae 7.00% 2037		5,105			5,563
Fannie Mae 7.00% 2037		2,583			2,835
Fannie Mae 4.445% 20383		4,134			4,288
Fannie Mae 4.50% 2038		9,356			9,350
Fannie Mae 5.00% 2038		41,453			42,595
Fannie Mae 5.314% 20383		2,184			2,291
Fannie Mae 5.50% 2038		96,848			101,504
Fannie Mae 5.50% 2038		19,028			20,015
Fannie Mae 5.50% 2038		10,937			11,481
Fannie Mae 5.50% 2038		8,985			9,432
Fannie Mae 6.00% 2038		29,699			31,510
Fannie Mae 6.00% 2038		22,743			24,129
Fannie Mae 6.00% 2038		14,976			15,893
Fannie Mae 6.00% 2038		12,118			12,869
Fannie Mae 6.50% 2038		8,037			8,626
Fannie Mae 6.50% 2038		5,384			5,779
Fannie Mae 6.50% 2038		3,891			4,177
Fannie Mae 3.62% 20393		22,804			23,190
Fannie Mae 3.625% 20393		10,836			11,020
Fannie Mae 3.626% 20393		6,387			6,500
Fannie Mae 3.65% 20393		5,186			5,273
Fannie Mae 3.658% 20393		4,855			4,945
Fannie Mae 3.761% 20393		8,417			8,593
Fannie Mae 3.762% 20393		4,778			4,880
Fannie Mae 3.79% 20393		8,015			8,189
Fannie Mae 3.83% 20393		5,703			5,830
Fannie Mae 3.85% 20393		3,580			3,663
Fannie Mae 3.91% 20393		5,700			5,834
Fannie Mae 3.912% 20393		5,294			5,423
Fannie Mae 3.914% 20393		4,791			4,934
Fannie Mae 3.95% 20393		8,005			8,202
Fannie Mae 3.951% 20393		4,974			5,101
Fannie Mae 4.50% 2039		22,637			22,625
Fannie Mae 6.00% 2039		1,876			1,990
Fannie Mae 6.50% 2039		2,632			2,822
Fannie Mae 3.619% 20403		5,186			5,271
Fannie Mae 6.00% 2040		137,211			145,337
Fannie Mae 6.50% 2040		25,000			26,777
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		91			101
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041		84			91
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2041		113			127
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042		117			132
Freddie Mac 4.00% 2015		940			969
Freddie Mac 4.50% 2023		12,279			12,644
Freddie Mac 4.50% 2024		4,351			4,478
Freddie Mac 5.00% 2035		4,002			4,112
Freddie Mac, Series 3061, Class PN, 5.50% 2035		1,413			1,492
Freddie Mac, Series 3146, Class PO, principal only, 0% 2036		2,521			1,951
Freddie Mac, Series 3156, Class PO, principal only, 0% 2036		2,155			1,813
Freddie Mac, Series 3257, Class PA, 5.50% 2036		6,027			6,403
Freddie Mac 6.00% 2036		36,982			39,335
Freddie Mac, Series 3318, Class JT, 5.50% 2037		4,497			4,736
Freddie Mac 5.711% 20373		4,584			4,842
Freddie Mac 6.00% 2037		8,324			8,841
Freddie Mac 6.00% 2037		2,580			2,745
Freddie Mac 6.50% 2037		12,007			12,879
Freddie Mac 5.00% 2038		7,120			7,311
Freddie Mac 5.00% 2038		244			251
Freddie Mac 5.00% 2038		9			9
Freddie Mac 5.50% 2038		8,028			8,424
Freddie Mac 6.50% 2038		16,300			17,473
Freddie Mac 6.50% 2038		3,727			3,994
Freddie Mac 6.50% 2038		1,755			1,880
Freddie Mac 3.608% 20393		2,778			2,824
Freddie Mac 3.758% 20393		1,229			1,252
Freddie Mac 3.837% 20393		5,542			5,655
Freddie Mac 3.959% 20393		3,305			3,381
Freddie Mac 5.00% 2040		11,050			11,331
Freddie Mac 5.50% 2040		40,844			42,790
Nykredit 4.00% 2035	DKr56,311				10,307
Nykredit 5.00% 2038		28,120			5,444
Wells Fargo Alternative Loan Trust, Series 2007-PA4, Class III-A-1, 6.054% 20373	$	15,950			9,456
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class III-A-1, 6.25% 2037		4,285			3,140
Wells Fargo Alternative Loan Trust, Series 2007-PA3, Class IV-A-1, 6.50% 2037		4,056			2,606
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 2036		2,905			3,026
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-3, 4.499% 2037		2,000			1,960
CS First Boston Mortgage Securities Corp., Series 2002-CKN2, Class A-3, 6.133% 2037		1,680			1,769
CS First Boston Mortgage Securities Corp., Series 2006-C2, Class A-3, 5.658% 20393		1,225			1,061
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20403		7,000			6,908
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 20354		3,000			3,028
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 20354		6,300			6,488
Crown Castle Towers LLC, Series 2006-1, Class E, 6.065% 20364		1,000			1,020
Crown Castle Towers LLC, Series 2006-1, Class F, 6.65% 20364		1,300			1,325
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20364		500			509
SBA CMBS Trust, Series 2006-1A, Class A, 5.314% 20364		3,000			3,029
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20364		4,500			4,544
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20364		3,000			3,088
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-2, 4.782% 2042		2,342			2,339
Wachovia Bank Commercial Mortgage Trust, Series 2005-C22, Class A-2, 5.242% 2044		3,022			3,039
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045		4,000			3,912
American Tower Trust I, Series 2007-1A, Class C, 5.615% 20374		2,000			2,057
American Tower Trust I, Series 2007-1A, Class D, 5.957% 20374		4,000			4,113
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20374		2,500			2,571
Merrill Lynch Mortgage Trust, Series 2005-CIP1, Class A-3-A, 4.949% 20383		2,000			1,967
Merrill Lynch Mortgage Trust, Series 2006-C1, Class A-3, 5.656% 20393		3,160			3,168
Merrill Lynch Mortgage Trust, Series 2004-BPC1, Class A-5, 4.855% 20413		2,445			2,401
Merrill Lynch Mortgage Trust, Series 2005-MCP1, Class AM, 4.805% 20433		1,065			832
Bank of America 5.50% 20124		7,000			7,472
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-3B, 5.316% 20373		4,000			4,028
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-LN1, Class H, 5.561% 20373,4		2,000			659
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042		2,208			2,213
Barclays Bank PLC 4.00% 2019	€	4,700			6,661
Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 4-A, 5.669% 20343	$	1,496			1,487
Morgan Stanley Mortgage Loan Trust, Series 2006-3AR, Class 2-A-3, 5.187% 20363		3,714			2,349
Morgan Stanley Mortgage Loan Trust, Series 2007-11AR, Class 2-A-1, 6.182% 20373		3,395			1,939
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.587% 20363		4,469			2,992
IndyMac INDX Mortgage Loan Trust, Series 2006-AR25, Class 3-A-1, 5.914% 20363		4,157			2,500
GS Mortgage Securities Corp. II, Series 2001-ROCK, Class A-2, 6.624% 20184		5,025			5,334
Hilton Hotel Pool Trust, Series 2000-HLTA, Class F, 7.75% 20154		5,000			5,252
Swedish Government 4.00% 2012	SKr34,000				4,916
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.336% 20443	$	1,000			956
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.334% 20453		3,000			3,058
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.581% 20373		8,575			3,877
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034		3,500			3,604
Bear Stearns ALT-A Trust, Series 2006-2, Class II-4-A-1, 5.774% 20363		5,198			3,189
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 2037		2,940			2,956
Northern Rock PLC 5.625% 20174		3,000			2,822
Thornburg Mortgage Securities Trust, Series 2006-5, Class A-1, 0.351% 20463		2,671			2,621
Commercial Mortgage Trust, Series 2000-C1, Class E, 8.132% 2033		2,500			2,511
Citigroup Commercial Mortgage Trust, Series 2006-C4, Class A-3, 5.725% (undated)3		2,500			2,399
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 20264		2,081			1,976
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20433		1,650			1,591
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036		1,417			1,464
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034		1,691			1,454
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035		268			272
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class A-2, 6.48% 2035		750			776
Salomon Brothers Commercial Mortgage Trust, Series 2000-C3, Class A-2, 6.592% 2033		1,018			1,036
Structured Products Asset Return Certificates Trust, Series 2001-CF1, Class A, 6.36% 20332		897			901
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032		269			269
LB-UBS Commercial Mortgage Trust, Series 2000-C3, Class A-2, 7.95% 2025		67			67
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.245% 20273,4		61			55
Chase Manhattan Bank — First Union National Bank, Commercial Mortgage Trust, Series 1999-1, Class B, 7.619% 2031		35			35
					1,703,881
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 9.59%
United Mexican States Government Global 9.875% 2010		1,000			1,013
United Mexican States Government Global 6.375% 2013		1,260			1,399
United Mexican States Government Global 5.875% 2014		3,500			3,813
United Mexican States Government, Series MI10, 9.50% 2014	MXN280,000				23,251
United Mexican States Government, Series M10, 8.00% 2015		300,000			23,353
United Mexican States Government, Series M10, 7.75% 2017		256,000			19,500
United Mexican States Government Global 5.95% 2019	$	9,090			9,658
United Mexican States Government, Series M20, 10.00% 2024	MXN48,400				4,251
United Mexican States Government, Series M30, 10.00% 2036		39,000			3,402
United Mexican States Government Global 6.05% 2040	$	5,000			4,831
Polish Government 5.25% 2013	PLN76,750				26,814
Polish Government 5.25% 2017		69,320			22,948
Polish Government 6.375% 2019	$	24,315			26,569
Irish Government 4.00% 2014	€	21,430			31,503
Irish Government 4.40% 2019		5,930			8,233
Irish Government 5.90% 2019		13,985			21,660
South Korean Government 4.25% 2014	KRW18,760,000				15,726
South Korean Government 4.75% 2014		29,060,000			25,006
South Korean Government 5.00% 2014		7,590,000			6,565
South Korean Government 5.75% 2014	$	4,800			5,257
South Korean Government 5.75% 2018	KRW6,725,000				5,971
Queensland Treasury Corp., Series 11, 6.00% 2011	$	A 6,040			5,524
Queensland Treasury Corp., Series 12, 6.50% 2012		19,250			17,847
Queensland Treasury Corp., Series 15, 6.00% 2015		12,125			10,965
Queensland Treasury Corp., Series 17, 6.00% 2017		4,610			4,115
German Government 3.75% 2019	€	18,905			28,006
German Government 4.75% 2034		5,020			7,803
Australia Government Agency-Guaranteed, National Australia Bank 5.75% 2013	$	A7,000			6,272
Australia Government Agency-Guaranteed, National Australia Bank 3.375% 20144	$	28,640			28,826
Australia Government Agency-Guaranteed, Commonwealth Bank of Australia 2.50% 20124		5,875			5,927
Australia Government Agency-Guaranteed, Commonwealth Bank of Australia 2.90% 20144		7,155			7,081
Australia Government Agency-Guaranteed, Commonwealth Bank of Australia 3.625% 20144		20,000			20,387
French Government O.A.T. Eurobond 4.00% 2014	€	19,480			29,657
European Investment Bank 3.125% 2014	$	9,250			9,367
European Investment Bank 4.25% 2014	€	3,070			4,722
European Investment Bank 4.875% 2017	$	8,000			8,585
European Investment Bank 6.125% 2017	$	A6,000			5,326
France Government Agency-Guaranteed, Société Finance 2.25% 20124	$	7,550			7,615
France Government Agency-Guaranteed, Société Finance 2.875% 20144		6,870			6,815
France Government Agency-Guaranteed, Société Finance 3.375% 20144		5,600			5,716
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014		15,750			19,884
KfW 6.25% 2012	$	A8,000			7,326
KfW 1.35% 2014	¥	564,000			6,207
KfW 5.00% 2015	NKr29,500				5,297
Sweden Government Agency-Guaranteed, Swedbank AB 2.80% 20124	$	7,750			7,888
Sweden Government Agency-Guaranteed, Swedbank AB 2.90% 20134		10,000			10,160
New South Wales Treasury Corp., Series 12, 6.00% 2012	$	A19,500			17,879
Treasury Corp. of Victoria 6.25% 2012		19,250			17,754
Malaysian Government 5.094% 2014	MYR39,025				12,070
Malaysian Government 3.741% 2015		18,875			5,497
Greek Government 5.50% 2014	€	3,700			5,373
Greek Government 6.00% 2019		8,245			11,937
Finland (Republic of) 5.375% 2013		10,710			17,023
Denmark Government Agency-Guaranteed, Danish Finance Co. 2.45% 20124	$	14,275			14,431
Japanese Government 1.50% 2014	¥	720,000			8,110
Japanese Government 2.40% 2038		522,350			5,777
New Zealand Government Agency-Guaranteed, Westpac Securities Co. 2.50% 20124	$	6,500			6,540
New Zealand Government Agency-Guaranteed, Westpac Securities Co. 3.45% 20144		5,570			5,558
Province of Ontario 1.875% 2012		10,000			9,907
Israeli Government 5.50% 20172	ILS21,600				5,928
Israeli Government 5.125% 2019	$	3,250			3,299
Nordic Investment Bank, Series C, 5.00% 2017		8,000			8,588
Kingdom of Denmark 5.00% 2013	DKr39,575				8,310
United Kingdom Government Agency-Guaranteed, Lloyds TSB Group PLC 2.80% 20124	$	8,000			8,150
Netherlands Government Agency-Guaranteed, ING Bank NV 3.90% 20144		7,000			7,181
Swedish Government 5.00% 2020	SKr39,290				6,293
Croatian Government 6.75% 20194	$	5,750			6,204
Russian Federation 7.50% 20305		4,700			5,323
Australia Government Agency-Guaranteed, Macquarie Bank Ltd. 5.00% 2014	$	A6,000			5,189
Corporación Andina de Fomento 5.75% 2017	$	3,000			3,062
Corporación Andina de Fomento 8.125% 2019		1,820			2,110
Belgium (Kingdom of), Series 40, 5.50% 2017	€	3,050			4,981
Asian Development Bank 2.75% 2014	$	4,950			4,952
Bank Nederlandse Gemeenten 3.75% 2014	€	3,120			4,663
Austrian Government 2.00% 20124	$	4,500			4,551
Netherlands Government Eurobond 4.50% 2017	€	2,610			4,049
Australia and New Zealand Government Agency-Guaranteed, Australia and New Zealand Banking Group Ltd. 3.25% 20124	$	3,850			3,966
Canadian Government 4.25% 20261,2	$	C1,305			1,758
Panama (Republic of) Global 7.125% 2026	$	390			442
Panama (Republic of) Global 9.375% 2029		500			667
El Salvador (Republic of) 7.65% 20354		580			574
Ireland Government Agency-Guaranteed, Anglo Irish Bank Corp. plc 1.012% 20163	€	1,100			447
					806,584
FINANCIALS — 8.03%
Countrywide Financial Corp., Series A, 4.50% 2010	$	990			1,007
Countrywide Financial Corp. 6.25% 2010	$	A1,200			1,073
Countrywide Financial Corp., Series B, 0.715% 20123	$	5,750			5,623
Countrywide Financial Corp., Series B, 5.80% 2012		22,943			24,368
Bank of America Corp. 5.75% 2017		13,795			14,149
Barclays Bank PLC 2.50% 2013		11,620			11,615
Barclays Bank PLC 5.20% 2014		7,200			7,640
Barclays Bank PLC 5.00% 2016		10,000			10,233
Barclays Bank PLC 6.05% 20174		8,600			8,766
PLD International Finance LLC 4.375% 2011	€	1,950			2,837
ProLogis 7.625% 2014	$	11,495			12,032
ProLogis 5.625% 2016		1,190			1,098
ProLogis 5.75% 2016		2,355			2,215
ProLogis 6.625% 2018		9,485			9,009
ProLogis 7.375% 2019		8,785			8,680
WT Finance (Australia) Pty Ltd., Westfield Europe Finance PLC, and WEA Finance LLC 3.625% 2012	€	2,595			3,738
Westfield Group 5.40% 20124	$	7,800			8,279
Westfield Group 7.50% 20144		1,265			1,425
Westfield Group 5.70% 20164		6,490			6,684
Westfield Group 7.125% 20184		13,385			14,657
Sovereign Bancorp, Inc. 1.991% 20133		5,125			5,018
Abbey National Treasury Services PLC 3.875% 20144		17,620			17,702
Santander Issuances, SA Unipersonal 5.805% 20163,4		7,300			7,236
Sovereign Bancorp, Inc. 8.75% 2018		3,250			3,754
Santander Issuances, SA Unipersonal 6.50% 20193,4		200			208
JPMorgan Chase & Co. 3.70% 2015		15,000			15,062
JPMorgan Chase & Co. 4.891% 20153		5,300			5,312
JPMorgan Chase & Co. 6.30% 2019		10,250			11,296
HBOS PLC 6.75% 20184		20,705			19,242
HBOS PLC 4.375% 20193	€	965			1,165
LBG Capital No.1 PLC, Series 2, 7.875% 20204	$	2,500			2,137
HBOS PLC 6.00% 20334		3,515			2,662
UniCredito Italiano SpA 5.584% 20173,4		9,480			9,037
UniCredito Italiano SpA 6.00% 20174		14,950			14,840
HVB Funding Trust III 9.00% 20314		1,299			1,143
Royal Bank of Scotland Group PLC 4.875% 20144		7,060			7,164
Royal Bank of Scotland Group PLC 5.00% 2014		5,465			4,835
Royal Bank of Scotland Group PLC 5.05% 2015		6,753			5,864
Royal Bank of Scotland Group PLC 4.70% 2018		1,722			1,343
Royal Bank of Scotland PLC 6.934% 2018	€	4,180			5,572
Morgan Stanley 6.00% 2014	$	6,810			7,329
Morgan Stanley, Series F, 6.00% 2015		8,850			9,438
Morgan Stanley, Series F, 5.625% 2019		6,850			6,913
Ford Motor Credit Co. 9.75% 20103		9,250			9,546
Ford Motor Credit Co. 3.034% 20123		10,755			10,016
Goldman Sachs Group, Inc. 6.25% 2017		755			811
Goldman Sachs Group, Inc. 5.95% 2018		1,110			1,174
Goldman Sachs Group, Inc. 6.15% 2018		7,660			8,213
Goldman Sachs Group, Inc. 7.50% 2019		5,535			6,486
Liberty Mutual Group Inc. 6.70% 20164		3,750			3,695
Liberty Mutual Group Inc. 6.50% 20354		3,435			2,766
Liberty Mutual Group Inc. 7.50% 20364		4,875			4,475
Liberty Mutual Group Inc., Series A, 7.80% 20873,4		1,090			910
Liberty Mutual Group Inc., Series C, 10.75% 20883,4		4,000			4,280
Citigroup Inc. 4.125% 2010		3,000			3,011
Citigroup Inc. 6.01% 2015		6,000			6,133
Citigroup Inc. 8.125% 2039		6,000			6,792
Simon Property Group, LP 4.875% 2010		1,000			1,007
Simon Property Group, LP 5.25% 2016		1,330			1,295
Simon Property Group, LP 6.10% 2016		325			332
Simon Property Group, LP 5.875% 2017		2,560			2,567
Simon Property Group, LP 6.125% 2018		2,835			2,885
Simon Property Group, LP 10.35% 2019		5,580			7,020
Korea Development Bank 5.30% 2013		5,500			5,753
Korea Development Bank 8.00% 2014		6,750			7,699
CIT Group Inc., Term Loan 2A, 9.50% 20123,5,6		3,100			3,185
CIT Group Inc., Term Loan, 13.00% 20123,5,6		5,000			5,186
CIT Group Inc., Series A, 7.00% 2013		526			494
CIT Group Inc., Series A, 7.00% 2014		788			734
CIT Group Inc., Series A, 7.00% 2015		788			710
CIT Group Inc., Series A, 7.00% 2016		1,314			1,163
CIT Group Inc., Series A, 7.00% 2017		1,840			1,605
Kimco Realty Corp. 6.00% 2012		500			528
Pan Pacific Retail Properties, Inc. 6.125% 2013		1,015			1,063
Kimco Realty Corp., Series C, 4.82% 2014		3,780			3,707
Kimco Realty Corp., Series C, 4.904% 2015		1,120			1,099
Kimco Realty Corp. 5.70% 2017		3,000			2,894
Kimco Realty Corp. 6.875% 2019		3,500			3,565
HSBK (Europe) BV 7.75% 20134		505			500
HSBK (Europe) BV 7.25% 20174		11,185			10,290
HSBK (Europe) BV 7.25% 2017		1,210			1,113
HSBC Finance Corp. 0.534% 20143		1,750			1,644
HSBC Finance Corp. 0.686% 20163		8,900			8,143
HSBC Holdings PLC 6.50% 2037		2,000			2,096
Wells Fargo Bank, National Assn. 4.75% 2015		2,250			2,297
Wells Fargo & Co. 5.625% 2017		8,750			9,116
General Motors Acceptance Corp. 6.625% 20124		3,166			3,134
General Motors Acceptance Corp. 6.875% 20124		4,432			4,388
General Motors Acceptance Corp. 7.00% 20124		2,779			2,765
General Motors Acceptance Corp. 6.75% 20144		921			884
CNA Financial Corp. 5.85% 2014		625			617
CNA Financial Corp. 6.50% 2016		5,540			5,453
CNA Financial Corp. 7.35% 2019		1,800			1,805
CNA Financial Corp. 7.25% 2023		3,000			2,829
MetLife Capital Trust IV 7.875% 20673,4		175			176
MetLife Capital Trust X 9.25% 20683,4		9,000			10,260
Société Générale 5.75% 20164		9,150			9,285
Allied Irish Banks, PLC 12.50% 2019	€	5,985			8,911
Resona Bank, Ltd. 3.75% 20153		1,015			1,452
Resona Bank, Ltd. 5.85% (undated)3,4	$	8,060			7,043
Rouse Co. 7.20% 20127		2,360			2,440
Rouse Co. 6.75% 20134,7		4,500			4,506
Rouse Co. 3.625% 20097		1,140			1,116
Standard Chartered Bank 6.40% 20174		7,290			7,550
Hospitality Properties Trust 5.125% 2015		765			691
Hospitality Properties Trust 6.30% 2016		300			278
Hospitality Properties Trust 5.625% 2017		3,835			3,325
Hospitality Properties Trust 6.70% 2018		3,530			3,235
SLM Corp., Series A, 0.512% 20113		1,210			1,133
SLM Corp., Series A, 5.45% 2011		5,906			5,891
Prudential Holdings, LLC, Series C, 8.695% 20234,5		1,250			1,341
Prudential Financial, Inc. 8.875% 20683		5,000			5,298
Host Marriott, LP, Series M, 7.00% 2012		4,050			4,136
Host Marriott, LP, Series K, 7.125% 2013		575			587
Host Hotels & Resorts, LP, Series Q, 6.75% 2016		1,425			1,425
New York Life Global Funding 4.65% 20134		5,700			5,992
AXA SA 8.60% 2030		1,325			1,544
AXA SA 6.463% (undated)3,4		5,000			3,925
Zions Bancorporation 5.65% 2014		5,000			3,725
Zions Bancorporation 6.00% 2015		1,990			1,409
Catlin Insurance Ltd. 7.249% (undated)3,4		6,500			4,810
PNC Funding Corp. 0.481% 20143		5,000			4,747
Westpac Banking Corp. 4.875% 2019		4,630			4,579
Chubb Corp. 5.75% 2018		1,000			1,063
Chubb Corp. 6.375% 20673		3,505			3,295
Developers Diversified Realty Corp. 9.625% 2016		4,020			4,202
American Express Co. 6.15% 2017		4,000			4,187
Realogy Corp., Letter of Credit, 3.271% 20133,5,6		758			676
Realogy Corp., Term Loan B, 3.287% 20133,5,6		2,816			2,511
Realogy Corp., Term Loan DD, 3.287% 20133,5,6		897			800
ACE INA Holdings Inc. 5.875% 2014		1,080			1,173
ACE INA Holdings Inc. 5.80% 2018		1,400			1,492
ACE INA Holdings Inc. 6.70% 2036		1,155			1,309
Jackson National Life Global 5.375% 20134		3,900			3,964
Fifth Third Capital Trust IV 6.50% 20673		5,250			3,859
RSA Insurance Group PLC 9.375% 20393	£	1,275			2,428
RSA Insurance Group PLC 8.50% (undated)3		760			1,291
Lincoln National Corp. 5.65% 2012	$	3,250			3,366
Lazard Group LLC 7.125% 2015		2,965			3,082
Lazard Group LLC 6.85% 2017		70			71
Northern Trust Corp. 4.625% 2014		2,825			3,013
Nationwide Mutual Insurance Co. 5.81% 20243,4		3,125			2,471
Nationwide Mutual Insurance Co. 7.875% 20334		515			479
Rodamco Europe Finance BV, Series 5, 3.75% 2012	€	1,600			2,349
International Lease Finance Corp., Series R, 5.40% 2012	$	2,500			2,175
ERP Operating LP 6.625% 2012		2,000			2,137
Monumental Global Funding III 5.25% 20144		2,000			2,042
UnumProvident Finance Co. PLC 6.85% 20154		1,500			1,528
Unum Group 7.125% 2016		475			493
Loews Corp. 6.00% 2035		1,800			1,729
Lehman Brothers Holdings Inc., Series I, 6.875% 20187		6,760			1,436
Banco Santander-Chile 5.375% 20144		1,165			1,226
ZFS Finance (USA) Trust V 6.50% 20673,4		1,235			1,068
United Dominion Realty Trust, Inc. 5.00% 2012		1,000			1,013
Allstate Corp., Series B, 6.125% 20673		980			857
Northern Rock PLC 5.60% (undated)3,4		1,800			236
Northern Rock PLC 6.594% (undated)3,4		4,400			577
Assurant, Inc. 5.625% 2014		765			785
Development Bank of Singapore Ltd. 7.125% 20114		200			213
Nationwide Financial Services, Inc. 6.75% 20673		255			199
					674,878
CONSUMER DISCRETIONARY — 3.83%
Tele-Communications, Inc. 9.80% 2012		2,000			2,265
Comcast Corp. 5.30% 2014		1,000			1,068
Comcast Corp. 5.85% 2015		7,275			8,004
Comcast Corp. 6.30% 2017		3,380			3,704
Comcast Corp. 5.70% 2018		3,250			3,422
Comcast Corp. 5.875% 2018		7,465			7,938
Comcast Corp. 6.95% 2037		630			689
Comcast Corp. 6.40% 2038		7,140			7,372
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20124		6,200			6,402
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013		4,425			4,563
Charter Communications Operating, LLC, Term Loan B, 4.24% 20143,5,6		9,947			9,343
Charter Communications Operating, LLC, Term Loan B, 7.25% 20143,5,6		4,913			5,023
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20144		3,000			3,375
Time Warner Cable Inc. 5.40% 2012		5,000			5,345
Time Warner Cable Inc. 7.50% 2014		1,780			2,053
Time Warner Cable Inc. 8.25% 2014		11,925			13,950
Time Warner Cable Inc. 6.75% 2018		2,650			2,916
Time Warner Cable Inc. 8.25% 2019		3,495			4,170
AOL Time Warner Inc. 6.875% 2012		6,250			6,846
AOL Time Warner Inc. 7.625% 2031		10,635			12,389
Time Warner Inc. 6.50% 2036		4,660			4,881
Univision Communications, Inc., First Lien Term Loan B, 2.501% 20143,5,6		5,420			4,722
Univision Communications Inc. 10.50% 20153,4,8		16,077			14,168
News America Inc. 4.75% 2010		2,000			2,005
News America Holdings Inc. 9.25% 2013		2,500			2,919
News America Inc. 6.90% 2019		6,125			6,913
News America Inc. 6.15% 2037		1,000			998
News America Inc. 6.65% 2037		4,400			4,663
DaimlerChrysler North America Holding Corp. 8.00% 2010		3,000			3,091
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011		6,500			6,830
DaimlerChrysler North America Holding Corp. 5.875% 2011		1,300			1,360
DaimlerChrysler North America Holding Corp. 7.75% 2011		2,330			2,478
MGM MIRAGE 6.75% 2012		4,000			3,590
MGM MIRAGE 6.75% 2013		1,250			1,084
MGM MIRAGE 13.00% 2013		3,125			3,602
MGM MIRAGE 5.875% 2014		3,200			2,580
MGM MIRAGE 7.50% 2016		1,000			785
NTL Cable PLC 8.75% 2014		946			981
NTL Cable PLC 8.75% 2014	€	210			315
NTL Cable PLC 9.75% 2014	£	147			250
NTL Cable PLC 9.50% 2016	$	1,525			1,645
Virgin Media Finance 8.375% 20194		8,000			8,270
Toys “R” Us, Inc. 7.625% 2011		6,665			6,807
Toys “R” Us-Delaware, Inc., Term Loan B, 4.481% 20123,5,6		2,000			1,960
J.C. Penney Co., Inc. 8.00% 2010		5,585			5,655
J.C. Penney Co., Inc. 9.00% 2012		2,485			2,814
Michaels Stores, Inc., Term Loan B1, 2.563% 20133,5,6		1,638			1,492
Michaels Stores, Inc. 10.00% 2014		5,950			6,188
Michaels Stores, Inc., Term Loan B2, 4.813% 20163,5,6		555			526
Nordstrom, Inc. 6.75% 2014		6,255			6,992
Allison Transmission Holdings, Inc., Term Loan B, 3.00% 20143,5,6		6,258			5,777
Allison Transmission Holdings, Inc. 11.00% 20154		510			538
Target Corp. 6.00% 2018		3,000			3,316
Target Corp. 7.00% 2038		2,000			2,341
Edcon (Proprietary) Ltd. 3.964% 20143	€	6,000			5,570
Cox Communications, Inc. 4.625% 2010	$	1,750			1,751
Cox Communications, Inc. 5.45% 2014		3,500			3,754
Marriott International, Inc., Series J, 5.625% 2013		5,000			5,134
Staples, Inc. 7.375% 2012		2,000			2,203
Staples, Inc. 9.75% 2014		2,250			2,744
Neiman Marcus Group, Inc. 9.00% 20153,8		4,117			4,045
Neiman Marcus Group, Inc. 10.375% 2015		425			419
Macy’s Retail Holdings, Inc. 8.875% 20153		3,610			3,998
Federated Retail Holdings, Inc. 5.90% 2016		250			245
Royal Caribbean Cruises Ltd. 8.00% 2010		1,375			1,406
Royal Caribbean Cruises Ltd. 8.75% 2011		2,675			2,812
FCE Bank PLC 7.125% 2013	€	3,000			4,190
Cablevision Systems Corp., Series B, 8.00% 2012	$	1,000			1,063
CSC Holdings, Inc. 8.50% 20144		200			214
CSC Holdings, Inc. 8.50% 20154		600			642
CSC Holdings, Inc. 8.625% 20194		2,050			2,217
KB Home 6.25% 2015		3,735			3,502
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014		3,200			3,108
UPC Germany GmbH 8.125% 20174		900			915
UPC Germany GmbH 9.625% 2019	€	400			581
Liberty Media Corp. 8.25% 2030	$	1,700			1,566
Cinemark USA, Inc., Term Loan B, 2.04% 20133,5,6		822			785
Cinemark USA, Inc. 8.625% 20194		2,000			2,090
Kabel Deutschland GmbH 10.625% 2014		2,625			2,756
Vidéotron Ltée 6.875% 2014		1,625			1,641
Vidéotron Ltée 6.375% 2015		1,000			982
AMC Entertainment Inc. 8.00% 2014		675			648
AMC Entertainment Inc. 8.75% 2019		1,750			1,794
Boyd Gaming Corp. 7.75% 2012		1,350			1,372
Boyd Gaming Corp. 6.75% 2014		1,000			906
Mohegan Tribal Gaming Authority 7.125% 2014		3,300			2,265
Clear Channel Worldwide, Series B, 9.25% 20174		2,125			2,199
Tenneco Automotive Inc. 8.625% 2014		2,000			2,027
Thomson Learning 10.50% 20154		2,100			2,019
Seminole Tribe of Florida 5.798% 20134,5		980			944
Seminole Tribe of Florida 7.804% 20204,5		1,170			1,023
Mediacom LLC and Mediacom Capital Corp. 9.125% 20194		1,850			1,896
MDC Holdings, Inc. 5.50% 2013		1,750			1,760
Regal Cinemas Corp., Series B, 9.375% 2012		1,000			1,006
Regal Cinemas Corp. 8.625% 2019		625			653
Quebecor Media Inc. 7.75% 2016		1,575			1,579
American Media Operation 14.00% 20133,4,8		1,903			1,227
Radio One, Inc. 6.375% 2013		1,650			1,219
Standard Pacific Corp. 7.00% 2015		1,340			1,172
Thomson Corp. 6.20% 2012		1,035			1,114
Dollar General Corp. 11.875% 20173,8		790			916
Education Management LLC and Education Management Finance Corp. 8.75% 2014		650			674
Young Broadcasting Inc. 10.00% 20117		2,716			10
					322,129
INDUSTRIALS — 3.59%
Delta Air Lines, Inc., Series 2000-1, Class A-1, 7.379% 20115		91			91
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20125		8,627			8,740
Delta Air Lines, Inc., Series 2000-1, Class B, 7.92% 20125		1,000			1,006
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20145		9,300			8,905
Northwest Airlines, Inc., Term Loan A, 2.01% 20183,5,6		8,548			6,753
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20245		1,433			1,275
Burlington Northern Santa Fe Corp. 7.00% 2014		6,480			7,361
Burlington Northern Santa Fe Corp. 5.75% 2018		1,505			1,601
Burlington Northern Santa Fe Corp. 4.70% 2019		12,980			12,884
BNSF Funding Trust I 6.613% 20553		1,680			1,617
Continental Airlines, Inc., Series 2001-1, Class A-2, 6.503% 20115		1,000			993
Continental Airlines, Inc. 8.75% 2011		2,000			1,945
Continental Airlines, Inc., Series 2000-2, Class A-2, 7.487% 20125		3,570			3,592
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20185		159			145
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20185		1,023			972
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 20195		1,629			1,561
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20195		2,938			2,903
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20205		933			923
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20215		2,649			2,530
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20225		536			502
Continental Airlines, Inc., Series 2007-1, Class B, 6.903% 20225		1,325			1,206
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20225		2,439			2,376
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20225		2,273			2,249
Nielsen Finance LLC, Term Loan A, 2.235% 20133,5,6		2,542			2,393
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		8,800			9,218
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014		3,000			3,386
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20169		4,200			3,854
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016		710			797
Norfolk Southern Corp. 5.75% 2016		5,270			5,614
Norfolk Southern Corp. 5.90% 2019		2,250			2,407
Norfolk Southern Corp. 7.05% 2037		7,210			8,531
Lockheed Martin Corp. 4.25% 2019		16,250			15,717
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20125		1,310			1,264
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 20125		683			682
American Airlines, Inc., Series 2001-2, Class B, 8.608% 20125		1,850			1,762
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20135		8,535			8,569
AMR Corp. 9.00% 2016		1,500			1,088
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20195		139			109
AMR Corp. 10.20% 2020		1,345			868
AMR Corp. 10.00% 2021		1,200			744
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B2, 4.03% 20143,5,6		4,212			3,866
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B1, 4.04% 20143,5,6		4,316			3,962
DAE Aviation Holdings, Inc. 11.25% 20154		8,255			7,017
Volvo Treasury AB 5.95% 20154		12,885			13,311
Koninklijke Philips Electronics NV 4.625% 2013		4,300			4,531
Koninklijke Philips Electronics NV 6.875% 2038		7,150			8,138
United Air Lines, Inc., Series 2000-2, Class B, 7.811% 20115,7		3,633			4,932
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20125		293			293
United Air Lines, Inc., Term Loan B, 2.313% 20143,5,6		4,137			3,277
United Air Lines, 1991 Equipment Trust Certificates, Series A, 10.11% 20062,5,7		230			—
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20245		3,614			3,108
TransDigm Inc. 7.75% 20144		8,000			8,140
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013		7,325			7,453
Canadian National Railway Co. 4.95% 2014		1,430			1,528
Canadian National Railway Co. 5.55% 2018		5,375			5,738
Union Pacific Corp. 5.125% 2014		2,300			2,452
Union Pacific Corp. 5.75% 2017		1,080			1,141
Union Pacific Corp. 5.70% 2018		3,265			3,426
Allied Waste North America, Inc., Series B, 6.125% 2014		2,750			2,800
Allied Waste North America, Inc. 7.25% 2015		2,000			2,092
Allied Waste North America, Inc. 6.875% 2017		2,000			2,126
Ashtead Group PLC 8.625% 20154		1,000			1,010
Ashtead Capital, Inc. 9.00% 20164		5,660			5,695
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 20114,5		1,000			1,040
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20134,5		1,319			1,346
BAE Systems Holdings Inc. 6.375% 20194		3,860			4,159
Northrop Grumman Corp. 5.05% 2019		6,180			6,323
CSX Corp. 6.25% 2015		5,000			5,513
Raytheon Co. 4.40% 2020		5,525			5,453
ARAMARK Corp., Term Loan B, 2.126% 20143,5,6		2,978			2,825
ARAMARK Corp., Letter of Credit, 4.721% 20143,5,6		196			186
ARAMARK Corp. 3.781% 20153		200			184
ARAMARK Corp. 8.50% 2015		2,175			2,251
B/E Aerospace 8.50% 2018		4,330			4,601
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.231% 20143,5,6		5,425			4,101
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.231% 20143,5,6		312			236
Kansas City Southern Railway Co. 8.00% 2015		3,900			4,061
RBS Global, Inc. and Rexnord LLC 9.50% 2014		3,250			3,274
John Deere Capital Corp. 5.40% 2011		2,000			2,138
John Deere Capital Corp., Series D, 4.50% 2013		500			525
Navistar International Corp. 8.25% 2021		2,500			2,575
US Investigations Services, Inc. 11.75% 20164		2,955			2,560
Atlas Copco AB 5.60% 20174		2,340			2,363
American Standard Inc. 7.625% 2010		2,300			2,313
Atrium Companies, Inc., Term Loan B, 11.75% 20123,5,6,8		3,215			1,855
Caterpillar Financial Services Corp., Series F, 6.20% 2013		1,610			1,796
Waste Management, Inc. 7.375% 2010		650			673
WMX Technologies, Inc. 7.10% 2026		500			543
RailAmerica, Inc. 9.25% 2017		1,125			1,202
Hutchison Whampoa International Ltd. 6.50% 20134		972			1,057
General Electric Capital Corp., Series A, 0.545% 20183		1,000			882
Navios Maritime Holdings Inc. 8.875% 20174		780			814
					302,018
TELECOMMUNICATION SERVICES — 2.92%
Verizon Communications Inc. 3.75% 2011		7,040			7,262
Verizon Communications Inc. 7.375% 2013		5,000			5,748
Verizon Communications Inc. 5.55% 2014		2,900			3,150
Verizon Communications Inc. 5.50% 2017		8,885			9,390
Verizon Communications Inc. 8.50% 2018		7,250			9,007
Verizon Communications Inc. 8.75% 2018		8,750			10,947
AT&T Corp. 7.30% 20113		1,850			2,038
AT&T Wireless Services, Inc. 7.875% 2011		1,890			2,031
Centennial Communications Corp. 6.04% 20133		500			500
AT&T Inc. 6.70% 2013		4,000			4,517
SBC Communications Inc. 5.10% 2014		2,700			2,907
SBC Communications Inc. 5.625% 2016		6,750			7,261
AT&T Inc. 5.50% 2018		10,000			10,451
AT&T Inc. 5.80% 2019		5,850			6,247
SBC Communications Inc. 6.45% 2034		2,130			2,179
AT&T Inc. 6.40% 2038		2,300			2,371
Olivetti Finance NV 7.25% 2012	€	905			1,422
Telecom Italia Capital SA, Series B, 5.25% 2013	$	750			790
Telecom Italia Capital SA 4.95% 2014		6,450			6,692
Telecom Italia Capital SA 5.25% 2015		4,000			4,187
Telecom Italia Capital SA 6.999% 2018		5,500			6,061
Telecom Italia SpA 7.75% 2033	€	1,350			2,291
Telecom Italia Capital SA 7.20% 2036	$	350			382
Telecom Italia Capital SA 7.721% 2038		3,040			3,511
Qwest Capital Funding, Inc. 7.90% 2010		4,295			4,402
Qwest Capital Funding, Inc. 7.25% 2011		11,475			11,705
Qwest Communications International Inc. 7.25% 2011		4,000			4,040
Qwest Corp. 8.875% 2012		1,250			1,350
Nextel Communications, Inc., Series E, 6.875% 2013		9,900			9,653
Nextel Communications, Inc., Series F, 5.95% 2014		195			183
Nextel Communications, Inc., Series D, 7.375% 2015		8,580			8,387
France Télécom 7.75% 20113		1,000			1,072
France Télécom 4.375% 2014		5,520			5,774
France Télécom 5.375% 2019		3,830			4,045
American Tower Corp. 4.625% 20154		6,475			6,557
American Tower Corp. 7.00% 2017		2,650			2,948
Telefónica Emisiones, SAU 5.984% 2011		5,000			5,290
Telefónica Emisiones, SAU 4.949% 2015		3,790			4,056
Cricket Communications, Inc. 9.375% 2014		8,580			8,666
MetroPCS Wireless, Inc. 9.25% 2014		4,400			4,477
MetroPCS Wireless, Inc. 9.25% 2014		3,575			3,638
Vodafone Group PLC 5.625% 2017		6,500			6,914
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015		1,700			1,752
Windstream Corp. 8.625% 2016		4,800			4,908
Deutsche Telekom International Finance BV 5.875% 2013		1,400			1,516
Deutsche Telekom International Finance BV 6.75% 2018		4,000			4,486
British Telecommunications PLC 5.95% 2018		5,515			5,614
Singapore Telecommunications Ltd. 6.375% 20114		5,000			5,421
Rogers Wireless Inc. 7.25% 2012		2,500			2,819
Rogers Wireless Inc. 7.50% 2015		1,975			2,309
Wind Acquisition SA 11.75% 20174		4,550			4,994
Clearwire Communications LLC/Finance 12.00% 20154		3,250			3,315
SBA Telecommunications, Inc. 8.00% 20164		2,300			2,415
Crown Castle International Corp. 9.00% 2015		700			747
Crown Castle International Corp. 7.75% 20174		750			802
Hawaiian Telcom Communications, Inc. 8.765% 20133,7		2,195			49
Hawaiian Telcom Communications, Inc. 9.75% 20137		2,870			65
Hawaiian Telcom Communications, Inc., Series B, 12.50% 20157		1,125			—
					245,711
UTILITIES — 2.55%
National Rural Utilities Cooperative Finance Corp. 2.625% 2012		5,400			5,437
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		10,000			10,833
National Rural Utilities Cooperative Finance Corp. 3.875% 2015		300			303
National Rural Utilities Cooperative Finance Corp. 5.45% 2018		2,500			2,613
National Rural Utilities Cooperative Finance Corp. 10.375% 2018		3,500			4,645
Ohio Edison Co. 6.40% 2016		7,750			8,340
Cleveland Electric Illuminating Co. 8.875% 2018		5,000			6,183
Jersey Central Power & Light Co. 7.35% 2019		4,500			5,116
Ohio Edison Co. 6.875% 2036		2,300			2,464
Edison Mission Energy 7.75% 2016		6,000			5,130
Midwest Generation, LLC, Series B, 8.56% 20165		3,823			3,862
Edison Mission Energy 7.00% 2017		4,050			3,220
Edison Mission Energy 7.20% 2019		5,250			4,003
Edison Mission Energy 7.625% 2027		4,500			3,071
Enel Finance International 3.875% 20144		15,455			15,660
ENEL SpA 5.625% 2027	€	1,130			1,724
Progress Energy, Inc. 7.05% 2019	$	14,550			16,306
Consumers Energy Co., First Mortgage Bonds, Series P, 5.50% 2016		4,000			4,207
Consumers Energy Co. 5.65% 2018		940			985
Consumers Energy Co., First Mortgage Bonds, 6.125% 2019		9,150			9,923
MidAmerican Energy Holdings Co., Series D, 5.00% 2014		2,200			2,311
MidAmerican Energy Co. 5.30% 2018		4,000			4,129
MidAmerican Energy Holdings Co. 5.75% 2018		6,500			6,862
AES Corp. 9.375% 2010		4,769			4,948
AES Corp. 8.75% 20134		4,358			4,489
AES Red Oak, LLC, Series A, 8.54% 20195		764			766
AES Red Oak, LLC, Series B, 9.20% 20295		2,500			2,356
Veolia Environnement 5.25% 2013		2,070			2,191
Veolia Environnement 6.00% 2018		4,000			4,231
Veolia Environnement 6.125% 2033	€	2,740			4,272
E.ON International Finance BV 5.80% 20184	$	9,740			10,478
Electricité de France SA 6.50% 20194		9,000			10,121
Iberdrola Finance Ireland 3.80% 20144		7,215			7,255
Scottish Power PLC 5.375% 2015		1,230			1,307
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 3.735% 20143,5,6		2,940			2,395
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 2015		6,475			5,277
Texas Competitive Electric Holdings Co. LLC, Series A, 10.25% 2015		550			448
Israel Electric Corp. Ltd. 7.70% 20184		500			547
Israel Electric Corp. 7.25% 2019		5,250			5,695
NRG Energy, Inc. 7.25% 2014		725			736
NRG Energy, Inc. 7.375% 2016		4,675			4,692
Niagara Mohawk Power 3.553% 20144		2,625			2,620
National Grid PLC 6.30% 2016		2,315			2,521
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series Q, 5.45% 2013		2,850			3,042
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015		150			161
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016		1,450			1,538
Public Service Electric and Gas Co., Series E, 5.30% 2018		2,460			2,587
PG&E Corp. 5.75% 2014		2,000			2,158
Duke Energy Corp., First and Refunding Mortgage Bonds, 5.30% 2015		100			109
					214,267
ENERGY — 2.39%
Kinder Morgan Energy Partners LP 6.00% 2017		380			400
Kinder Morgan Energy Partners LP 9.00% 2019		1,320			1,627
Kinder Morgan Energy Partners LP 6.85% 2020		15,780			17,537
Kinder Morgan Energy Partners LP 6.50% 2037		900			910
Kinder Morgan Energy Partners LP 6.95% 2038		7,000			7,484
TransCanada PipeLines Ltd. 6.50% 2018		10,900			12,179
TransCanada PipeLines Ltd. 6.35% 20673		16,495			15,499
Williams Companies, Inc. 6.375% 20104		1,000			1,018
Williams Companies, Inc. 7.125% 2011		500			535
Williams Companies, Inc. 8.125% 2012		6,180			6,788
Williams Companies, Inc. 7.625% 2019		7,890			8,860
Williams Companies, Inc. 7.875% 2021		4,595			5,281
Williams Companies, Inc. 8.75% 2032		2,400			2,880
Enbridge Energy Partners, LP, Series B, 6.50% 2018		7,940			8,506
Enbridge Energy Partners, LP 9.875% 2019		11,250			14,268
Gaz Capital SA, Series 9, 6.51% 2022		13,500			12,420
Gaz Capital SA 7.288% 20374		2,000			1,855
Chevron Corp. 4.95% 2019		12,230			12,906
Rockies Express Pipeline LLC 6.25% 20134		5,000			5,467
Rockies Express Pipeline LLC 6.85% 20184		4,300			4,760
StatoilHydro ASA 2.90% 2014		3,110			3,101
StatoilHydro ASA 5.25% 2019		6,130			6,509
Sunoco, Inc. 9.625% 2015		5,750			6,850
Sunoco, Inc. 5.75% 2017		2,000			2,025
Petrobras International 5.75% 2020		4,800			4,907
Petrobras International 6.875% 2040		2,240			2,313
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20145		608			661
Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 20144,5		324			353
Ras Laffan Liquefied Natural Gas III 5.832% 20165		2,000			2,120
Ras Laffan Liquefied Natural Gas II 5.298% 20204,5		2,500			2,524
Ras Laffan Liquefied Natural Gas II 5.298% 20205		1,095			1,106
Williams Partners L.P. and Williams Partners Finance Corp. 7.50% 2011		2,950			3,017
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017		2,500			2,529
Shell International Finance B.V. 4.00% 2014		4,860			5,076
Devon Energy Corp. 6.30% 2019		3,610			4,027
Husky Energy Inc. 7.25% 2019		2,090			2,420
Qatar Petroleum 5.579% 20114,5		1,834			1,885
Petroleum Export Ltd., Class A-3, 5.265% 20114,5		1,817			1,771
Enterprise Products Operating LLC 7.00% 20673		1,945			1,727
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20144,5		1,608			1,616
Premcor Refining Group Inc. 6.75% 2011		1,250			1,288
Gulfstream Natural Gas 6.19% 20254		1,220			1,187
Petroplus Finance Ltd. 9.375% 20194		950			950
					201,142
HEALTH CARE — 1.85%
Roche Holdings Inc. 5.00% 20144		6,250			6,712
Roche Holdings Inc. 6.00% 20194		23,070			25,486
Schering-Plough Corp. 5.375% 2014	€	3,955			6,200
Schering-Plough Corp. 6.00% 2017	$	9,990			11,114
Merck & Co., Inc. 5.00% 2019		1,900			1,979
HCA Inc., Term Loan B1, 2.501% 20133,5,6		3,191			3,060
HCA Inc. 9.125% 2014		580			613
HCA Inc. 9.25% 2016		680			732
HCA Inc. 9.625% 20163,8		715			776
HCA Inc. 8.50% 20194		3,405			3,686
HCA Inc. 7.875% 20204		1,260			1,315
Abbott Laboratories 5.125% 2019		6,020			6,308
Abbott Laboratories 6.00% 2039		1,980			2,095
Biogen Idec Inc. 6.00% 2013		7,750			8,237
Express Scripts Inc. 5.25% 2012		5,460			5,805
Express Scripts Inc. 6.25% 2014		2,020			2,206
VWR Funding, Inc. 11.25% 20153,8		7,320			7,649
Hospira, Inc. 6.40% 2015		3,796			4,206
Hospira, Inc. 6.05% 2017		2,810			2,945
PTS Acquisition Corp. 10.25% 20153,8		7,669			6,959
Boston Scientific Corp. 5.45% 2014		225			237
Boston Scientific Corp. 4.50% 2015		1,200			1,204
Boston Scientific Corp. 6.00% 2020		2,390			2,447
Boston Scientific Corp. 7.00% 2035		1,600			1,578
GlaxoSmithKline Capital Inc. 5.65% 2018		5,000			5,402
AstraZeneca PLC 5.40% 2012		4,500			4,919
Elan Finance PLC and Elan Finance Corp. 4.381% 20133		2,440			2,092
Elan Finance PLC and Elan Finance Corp. 8.75% 20164		2,600			2,496
Novartis Securities Investment Ltd. 5.125% 2019		4,270			4,494
Pfizer Inc. 6.20% 2019		3,930			4,376
HealthSouth Corp. 10.75% 2016		3,715			4,059
Cardinal Health, Inc. 4.00% 2015		2,715			2,667
Cardinal Health, Inc. 5.80% 2016		1,235			1,244
WellPoint, Inc. 5.25% 2016		3,625			3,664
Tenet Healthcare Corp. 7.375% 2013		1,000			1,008
Tenet Healthcare Corp. 9.00% 20154		350			380
Tenet Healthcare Corp. 9.25% 2015		1,245			1,332
Surgical Care Affiliates, Inc. 10.00% 20174		2,500			2,313
Quintiles Transnational 9.50% 20143,4,8		1,585			1,597
					155,592
CONSUMER STAPLES — 1.43%
Anheuser-Busch InBev NV 7.20% 20144		5,000			5,676
Anheuser-Busch InBev NV 4.125% 20154		10,000			10,165
Anheuser-Busch InBev NV 6.875% 20194		3,320			3,713
Anheuser-Busch InBev NV 7.75% 20194		10,315			12,097
Anheuser-Busch InBev NV 5.375% 20204		4,500			4,600
CVS Caremark Corp. 6.60% 2019		6,300			6,906
CVS Caremark Corp. 6.943% 20305		7,278			7,336
Kroger Co. 5.00% 2013		4,500			4,762
Kroger Co. 7.50% 2014		1,650			1,885
Kroger Co. 6.40% 2017		4,130			4,519
Tesco PLC 5.50% 20174		10,035			10,578
Tesco PLC 5.50% 2033	£	330			522
Wal-Mart Stores, Inc. 5.375% 2017	$	2,605			2,807
Wal-Mart Stores, Inc. 5.80% 2018		7,395			8,220
British American Tobacco International Finance PLC 9.50% 20184		8,137			10,349
Altria Group, Inc. 9.70% 2018		5,000			6,191
SUPERVALU INC. 7.50% 2012		585			605
Albertson’s, Inc. 7.25% 2013		1,790			1,821
SUPERVALU INC. 8.00% 2016		1,950			1,989
Constellation Brands, Inc. 7.25% 2017		4,000			4,075
Stater Bros. Holdings Inc. 8.125% 2012		2,550			2,588
Stater Bros. Holdings Inc. 7.75% 2015		1,425			1,454
Tyson Foods, Inc. 7.85% 20163		3,355			3,456
H.J Heinz Co. 7.125% 20394		1,400			1,588
Safeway Inc. 6.25% 2014		1,420			1,561
Diageo Capital PLC 5.75% 2017		1,000			1,078
					120,541
INFORMATION TECHNOLOGY — 1.30%
NXP BV and NXP Funding LLC 3.034% 20133		8,025			6,691
NXP BV and NXP Funding LLC 3.492% 20133	€	1,100			1,245
NXP BV and NXP Funding LLC 10.00% 201310	$	8,398			8,597
NXP BV and NXP Funding LLC 7.875% 2014		15,595			14,230
Sanmina-SCI Corp. 6.75% 2013		2,725			2,701
Sanmina-SCI Corp. 3.004% 20143,4		2,275			2,099
Sanmina-SCI Corp. 8.125% 2016		11,525			11,554
Freescale Semiconductor, Inc., Term Loan B, 1.985% 20133,5,6		1,259			1,105
Freescale Semiconductor, Inc. 9.875% 20143,8		1,049			933
Freescale Semiconductor, Inc., Term Loan B, 12.50% 20145,6		7,226			7,452
Freescale Semiconductor, Inc. 10.125% 2016		774			627
First Data Corp., Term Loan B2, 2.999% 20143,5,6		5,882			5,242
First Data Corp. 9.875% 2015		4,000			3,750
Jabil Circuit, Inc. 8.25% 2018		8,300			8,923
Western Union Co. 5.93% 2016		6,000			6,481
SunGard Data Systems Inc. 9.125% 2013		5,500			5,665
Oracle Corp. 6.50% 2038		5,000			5,509
National Semiconductor Corp. 6.15% 2012		4,500			4,716
KLA-Tencor Corp. 6.90% 2018		3,750			3,952
Xerox Corp. 7.125% 2010		2,500			2,557
Celestica Inc. 7.625% 2013		1,925			2,004
Advanced Micro Devices, Inc. 8.125% 20174		1,675			1,677
Electronic Data Systems Corp., Series B, 6.00% 20133		1,500			1,659
					109,369
MATERIALS — 1.05%
Dow Chemical Co. 8.55% 2019		6,070			7,254
Dow Chemical Co. 9.40% 2039		5,975			7,924
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		2,040			2,226
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		10,360			11,360
Rio Tinto Finance (USA) Ltd. 9.00% 2019		8,280			10,497
International Paper Co. 7.40% 2014		500			557
International Paper Co. 7.95% 2018		4,285			4,950
International Paper Co. 7.50% 2021	$	2,835			3,183
CRH Finance BV 7.375% 20143	€	2,000			3,259
CRH America, Inc. 6.00% 2016	$	360			377
CRH America, Inc. 8.125% 2018		4,140			4,836
Nalco Co. 8.25% 20174		5,000			5,337
Ball Corp. 7.125% 2016		2,705			2,786
Ball Corp. 7.375% 2019		2,000			2,065
Teck Resources Ltd. 9.75% 2014		4,000			4,635
Lafarge 6.15% 2011		3,530			3,680
Reynolds Group 7.75% 20164		3,425			3,519
Owens-Brockway Glass Container Inc. 8.25% 2013		1,090			1,125
Owens-Brockway Glass Container Inc. 6.75% 2014	€	1,250			1,764
Holcim Ltd. 6.00% 20194	$	325			339
Holcim Ltd. 6.875% 20394		2,250			2,371
Rockwood Specialties Group, Inc. 7.625% 2014	€	1,500			2,154
Graphic Packaging International, Inc. 9.50% 2017	$	875			932
Georgia-Pacific Corp., First Lien Term Loan B, 2.256% 20123,5,6		675			656
					87,786
ASSET-BACKED OBLIGATIONS5 — 0.56%
AmeriCredit Automobile Receivables Trust, Series 2006-R-M, Class A-2, MBIA insured, 5.42% 2011		2,282			2,314
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-3-A, MBIA insured, 5.42% 2012		1,762			1,788
AmeriCredit Automobile Receivables Trust, Series 2006-B-G, Class A-4, FGIC insured, 5.21% 2013		2,494			2,563
Honda Auto Receivables Owner Trust, Series 2006-3, Class A-4, 5.11% 2012		4,265			4,320
Honda Auto Receivables Owner Trust, Series 2006-2, Class A-4, 5.28% 2012		2,158			2,184
Nissan Auto Lease Trust, Series 2008-A, Class A-3a, 5.14% 2011		5,000			5,115
Discover Card Master Trust I, Series 2007-3, Class B, Subseries 1, 0.363% 20123		4,000			3,969
Long Beach Acceptance Auto Receivables Trust, Series 2006-B, Class A-4, FSA insured, 5.18% 2013		3,743			3,816
Triad Automobile Receivables Trust, Series 2007-A, Class A-3, FSA insured, 5.28% 2012		2,790			2,803
MBNA Credit Card Master Note Trust, Series 2004-1, Class B, 4.45% 2016		2,750			2,633
Washington Mutual Master Note Trust, Series 2007-A4A, Class A-4, 5.20% 20144		2,445			2,499
Drive Auto Receivables Trust, Series 2006-1, Class A-4, FSA insured, 5.54% 20134		2,419			2,463
CenterPoint Energy Transition Bond Company III, LLC, Series 2008, Class A-2, 5.234% 2023		1,500			1,576
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012		1,474			1,498
Drivetime Auto Owner Trust, Series 2006-B, Class A-3, MBIA insured, 5.227% 20123,4		1,455			1,484
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 0.373% 20373		1,649			1,159
Capital One Auto Finance Trust, Series 2007-B, Class A3A, MBIA insured, 5.03% 2012		1,137			1,148
CPS Auto Receivables Trust, Series 2005-D, Class A-2, FSA insured, 5.06% 20124		1,036			1,055
CWHEQ Home Equity Loan Trust, Series 2007-S1, Class A-6, MBIA insured, 5.693% 20363		3,145			1,032
Credit-Based Asset Servicing and Securitization LLC, Series 2007-CB4, Class A-2B, 5.723% 20373		1,500			780
Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029		1,337			467
Cendant Timeshare Receivables Funding, LLC, Series 2005-1, Class A-1, FGIC insured, 4.67% 20174		228			196
Vanderbilt Mortgage and Finance, Inc., Series 2001-A, Class B-1, 8.20% 2020		151			150
Home Equity Mortgage Trust, Series 2006-6, Class 2A-1, 0.331% 20373		1,714			69
					47,081
MUNICIPALS — 0.05%
State of California, Various Purpose General Obligation Bonds, 7.50% 2034		2,040			2,002
State of North Carolina, Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Federally Taxable,
Series 2003-E, 5.55% 2014		1,625			1,595
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds,
Series 2002-A, Class A, 6.72% 2025		1,104			883
State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds,
Series 2001-A, Class A, 6.36% 2025		51			43
					4,523
Total bonds, notes & other debt instruments (cost: $7,513,782,000)					7,633,018
				Value
Preferred stocks — 1.02%	Shares				(000	)
FINANCIALS — 1.02%
SMFG Preferred Capital USD 3 Ltd. 9.50%3,4		8,509,000		$	8,977
SMFG Preferred Capital GBP 2 Ltd. 10.231%3		1,400,000			2,558
Royal Bank of Scotland Group PLC, Series U, 7.64%3		11,500,000			6,217
RBS Capital Trust II 6.425% noncumulative trust3		6,000,000			3,690
PNC Preferred Funding Trust III 8.70%3,4		4,900,000			5,032
PNC Preferred Funding Trust I 6.517%3,4		4,700,000			3,523
Barclays Bank PLC 7.434%3,4		6,650,000			6,151
Barclays Bank PLC 5.926%3,4		1,000,000			760
BNP Paribas 7.195%3,4		5,800,000			5,394
BNP Paribas Capital Trust 9.003% noncumulative trust3,4		850,000			841
Wells Fargo & Co. 7.98%3		5,500,000			5,541
Bank of America Corp., Series V, 7.00%		250,000			5,413
Commerzbank Capital Funding Trust I, Class B, 5.012% noncumulative3		7,750,000			5,329
Société Générale 5.922%3,4		6,630,000			5,172
JPMorgan Chase & Co., Series I, 7.90%3		4,350,000			4,502
AXA SA, Series B, 6.379%3,4		3,360,000			2,722
HSBC Capital Funding LP, Series 2, 10.176% noncumulative step-up3,4		2,000,000			2,435
ING Capital Funding Trust III 8.439% noncumulative3		2,700,000			2,336
Banco Bilbao Vizcaya Argentaria, SA, 5.919%3		2,495,000			2,011
Fannie Mae, Series O, 0%3,4,11		960,808			1,537
Lloyds Banking Group PLC 6.657% preference shares3,4		2,500,000			1,503
Swire Pacific Ltd. 8.84% cumulative guaranteed perpetual capital securities4		65,000			1,467
Resona Preferred Global Securities (Cayman) Ltd. 7.191%3,4		1,502,000			1,230
QBE Capital Funding II LP 6.797%3,4		1,415,000			1,211
Freddie Mac, Series Z, 8.375%11		210,000			232
Total preferred stocks (cost: $94,764,000)					85,784
Common stocks — 0.08%
MATERIALS — 0.06%
Georgia Gulf Corp.11		296,439			5,152
INFORMATION TECHNOLOGY — 0.00%
ZiLOG, Inc.11		32,500			115
CONSUMER DISCRETIONARY — 0.00%
Adelphia Recovery Trust, Series ACC-111		2,409,545			77
Adelphia Recovery Trust, Series ACC-6B2,11		500,000			3
American Media Operations, Inc.2,4,11		32,601			—
					80
HEALTH CARE — 0.00%
Clarent Hospital Corp. Liquidating Trust2,11		16,114			1
TELECOMMUNICATION SERVICES — 0.00%
XO Holdings, Inc.11		1,134			1
MISCELLANEOUS — 0.02%
Other common stocks in initial period of acquisition					1,249
Total common stocks (cost: $8,329,000)					6,598
				Value
Rights & warrants — 0.00%	Shares				(000	)
TELECOMMUNICATION SERVICES — 0.00%
XO Holdings, Inc., Series B, warrants, expire 201011		1,704		$	—
XO Holdings, Inc., Series A, warrants, expire 201011		2,273			—
XO Holdings, Inc., Series C, warrants, expire 201011		1,704			—
GT Group Telecom Inc., warrants, expire 20102,4,11		1,000			—
Total rights & warrants (cost: $52,000)					—
	Principal amount
Short-term securities — 11.63%		(000	)
U.S. Treasury Bills 0.17%–0.325% due 5/6–9/23/2010	$	294,400			294,109
Freddie Mac 0.14%–0.24% due 3/29–5/18/2010		151,900			151,832
JPMorgan Chase Funding Inc. 0.18% due 1/19/20104		50,000			49,993
JPMorgan Chase & Co. 0.03% due 1/4/2010		29,500			29,500
Park Avenue Receivables Co., LLC 0.15% due 1/4/20104		5,500			5,500
Coca-Cola Co. 0.15%–0.22% due 2/2–5/13/20104		66,850			66,807
Fannie Mae 0.25%–0.43% due 3/3–12/3/2010		66,300			66,154
Federal Home Loan Bank 0.122% due 1/13/2010		62,200			62,198
Johnson & Johnson 0.20% due 6/21/20104		50,000			49,940
Chevron Funding Corp. 0.11% due 1/7/2010		40,000			39,999
Federal Farm Credit Banks 0.12%–0.20% due 1/6–6/15/2010		32,000			31,989
Straight-A Funding LLC 0.16%–0.18% due 1/19–2/3/20104		30,002			29,998
Procter & Gamble International Funding S.C.A. 0.23% due 1/5/20104		29,200			29,199
Paccar Financial Corp. 0.17% due 2/16/2010		25,800			25,794
Microsoft Corp. 0.16% due 4/14/20104		23,100			23,088
Private Export Funding Corp. 0.08% due 1/11/20104		12,500			12,500
General Electric Capital Services, Inc. 0.17% due 2/18/2010		10,000			9,997
Total short-term securities (cost: $978,465,000)					978,597
Total investment securities (cost: $8,595,392,000)					8,703,997
Other assets less liabilities					(293,852	)
Net assets				$	8,410,145

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

1Index-linked bond whose principal amount moves with a government retail price index.

2Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $177,905,000, which represented 2.12% of the net assets of the fund.

3Coupon rate may change periodically.

4Purchased 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 $1,102,733,000, which represented 13.11% of the net assets of the fund.

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

6Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $91,350,000, which represented 1.09% of the net assets of the fund.

7Scheduled interest and/or principal payment was not received.

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

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

10Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 7/17/2009 at a cost of $6,707,000) may be subject to legal or contractual restrictions on resale.

11Security did not produce income during the last 12 months.

Key to symbols and abbreviations

A$ = Australian dollars

C$ = Canadian dollars

DKr = Danish kroner

€ = Euros

£ = British pounds

ILS = Israeli shekels

¥ = Japanese yen

KRW = South Korean won

MXN = Mexican pesos

MYR = Malaysian ringgits

NKr = Norwegian kroner

PLN = Polish zloty

SKr = Swedish kronor

Bond Fund

Summary investment portfolio, December 31, 2009

Largest Holdings (By issuer)	Percent of net assets
U.S. Treasury		25.82
Fannie Mae		16.45
Freddie Mac		4.42
Federal Home Loan Bank		1.59
United Mexican States		1.12
Polish Government		.91
Irish Government		.73
Bank of America		.70
South Korean Government		.70
Barclays		.62

	Principal						Percent
	amount			Value			of net
Bonds, notes & other debt instruments - 90.76%		(000	)		(000	)	assets
Bonds & notes of U.S. government & government agencies - 31.36%
U.S. Treasury:
1.75% 2011	$	67,140		$	67,994
1.75% 2012		50,000			50,330
4.50% 2012		30,000			32,114
1.875% 2013 (1) (2)		40,606			42,855
2.00% 2013		136,795			136,089
3.375% 2013		105,760			111,031
1.75% 2014		147,660			144,885
2.00% 2014 (1) (2)		52,354			55,492
2.25% 2014		52,500			52,151
1.625% 2015 (1) (2)		56,606			58,982
4.00% 2015		38,480			40,908
4.125% 2015		31,970			34,097
4.25% 2015		89,250			95,553
2.375% 2016		104,000			99,523
3.00% 2016		77,760			76,490
3.125% 2016		59,000			58,267
3.25% 2016		96,000			96,187
5.125% 2016		34,750			38,763
7.50% 2016		39,750			50,119
8.75% 2017		75,000			101,431
3.75% 2018		122,750			122,765
3.875% 2018		71,500			72,617
2.75% 2019		56,120			51,681
3.125% 2019		161,100			152,586
3.625% 2019		64,705			63,626
4.50% 2039		47,500			46,446
1.00%-9.25% 2011-2039 (1) (2)		210,321			218,855			25.82
Freddie Mac:
2.125% 2012		50,000			50,441
5.75% 2012		40,000			43,532
2.50%-5.25% 2010-2014		63,320			64,198			1.88
Federal Home Loan Bank:
1.75% 2012		44,000			43,998
4.00% 2013		30,000			31,770
2.25%-5.375% 2012-2016		55,250			57,672			1.59
Fannie Mae 2.50%-5.50% 2011-2014		70,500			72,450			.86
United States Government Agency-Guaranteed (FDIC insured), JPMorgan Chase & Co. 0.501%-2.20% 2012 (3)		27,000			27,318			.33
Other securities					74,300			.88
					2,637,516			31.36
Mortgage-backed obligations (4) - 20.26%
Fannie Mae:
4.50% 2021		65,874			68,334
4.50% 2024		33,131			34,128
4.50% 2024		32,922			33,925
4.50% 2025		174,515			179,532
6.00% 2037		46,511			49,345
5.00% 2038		41,453			42,595
5.50% 2038		96,848			101,504
6.00% 2038		29,699			31,510
6.00% 2040		137,211			145,337
3.619%-10.037% 2010-2042 (3)		597,360			623,058			15.57
Freddie Mac:
6.00% 2036		36,982			39,335
5.50% 2040		40,844			42,790
0%-6.50% 2015-2040 (3)		126,767			131,690			2.54
Other securities					180,798			2.15
					1,703,881			20.26
Bonds & notes of governments & government agencies outside the U.S. - 9.59%
United Mexican States Government 7.75%-10.00% 2014-2036	MXN 923,400				73,757
United Mexican States Government Global 5.875%-9.875% 2010-2040	$	19,850			20,714			1.12
Other securities					712,113			8.47
					806,584			9.59
Financials - 8.03%
JPMorgan Chase & Co. 3.70%-6.30% 2015-2019 (3)		30,550			31,670			.38
Other securities					643,208			7.65
					674,878			8.03
Consumer discretionary - 3.83%
Other securities					322,129			3.83
Industrials - 3.59%
Other securities					302,018			3.59
Telecommunication services - 2.92%
Other securities					245,711			2.92
Utilities - 2.55%
Other securities					214,267			2.55
Energy - 2.39%
Other securities					201,142			2.39
Health care - 1.85%
Other securities					155,592			1.85
Consumer staples - 1.43%
Other securities					120,541			1.43
Information technology - 1.30%
Other securities					109,369			1.30
Materials - 1.05%
Other securities					87,786			1.05
Other - 0.61%
Other securities					51,604			.61
Total bonds, notes & other debt instruments (cost: $7,513,782,000)					7,633,018			90.76
	Shares
Preferred stocks - 1.02%
Financials - 1.02%
JPMorgan Chase & Co., Series I, 7.90% (3)		4,350,000			4,502			.05
Fannie Mae, Series O, 0% (3) (5) (6)		960,808			1,537			.02
Freddie Mac, Series Z, 8.375% (6)		210,000			232			.00
Other securities					79,513			.95
Total preferred stocks (cost: $94,764,000)					85,784			1.02
Common stocks - 0.08%
Other - 0.06%
Other securities					5,349			.06
Miscellaneous - 0.02%
Other common stocks in initial period of acquisition					1,249			.02
Total common stocks (cost: $8,329,000)					6,598			.08
Rights & warrants - 0.00%
Telecommunication services - 0.00%
Other securities					0			.00
Total rights & warrants (cost: $52,000)					0			.00
	Principal
	amount
Short-term securities - 11.63%		(000	)
U.S. Treasury Bills 0.17%-0.325% due 5/6-9/23/2010	$	294,400			294,109			3.50
Freddie Mac 0.14%-0.24% due 3/29-5/18/2010		151,900			151,832			1.80
JPMorgan Chase Funding Inc. 0.18% due 1/19/2010 (5)		50,000			49,993
JPMorgan Chase & Co. 0.03% due 1/4/2010		29,500			29,500
Park Avenue Receivables Co., LLC 0.15% due 1/4/2010 (5)		5,500			5,500			1.01
Coca-Cola Co. 0.15%-0.22% due 2/2-5/13/2010 (5)		66,850			66,807			.79
Fannie Mae 0.25%-0.43% due 3/3-12/3/2010		66,300			66,154			.79
Federal Home Loan Bank 0.122% due 1/13/2010		62,200			62,198			.74
Johnson & Johnson 0.20% due 6/21/2010 (5)		50,000			49,940			.59
Chevron Funding Corp. 0.11% due 1/7/2010		40,000			39,999			.48
Federal Farm Credit Banks 0.12%-0.20% due 1/6-6/15/2010		32,000			31,989			.38
Other securities					130,576			1.55
Total short-term securities (cost: $978,465,000)					978,597			11.63
Total investment securities (cost: $8,595,392,000)					8,703,997			103.49
Other assets less liabilities					(293,852	)		(3.49	)
Net assets				$	8,410,145			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 $8,597,000, which represented .10% of the net assets of the fund) may be subject to legal or contractual restrictions on resale.

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

(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 $177,905,000, which represented 2.12% of the net assets of the fund.

(3) Coupon rate may change periodically.

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

(5) 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 $1,102,733,000, which represented 13.11% of the net assets of the fund.

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

Key to abbreviation

MXN = Mexican pesos

See Notes to Financial Statements

Global Bond Fund

Investment portfolio

December 31, 2009

Bonds, notes & other debt instruments — 93.41%	Principal amount (000)			Value (000)
EUROS — 26.64%
German Government 4.25% 2012	€	60		US$ 92
German Government 5.00% 2012		2,100			3,260
German Government 3.75% 2013		12,134			18,408
German Government 4.50% 2013		3,525			5,441
German Government, Series 6, 4.00% 2016		14,160			21,587
German Government 3.75% 2017		9,905			14,858
German Government 4.25% 2017		10,400			16,043
German Government, Series 7, 4.00% 2018		8,285			12,572
German Government 3.75% 2019		1,960			2,904
German Government 6.25% 2030		5,700			10,428
German Government 4.75% 2034		3,695			5,743
Irish Government 5.00% 2013		6,000			9,128
Irish Government 4.00% 2014		9,035			13,282
Irish Government 4.50% 2018		1,415			2,013
Irish Government 4.40% 2019		1,525			2,117
Irish Government 5.90% 2019		12,690			19,654
Netherlands Government Eurobond 4.00% 2011		2,450			3,621
Netherlands Government Eurobond 4.25% 2013		12,610			19,400
Netherlands Government Eurobond 4.50% 2017		7,815			12,125
Netherlands Government Eurobond 4.00% 2018		7,225			10,787
Greek Government 5.50% 2014		5,815			8,444
Greek Government 6.00% 2019		9,610			13,914
Italian Government 3.75% 2011		1,220			1,796
Italian Government 3.75% 2013		4,750			7,074
Italian Government 4.50% 2019		6,050			9,102
French Government B.T.A.N. Eurobond 4.50% 2013		5,250			8,115
French Government O.A.T. Eurobond 4.00% 2014		1,960			2,984
KfW 4.375% 2013		7,125			10,922
Deutsche Genossenschaftsbank-Hypothekenbank AG 4.50% 20131		2,000			3,047
Deutsche Genossenschaftsbank-Hypothekenbank AG 4.00% 20161		3,500			5,243
European Investment Bank 4.25% 2014		1,300			2,000
European Investment Bank 4.75% 2017		2,975			4,653
Dexia Municipal Agency 4.50% 20171		4,250			6,376
Spanish Government 4.40% 2015		1,000			1,525
Spanish Government 4.60% 2019		2,575			3,881
Royal Bank of Scotland PLC 6.934% 2018		3,875			5,165
Barclays Bank PLC 4.00% 20191		3,450			4,890
Barclays Bank PLC 4.50% 20192		150			215
Allied Irish Banks, PLC 12.50% 2019		3,015			4,489
Finland (Republic of) 5.375% 2013		2,340			3,719
Belgium (Kingdom of), Series 23, 8.00% 2015		2,050			3,672
Schering-Plough Corp. 5.375% 2014		2,295			3,598
Merrill Lynch & Co., Inc. 4.625% 2018		2,325			2,986
Koninklijke KPN NV 6.50% 2016		650			1,053
Koninklijke KPN NV 4.75% 2017		1,250			1,849
Hungarian Government 6.75% 2014		450			702
Hungarian Government 3.50% 2016		750			1,000
Hungarian Government 4.375% 2017		300			419
Northern Rock PLC, Series 7, 4.125% 20171		1,650			2,097
Bayerische Hypo- und Vereinsbank AG 6.00% 2014		250			383
UniCredito Italiano SpA 3.95% 2016		300			397
UniCredito Italiano SpA 5.75% 2017		850			1,289
CRH Finance BV 7.375% 20142		1,235			2,013
Bank Nederlandse Gemeenten 3.75% 2014		1,320			1,973
Polish Government 5.875% 2014		1,250			1,947
Standard Chartered Bank 5.875% 2017		1,250			1,885
PLD International Finance LLC 4.375% 2011		1,250			1,818
AT&T Inc. 6.125% 2015		1,000			1,606
France Télécom 7.25% 2013		500			811
France Télécom 5.625% 2018		500			788
Wal-Mart Stores, Inc. 4.875% 2029		1,000			1,411
Volvo Treasury AB 5.00% 2017		1,000			1,411
Bank of Scotland PLC 5.625% 2013		775			1,177
HBOS PLC 4.375% 20192		155			187
Telecom Italia SpA 7.75% 2033		800			1,358
Gaz Capital SA, Series 13, 6.605% 2018		900			1,318
Novartis Finance SA, 4.25% 2016		750			1,125
Province De Québec 3.375% 2016		750			1,070
Croatian Government 5.00% 2014		460			677
Croatian Government 6.50% 2015		250			377
NGG Finance PLC 6.125% 2011		150			228
National Grid Transco PLC 4.375% 2020		450			639
BHP Billiton Finance Ltd. 6.375% 2016		500			825
NXP BV and NXP Funding LLC 3.492% 20132		250			283
NXP BV and NXP Funding LLC 8.625% 2015		450			480
Société Générale 6.999% (undated)2		550			725
Commerzbank AG, Series 551, 4.125% 20162		550			716
Veolia Environnement 4.875% 2013		150			227
Veolia Environnement 6.125% 2033		305			476
FCE Bank PLC 7.125% 2013		500			698
Verizon Communications Inc. 8.75% 2015		350			637
GlaxoSmithKline Capital PLC 5.125% 2012		400			614
Smurfit Kappa Acquisition 7.25% 2017		100			141
Smurfit Kappa Acquisition 7.75% 2019		300			425
ENEL SpA 5.625% 2027		320			488
Edcon (Proprietary) Ltd. 3.964% 20142		500			464
Anheuser-Busch InBev NV 8.625% 2017		250			453
Shinsei Bank, Ltd. 3.75% 20162		300			367
Resona Bank, Ltd. 3.75% 20152		250			358
DaimlerChrysler North America Holding Corp. 4.25% 2011		190			281
Ireland Government Agency-Guaranteed, Anglo Irish Bank Corp. plc 1.012% 20162		500			203
Santander Issuances, SA Unipersonal 5.435% 20172		100			150
UPC Germany GmbH 9.625% 2019		100			145
WT Finance (Australia) Pty Ltd., Westfield Europe Finance PLC, and WEA Finance LLC 3.625% 2012		70			101
Nalco Co. 9.00% 2013		35			51
					363,589
JAPANESE YEN — 5.84%
Japanese Government 1.30% 2011	¥	1,163,950			12,716
Japanese Government 1.40% 2012		295,000			3,256
Japanese Government 0.70% 2013		220,000			2,397
Japanese Government 1.50% 2014		131,300			1,479
Japanese Government, Class 4, 0.50% 20153,4		146,450			1,491
Japanese Government 1.30% 2015		1,895,000			21,163
Japanese Government 1.70% 2016		2,312,650			26,397
Japanese Government 1.70% 2017		215,000			2,445
Japanese Government 1.50% 2018		134,250			1,492
Japanese Government 2.30% 2035		311,400			3,377
Japanese Government 2.40% 2038		313,200			3,464
					79,677
POLISH ZLOTY — 3.10%
Polish Government 5.25% 2013	PLN43,250				15,110
Polish Government 5.75% 2014		37,500			13,155
Polish Government 5.25% 2017		42,555			14,088
					42,353
SOUTH KOREAN WON — 2.86%
South Korean Government 5.75% 2010	KRW 1,250,000				1,097
South Korean Government 5.75% 2013		6,050,000			5,401
South Korean Government 4.25% 2014		7,560,000			6,337
South Korean Government 4.75% 2014		7,680,000			6,609
South Korean Government 5.00% 2014		2,510,000			2,171
South Korean Government 5.50% 2017		6,568,060			5,760
South Korean Government 5.75% 2018		13,100,000			11,631
					39,006
AUSTRALIAN DOLLARS — 2.40%
Queensland Treasury Corp., Series 12, 6.50% 2012	$	A 2,250			2,086
Queensland Treasury Corp., Series 15, 6.00% 2015		10,075			9,111
Queensland Treasury Corp., Series 17, 6.00% 2017		2,040			1,821
New South Wales Treasury Corp., Series 12, 6.00% 2012		2,250			2,063
New South Wales Treasury Corp., Series 14, 5.50% 2014		1,775			1,584
New South Wales Treasury Corp., Series 17, 5.50% 2017		5,250			4,557
European Investment Bank 6.125% 2017		4,400			3,906
Treasury Corp. of Victoria 6.25% 2012		2,250			2,075
Australia Government Agency-Guaranteed, National Australia Bank 5.75% 2013		2,250			2,016
Australia Government Agency-Guaranteed, Macquarie Bank Ltd. 5.00% 2014		1,750			1,513
KfW 6.25% 2012		1,600			1,465
Countrywide Financial Corp. 6.25% 2010		600			537
					32,734
MEXICAN PESOS — 2.05%
United Mexican States Government, Series M, 7.50% 2012	MXN45,000				3,546
United Mexican States Government, Series MI10, 9.50% 2014		80,100			6,651
United Mexican States Government, Series M10, 8.00% 2015		88,300			6,874
United Mexican States Government, Series M10, 7.25% 2016		44,000			3,316
United Mexican States Government, Series M10, 7.75% 2017		79,900			6,086
United Mexican States Government, Series M20, 10.00% 2024		6,800			597
United Mexican States Government, Series M30, 10.00% 2036		10,500			916
					27,986
DANISH KRONER — 2.03%
Nykredit 5.00% 20381	DKr45,501				8,809
Nykredit 6.00% 20381		10,498			2,099
Nykredit 6.00% 20381		6,097			1,217
Nykredit 6.00% 20411		8,431			1,681
Kingdom of Denmark 4.00% 2012		41,000			8,299
Kingdom of Denmark 5.00% 2013		19,985			4,197
Realkredit Danmark, interest only, 6.00% 20381		7,273			1,452
					27,754
BRITISH POUNDS — 1.80%
United Kingdom 4.25% 2011	£	1,000			1,682
United Kingdom 2.75% 2015		2,025			3,225
United Kingdom 4.00% 2016		4,945			8,264
United Kingdom 3.75% 2019		710			1,116
United Kingdom 4.50% 2019		2,605			4,352
United Kingdom 6.00% 2028		2,000			3,891
RSA Insurance Group PLC 9.375% 20392		569			1,084
AXA SA 6.667% (undated)2		400			544
Wal-Mart Stores, Inc. 5.625% 2034		100			169
Tesco PLC 5.50% 2033		100			158
Allied Irish Banks, PLC 5.625% 20302		125			122
					24,607
SWEDISH KRONOR — 1.19%
Swedish Government 4.00% 20121	SKr18,000				2,603
Swedish Government 5.50% 2012		20,000			3,080
Swedish Government 6.75% 2014		41,010			6,751
Swedish Government 4.50% 2015		25,000			3,809
					16,243
MALAYSIAN RINGGITS — 1.17%
Malaysian Government 3.718% 2012	MYR11,700				3,484
Malaysian Government 5.094% 2014		28,120			8,697
Malaysian Government 3.741% 2015		5,270			1,535
Malaysian Government 3.814% 2017		3,000			863
Malaysian Government 4.24% 2018		5,000			1,468
					16,047
CANADIAN DOLLARS — 0.84%
Canadian Government 5.50% 2010	$	C 70			68
Canadian Government 5.25% 2012		250			259
Canadian Government 4.50% 2015		4,340			4,490
Canadian Government 4.25% 2018		500			506
Canadian Government 5.75% 2029		500			578
Hydro One Inc. 5.49% 2040		750			709
Rogers Communications Inc. 5.80% 2016		625			640
Province of New Brunswick 6.75% 2017		500			566
Canadian Imperial Bank 5.00% 2012		500			508
Province of Ontario, Series HC, 9.50% 2022		250			349
Province of Ontario 4.60% 2039		125			116
Interprovincial Pipe Line Inc., Series K, 8.20% 2024		375			465
Province De Québec 9.375% 2023		250			346
Wells Fargo & Co. 6.05% 2012		250			259
Bank of Nova Scotia 5.04% 2013		250			256
Toronto-Dominion Bank 4.854% 2013		250			255
GE Capital Canada Funding Co., Series A, 5.29% 2012		250			253
Canada Housing Trust 4.10% 2018		250			244
Thomson Reuters Corp. 5.70% 2015		150			157
Bank of Montreal 5.18% 2015		150			156
Royal Bank of Canada 5.20% 2012		150			154
TransCanada PipeLines Ltd. 5.05% 2014		125			128
					11,462
NORWEGIAN KRONER — 0.49%
Norwegian Government 6.50% 2013	NKr29,750				5,681
KfW 5.00% 2015		5,500			988
					6,669
SINGAPORE DOLLARS — 0.48%
Singapore (Republic of) 3.125% 2011	$	S4,700			3,438
Singapore (Republic of) 3.75% 2016		4,000			3,147
					6,585
NEW TURKISH LIRAS — 0.43%
Turkey (Republic of) 10.00% 20123,4	TRY7,660				5,879
ISRAELI SHEKELS — 0.30%
Israeli Government 5.50% 20174	ILS14,760				4,051
INDONESIAN RUPIAH — 0.22%
Indonesia (Republic of) 11.00% 2012	IDR4,320,000				490
Indonesia (Republic of) 12.50% 2013		9,217,000			1,088
Indonesia (Republic of) 14.275% 2013		2,230,000			280
Indonesia (Republic of) 11.25% 2014		1,330,000			154
Indonesia (Republic of) 10.75% 2016		8,460,000			967
					2,979
THAI BAHT — 0.20%
Thai Government 1.75% 2011	THB28,000				839
Thai Government 5.375% 2011		7,000			222
Thai Government 5.25% 2014		16,000			516
Thai Government 3.625% 2015		37,750			1,131
					2,708
EGYPTIAN POUNDS — 0.15%
Egypt (Arab Republic of) 0% 20104	EGP6,000				1,089
Egypt (Arab Republic of) 0% 2010		5,000			907
Egypt (Arab Republic of) 11.50% 2011		125			24
					2,020
BRAZILIAN REAIS — 0.15%
Brazilian Treasury Bill 6.00% 20153,4	BRL1,854				1,033
Brazil (Federal Republic of) 10.00% 20174		2,000			986
					2,019
DOMINICAN PESOS — 0.01%
Cervecería Nacional Dominicana, C. por A. 16.00% 20124,5	DOP3,279				82
ARGENTINE PESOS — 0.00%
Argentina (Republic of) 5.83% 20331,3,4,6	ARS288				45
U.S. DOLLARS — 41.06%
U.S. Treasury 5.75% 2010	US$ 5,000				5,167
U.S. Treasury 1.75% 2011		3,905			3,954
U.S. Treasury 4.50% 2011		1,610			1,681
U.S. Treasury 4.625% 2011		11,900			12,716
U.S. Treasury 3.00% 20123,4		4,659			5,021
U.S. Treasury 2.75% 2013		12,500			12,804
U.S. Treasury 3.875% 2013		8,775			9,348
U.S. Treasury 1.75% 2014		3,275			3,213
U.S. Treasury 1.875% 20153,4		1,389			1,466
U.S. Treasury 4.00% 2015		10,630			11,301
U.S. Treasury 4.25% 2015		4,500			4,818
U.S. Treasury 3.00% 2016		570			561
U.S. Treasury 3.125% 2016		6,000			5,925
U.S. Treasury 5.125% 2016		22,750			25,377
U.S. Treasury 7.50% 2016		14,900			18,787
U.S. Treasury 4.75% 2017		6,375			6,919
U.S. Treasury 8.875% 2017		8,000			10,910
U.S. Treasury 1.625% 20183,4		258			265
U.S. Treasury 3.75% 2018		2,000			2,000
U.S. Treasury 3.875% 2018		3,000			3,047
U.S. Treasury 3.125% 2019		3,500			3,315
U.S. Treasury 3.625% 2019		6,085			5,983
U.S. Treasury 7.875% 2021		1,250			1,681
U.S. Treasury 8.125% 2021		2,500			3,421
U.S. Treasury 5.25% 2029		1,000			1,084
U.S. Treasury 3.50% 2039		3,500			2,869
Fannie Mae 4.00% 20241		7,700			7,760
Fannie Mae 4.00% 20241		4,753			4,789
Fannie Mae 4.00% 20241		239			241
Fannie Mae 4.50% 20241		2,832			2,919
Fannie Mae 4.50% 20241		1,205			1,241
Fannie Mae 4.50% 20241		979			1,009
Fannie Mae 4.50% 20241		424			437
Fannie Mae 4.50% 20241		379			390
Fannie Mae 4.50% 20241		157			162
Fannie Mae 4.50% 20241		154			158
Fannie Mae 4.50% 20241		150			155
Fannie Mae 4.50% 20241		139			143
Fannie Mae 4.50% 20241		139			143
Fannie Mae 4.00% 20251		5,000			5,030
Fannie Mae 4.50% 20251		3,445			3,544
Fannie Mae 5.00% 20351		1,891			1,945
Fannie Mae, Series 2006-96, Class MO, principal only, 0% 20361		298			248
Fannie Mae 6.00% 20361		1,610			1,713
Fannie Mae 6.00% 20361		189			202
Fannie Mae 6.50% 20361		1,432			1,542
Fannie Mae 6.50% 20361		318			339
Fannie Mae 5.785% 20371,2		2,421			2,562
Fannie Mae 4.445% 20381,2		1,074			1,114
Fannie Mae 4.50% 20381		891			891
Fannie Mae 5.00% 20381		1,101			1,132
Fannie Mae 5.314% 20381,2		1,100			1,154
Fannie Mae 5.50% 20381		9,793			10,264
Fannie Mae 5.50% 20381		1,712			1,797
Fannie Mae 6.00% 20381		1,070			1,140
Fannie Mae 3.62% 20391,2		60			61
Fannie Mae 3.626% 20391,2		24			25
Fannie Mae 3.65% 20391,2		39			39
Fannie Mae 3.761% 20391,2		31			32
Fannie Mae 3.79% 20391,2		584			596
Fannie Mae 3.83% 20391,2		22			23
Fannie Mae 3.85% 20391,2		15			15
Fannie Mae 3.91% 20391,2		23			23
Fannie Mae 3.912% 20391,2		373			383
Fannie Mae 3.95% 20391,2		430			440
Fannie Mae 3.951% 20391,2		19			20
Fannie Mae 6.00% 20391		227			241
Fannie Mae 6.50% 20391		737			790
Fannie Mae 3.619% 20401,2		39			39
Fannie Mae 5.00% 20401		3,232			3,317
Fannie Mae 6.00% 20401		4,649			4,924
Freddie Mac 3.125% 2010		3,730			3,740
Freddie Mac, Series 3213, Class OG, principal only, 0% 20361		73			59
Freddie Mac, Series 3292, Class BO, principal only, 0% 20371		574			458
Freddie Mac 6.00% 20371		2,256			2,418
Freddie Mac 6.00% 20371		1,926			2,046
Freddie Mac 6.00% 20371		892			951
Freddie Mac 6.00% 20371		320			339
Freddie Mac 6.00% 20371		207			222
Freddie Mac 6.50% 20371		617			662
Freddie Mac 5.00% 20381		546			560
Freddie Mac 5.00% 20381		211			217
Freddie Mac 5.008% 20381,2		498			517
Freddie Mac 5.50% 20381		682			716
Freddie Mac 6.00% 20381		174			184
Freddie Mac 6.50% 20381		4,309			4,618
Freddie Mac 6.50% 20381		2,029			2,175
Freddie Mac 6.50% 20381		1,684			1,805
Freddie Mac 6.50% 20381		1,508			1,616
Freddie Mac 3.608% 20391,2		11			11
Freddie Mac 3.758% 20391,2		17			17
Freddie Mac 3.837% 20391,2		15			16
Freddie Mac 6.50% 20391		5,997			6,426
Freddie Mac 5.50% 20401		3,855			4,039
France Government Agency-Guaranteed, Société Finance 2.875% 20145		1,150			1,141
France Government Agency-Guaranteed, Société Finance 3.375% 20145		1,150			1,174
Société Générale 5.75% 20165		3,060			3,105
Polish Government 6.375% 2019		4,415			4,824
HBOS PLC 6.75% 20185		3,720			3,457
HBOS PLC 6.00% 20335		1,500			1,136
Comcast Corp. 5.30% 2014		750			801
Comcast Corp. 6.30% 2017		670			734
Comcast Corp. 5.875% 2018		1,760			1,871
Comcast Corp. 6.45% 2037		250			259
Comcast Corp. 6.95% 2037		820			897
Anheuser-Busch InBev NV 6.875% 20195		290			324
Anheuser-Busch InBev NV 7.75% 20195		2,195			2,574
Anheuser-Busch InBev NV 5.375% 20205		1,600			1,636
Verizon Communications Inc. 3.75% 2011		1,370			1,413
Verizon Communications Inc. 5.55% 2014		1,030			1,119
Verizon Communications Inc. 5.50% 2017		500			528
Verizon Communications Inc. 8.50% 2018		1,000			1,242
Verizon Communications Inc. 6.35% 2019		195			216
Barclays Bank PLC 2.50% 2013		1,170			1,170
Barclays Bank PLC 5.20% 2014		900			955
Barclays Bank PLC 5.00% 2016		500			512
Barclays Bank PLC 6.05% 20175		1,690			1,723
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014		3,000			3,787
Abbey National Treasury Services PLC 3.875% 20145		1,550			1,557
Santander Issuances, SA Unipersonal 6.50% 20192,5		2,100			2,180
Progress Energy, Inc. 6.05% 2014		1,000			1,096
Progress Energy, Inc. 7.05% 2019		2,075			2,325
ProLogis 7.625% 2014		915			958
ProLogis 5.625% 2016		120			111
ProLogis 6.625% 2018		80			76
ProLogis 7.375% 2019		2,250			2,223
Goldman Sachs Group, Inc. 6.25% 2017		160			172
Goldman Sachs Group, Inc. 5.95% 2018		235			249
Goldman Sachs Group, Inc. 6.15% 2018		2,700			2,895
Norfolk Southern Corp. 5.75% 2016		985			1,049
Norfolk Southern Corp. 5.90% 2019		670			717
Norfolk Southern Corp. 7.05% 2037		1,205			1,426
Korea Development Bank 5.30% 2013		1,350			1,412
Korea Development Bank 8.00% 2014		1,550			1,768
Jackson National Life Global 5.375% 20135		3,100			3,150
Centennial Communications Corp. 6.04% 20132		40			40
Centennial Communications Corp. 10.00% 2013		775			814
SBC Communications Inc. 5.10% 2014		100			108
SBC Communications Inc. 5.625% 2016		250			269
AT&T Inc. 5.50% 2018		500			523
AT&T Inc. 5.80% 2019		1,250			1,335
American Tower Corp. 7.00% 2017		2,700			3,004
Enbridge Energy Partners, LP, Series B, 6.50% 2018		1,895			2,030
Enbridge Energy Partners, LP 9.875% 2019		750			951
Telecom Italia Capital SA 4.95% 2014		1,650			1,712
Telecom Italia Capital SA 6.999% 2018		500			551
Telecom Italia Capital SA 7.20% 2036		610			666
Westfield Group 5.40% 20125		465			494
Westfield Group 7.50% 20145		175			197
Westfield Group 5.70% 20165		530			546
Westfield Group 7.125% 20185		1,525			1,670
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		225			246
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		2,375			2,604
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp., Series L, 3.125% 2012		500			517
Countrywide Financial Corp., Series B, 5.80% 2012		200			212
Bank of America Corp. 5.75% 2017		2,005			2,056
United Mexican States Government Global 5.875% 2014		750			817
United Mexican States Government Global 5.95% 2019		1,660			1,764
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		725			759
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20167		780			716
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016		935			1,050
JPMorgan Chase & Co. 6.30% 2019		2,260			2,491
Standard Chartered Bank 6.40% 20175		2,400			2,486
Volvo Treasury AB 5.95% 20155		2,370			2,448
Time Warner Cable Inc. 7.50% 2014		200			231
Time Warner Cable Inc. 8.25% 2014		250			292
Time Warner Cable Inc. 6.75% 2018		815			897
Time Warner Cable Inc. 5.00% 2020		1,000			972
CVS Caremark Corp. 6.60% 2019		1,680			1,842
CVS Caremark Corp. 6.943% 20301		538			542
Roche Holdings Inc. 4.50% 20125		125			132
Roche Holdings Inc. 6.00% 20195		1,280			1,414
Roche Holdings Inc. 7.00% 20395		630			766
Veolia Environnement 5.25% 2013		1,980			2,096
Veolia Environnement 6.00% 2018		200			212
Canadian National Railway Co. 4.95% 2014		2,005			2,143
Canadian National Railway Co. 5.55% 2018		125			133
Wells Fargo & Co. 5.625% 2017		2,175			2,266
Edison Mission Energy 7.50% 2013		800			756
Edison Mission Energy 7.75% 2016		50			43
Midwest Generation, LLC, Series B, 8.56% 20161		79			80
Edison Mission Energy 7.00% 2017		350			278
Edison Mission Energy 7.20% 2019		1,325			1,010
Edison Mission Energy 7.625% 2027		125			85
British American Tobacco International Finance PLC 9.50% 20185		1,753			2,230
Williams Companies, Inc. 8.75% 2020		1,670			1,996
Williams Companies, Inc. 7.875% 2021		150			172
Croatian Government 6.75% 20195		2,000			2,158
Intergen Power 9.00% 20175		2,050			2,147
Vodafone Group PLC 5.00% 2015		1,250			1,312
Vodafone Group PLC 5.625% 2017		750			798
CIT Group Inc., Term Loan 2A, 9.50% 20121,2,8		800			822
CIT Group Inc., Series A, 7.00% 2015		1,425			1,282
Boston Scientific Corp. 5.45% 2014		210			222
Boston Scientific Corp. 4.50% 2015		1,490			1,495
Boston Scientific Corp. 7.00% 2035		100			99
Boston Scientific Corp. 7.375% 2040		230			248
International Paper Co. 7.95% 2018		505			583
International Paper Co. 9.375% 2019		75			92
International Paper Co. 7.50% 2021		500			561
International Paper Co. 7.30% 2039		750			798
Citigroup Inc. 6.125% 2017		750			757
Citigroup Inc. 8.125% 2039		1,000			1,132
HSBC Finance Corp. 0.534% 20142		250			235
HSBC Finance Corp. 0.686% 20162		1,800			1,647
Royal Bank of Scotland Group PLC 4.875% 20145		1,240			1,258
Royal Bank of Scotland Group PLC 5.00% 2014		365			323
Royal Bank of Scotland Group PLC 6.99% (undated)2,5		500			292
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011		1,350			1,419
DaimlerChrysler North America Holding Corp. 5.875% 2011		400			418
Deutsche Telekom International Finance BV 5.875% 2013		1,660			1,798
E.ON International Finance BV 5.80% 20185		1,490			1,603
E.ON International Finance BV 6.65% 20385		150			171
Ford Motor Credit Co. 9.75% 20102		275			284
Ford Motor Credit Co. 7.375% 2011		275			281
Ford Motor Credit Co. 3.034% 20122		625			582
Ford Motor Credit Co. 8.70% 2014		250			262
Ford Motor Credit Co. 8.00% 2016		350			351
Pan Pacific Retail Properties, Inc. 6.125% 2013		215			225
Kimco Realty Corp., Series C, 4.904% 2015		235			231
Kimco Realty Corp. 6.875% 2019		1,250			1,273
GlaxoSmithKline Capital Inc. 4.85% 2013		600			645
GlaxoSmithKline Capital Inc. 5.65% 2018		1,000			1,080
Public Service Electric and Gas Co., Series E, 5.30% 2018		1,620			1,703
AES Corp. 7.75% 2015		850			867
AES Corp. 8.00% 2020		775			792
Freescale Semiconductor, Inc., Term Loan B, 1.985% 20131,2,8		1,019			894
Freescale Semiconductor, Inc., Term Loan B, 12.50% 20141,8		349			360
Freescale Semiconductor, Inc. 10.125% 2016		500			405
Nextel Communications, Inc., Series E, 6.875% 2013		175			171
Nextel Communications, Inc., Series F, 5.95% 2014		1,125			1,056
Nextel Communications, Inc., Series D, 7.375% 2015		175			171
Sprint Capital Corp. 8.75% 2032		250			237
Merrill Lynch Mortgage Trust, Series 2006-C1, Class A-3, 5.656% 20391,2		80			80
Merrill Lynch Mortgage Trust, Series 2004-BPC1, Class A-5, 4.855% 20411,2		1,165			1,144
Merrill Lynch Mortgage Trust, Series 2005-MCP1, Class AM, 4.805% 20431,2		520			406
First Data Corp., Term Loan B2, 2.999% 20141,2,8		1,406			1,253
First Data Corp. 9.875% 2015		250			234
First Data Corp. 9.875% 2015		100			94
HVB Funding Trust I 8.741% 20315		1,450			1,276
HVB Funding Trust III 9.00% 20315		300			264
Enel Finance International 3.875% 20145		1,490			1,510
Lockheed Martin Corp. 4.25% 2019		1,550			1,499
France Télécom 4.375% 2014		675			706
France Télécom 5.375% 2019		690			729
National Rural Utilities Cooperative Finance Corp. 2.625% 2012		1,150			1,158
National Rural Utilities Cooperative Finance Corp. 5.50% 2013		250			271
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 3.735% 20141,2,8		122			100
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 2015		415			338
Texas Competitive Electric Holdings Co. LLC, Series A, 10.25% 2015		410			334
Texas Competitive Electric Holdings Co. LLC 11.25% 20162,6		837			595
Univision Communications, Inc., First Lien Term Loan B, 2.501% 20141,2,8		70			61
Univision Communications Inc. 12.00% 20145		600			664
Univision Communications Inc. 10.50% 20152,5,6		726			640
Simon Property Group, LP 6.125% 2018		400			407
Simon Property Group, LP 10.35% 2019		750			944
Tenet Healthcare Corp. 7.375% 2013		165			166
Tenet Healthcare Corp. 9.25% 2015		145			155
Tenet Healthcare Corp. 8.875% 20195		925			1,004
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20125		650			671
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013		15			15
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20145		25			28
Charter Communications, Inc. 13.50% 20165		513			602
Kroger Co. 7.50% 2014		1,000			1,142
Kroger Co. 6.40% 2017		130			142
Cricket Communications, Inc. 9.375% 2014		525			530
Cricket Communications, Inc. 7.75% 2016		750			752
Crown Castle International Corp. 9.00% 2015		1,050			1,121
Crown Castle International Corp. 7.75% 20175		150			160
Qwest Capital Funding, Inc. 7.90% 2010		150			154
Qwest Communications International Inc. 7.25% 2011		475			480
Qwest Capital Funding, Inc. 7.25% 2011		275			280
Qwest Corp. 7.875% 2011		325			342
U S WEST Communications, Inc. 6.875% 2033		10			9
Australia Government Agency-Guaranteed, Commonwealth Bank of Australia 2.90% 20145		1,240			1,227
NTL Cable PLC 8.75% 2014		105			109
NTL Cable PLC 9.125% 2016		275			291
Virgin Media Finance 8.375% 20195		800			827
Petrobras International 5.75% 2020		810			828
Petrobras International 6.875% 2040		380			392
Husky Energy Inc. 7.25% 2019		1,040			1,204
Pfizer Inc. 4.45% 2012		250			265
Pfizer Inc. 6.20% 2019		840			935
Kinder Morgan Energy Partners LP 6.00% 2017		140			147
Kinder Morgan Energy Partners LP 6.85% 2020		910			1,011
Local T.V. Finance LLC, Term Loan B, 2.26% 20131,2,8		1,287			1,085
Local T.V. Finance LLC 10.00% 20152,5,6		66			29
Federal Home Loan Bank 5.25% 2014		1,000			1,107
Burlington Northern Santa Fe Corp. 5.75% 2018		40			43
Burlington Northern Santa Fe Corp. 4.70% 2019		370			367
Burlington Northern Santa Fe Corp. 6.15% 2037		660			697
Naftogaz Ukraine 9.50% 2014		1,300			1,105
Venezuela (Republic of) 9.25% 2027		1,490			1,095
Stater Bros. Holdings Inc. 8.125% 2012		375			381
Stater Bros. Holdings Inc. 7.75% 2015		700			714
Union Pacific Corp. 5.70% 2018		400			420
Union Pacific Corp. 6.15% 2037		650			673
Michaels Stores, Inc. 10.00% 2014		1,035			1,076
Morgan Stanley 6.00% 2014		1,000			1,076
Mohegan Tribal Gaming Authority 8.00% 2012		300			257
Mohegan Tribal Gaming Authority 7.125% 2014		1,175			806
Shell International Finance B.V. 4.00% 2014		1,010			1,055
Northrop Grumman Corp. 5.05% 2019		1,030			1,054
Sanmina-SCI Corp. 6.75% 2013		805			798
Sanmina-SCI Corp. 8.125% 2016		250			251
Abbott Laboratories 5.125% 2019		1,000			1,048
Schering-Plough Corp. 6.00% 2017		380			423
Merck & Co., Inc. 5.00% 2019		600			625
CHS/Community Health Systems, Inc. 8.875% 2015		1,000			1,037
Mandalay Resort Group 6.375% 2011		25			23
MGM MIRAGE 6.75% 2013		25			22
MGM MIRAGE 13.00% 2013		325			375
MGM MIRAGE 5.875% 2014		750			605
Petroplus Finance Ltd. 6.75% 20145		675			638
Petroplus Finance Ltd. 7.00% 20175		300			271
Petroplus Finance Ltd. 9.375% 20195		100			100
Allison Transmission Holdings, Inc. 11.00% 20155		900			949
Allison Transmission Holdings, Inc. 11.25% 20152,5,6		53			56
CRH America, Inc. 6.00% 2016		175			183
CRH America, Inc. 8.125% 2018		700			818
AMC Entertainment Inc. 8.00% 2014		25			24
AMC Entertainment Inc., Series B, 11.00% 2016		175			184
AMC Entertainment Inc. 8.75% 2019		750			769
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014		625			652
Sally Holdings LLC and Sally Capital Inc. 10.50% 2016		300			324
TransCanada PipeLines Ltd. 7.625% 2039		250			309
TransCanada PipeLines Ltd. 6.35% 20672		700			658
Gerdau Holdings Inc. 7.00% 20205		930			960
Host Marriott, LP, Series K, 7.125% 2013		300			306
Host Marriott, LP, Series O, 6.375% 2015		300			295
Host Hotels & Resorts LP 9.00% 20175		325			353
General Motors Acceptance Corp. 6.75% 2014		1,000			951
Brazil (Federal Republic of) Global 5.625% 2041		1,000			947
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-2, 5.117% 20371		940			945
Iberdrola Finance Ireland 3.80% 20145		740			744
Scottish Power PLC 5.375% 2015		185			197
HCA Inc., Term Loan B1, 2.501% 20131,2,8		86			83
HCA Inc. 9.25% 2016		510			549
HCA Inc. 8.50% 20195		75			81
HCA Inc. 7.875% 20205		215			224
Toys “R” Us, Inc. 7.625% 2011		685			700
Toys “R” Us, Inc. 7.375% 2018		250			230
Australia and New Zealand Government Agency-Guaranteed, Australia and New Zealand Banking Group Ltd. 3.25% 20125		900			927
Teck Resources Ltd. 9.75% 2014		800			927
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20121		2			2
United Air Lines, Inc., Term Loan B, 2.313% 20141,2,8		752			596
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20241		382			329
Albertson’s, Inc. 7.25% 2013		400			407
SUPERVALU INC. 8.00% 2016		325			331
Albertson’s, Inc. 8.00% 2031		200			182
Telefónica Emisiones, SAU 4.949% 2015		860			920
Corporación Andina de Fomento 5.75% 2017		625			638
Corporación Andina de Fomento 8.125% 2019		240			278
Denmark Government Agency-Guaranteed, Danish Finance Co. 2.45% 20125		900			910
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013		885			900
Royal Caribbean Cruises Ltd. 11.875% 2015		775			900
Intelsat Jackson Holding Co., Series B, 8.875% 20155		300			312
Intelsat, Ltd. 8.875% 2015		125			130
Intelsat Jackson Holding Co. 9.50% 2016		425			457
US Investigations Services, Inc., Term Loan B, 3.253% 20151,2,8		245			220
US Investigations Services, Inc. 10.50% 20155		700			628
US Investigations Services, Inc. 11.75% 20165		45			39
SunGard Data Systems Inc. 9.125% 2013		858			884
Neiman Marcus Group, Inc. 9.00% 20152,6		889			873
CMC Energy Corp. 6.55% 2017		600			596
Consumers Energy Co., First Mortgage Bonds, 6.125% 2019		250			271
New Zealand Government Agency-Guaranteed, Westpac Securities Co. 3.45% 20145		855			853
Delhaize Group 5.875% 2014		690			742
Delhaize Group 6.50% 2017		100			109
NRG Energy, Inc. 7.25% 2014		145			147
NRG Energy, Inc. 7.375% 2016		700			703
HSBK (Europe) BV 7.25% 2017		915			842
Dollar General Corp. 10.625% 2015		104			116
Dollar General Corp. 11.875% 20172,6		618			717
Hospitality Properties Trust 6.70% 2018		905			829
Warner Music Group 7.375% 2014		325			316
Warner Music Group 9.50% 20165		475			511
Resona Bank, Ltd. 5.85% (undated)2,5		945			826
Smithfield Foods, Inc. 10.00% 20145		500			545
Smithfield Foods, Inc. 7.75% 2017		300			278
Bausch & Lomb Inc. 9.875% 2015		775			821
NXP BV and NXP Funding LLC 7.875% 2014		900			821
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 20361		194			202
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-3, 4.499% 20371		100			98
CS First Boston Mortgage Securities Corp., Series 2006-C2, Class A-3, 5.658% 20391,2		600			520
TransDigm Inc. 7.75% 2014		800			814
Brandywine Operating Partnership, LP 7.50% 2015		800			814
Coventry Health Care, Inc. 5.875% 2012		800			812
VWR Funding, Inc. 11.25% 20152,6		775			810
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014		825			801
MetroPCS Wireless, Inc. 9.25% 2014		475			483
MetroPCS Wireless, Inc. 9.25% 2014		300			305
Boyd Gaming Corp. 7.75% 2012		260			264
Boyd Gaming Corp. 6.75% 2014		525			476
Boyd Gaming Corp. 7.125% 2016		50			44
ARAMARK Corp., Term Loan B, 2.126% 20141,2,8		1			1
ARAMARK Corp., Letter of Credit, 4.721% 20141,2,8		—			—
ARAMARK Corp. 8.50% 2015		755			781
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20431,2		805			776
Duane Reade Inc. 11.75% 2015		710			774
South Korean Government 5.75% 2014		700			767
Constellation Brands, Inc. 7.25% 2017		735			749
Lazard Group LLC 7.125% 2015		500			520
Lazard Group LLC 6.85% 2017		225			227
BAE Systems Holdings Inc. 6.375% 20195		690			744
Electricité de France SA 6.95% 20395		625			742
General Maritime Corp. 12.00% 20175		700			732
Staples, Inc. 9.75% 2014		600			732
Devon Energy Corp. 6.30% 2019		650			725
MBNA Credit Card Master Note Trust, Series 2004-1, Class B, 4.45% 20161		750			718
Chevron Corp. 4.95% 2019		680			718
Hanesbrands Inc., Series B, 3.831% 20142		640			609
Hanesbrands Inc. 8.00% 2016		100			102
News America Inc. 6.90% 2019		625			705
TRW Automotive Inc. 7.00% 20145		700			689
AOL Time Warner Inc. 7.625% 2031		145			169
Time Warner Inc. 6.50% 2036		490			513
Altria Group, Inc. 9.25% 2019		550			671
ZFS Finance (USA) Trust V 6.50% 20672,5		776			671
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.50% 20141,2,8		85			81
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015		525			373
Hawker Beechcraft Acquisition Co., LLC 9.625% 20152,6		346			213
Ashtead Group PLC 8.625% 20155		400			404
Ashtead Capital, Inc. 9.00% 20165		250			252
Developers Diversified Realty Corp. 5.50% 2015		735			648
Clear Channel Worldwide, Series B, 9.25% 20175		625			647
United States Government Agency-Guaranteed (FDIC insured), Regions Bank 3.25% 2011		625			647
Biogen Idec Inc. 6.00% 2013		600			638
Liberty Mutual Group Inc. 6.50% 20355		30			24
Liberty Mutual Group Inc. 7.50% 20365		120			110
Liberty Mutual Group Inc., Series A, 7.80% 20872,5		600			501
Westpac Banking Corp. 4.875% 2019		640			633
FMG Finance Pty Ltd. 10.00% 20135		600			627
Rockwood Specialties Group, Inc. 7.50% 2014		610			619
Digicel Group Ltd. 12.00% 20145		100			113
Digicel Group Ltd. 12.00% 2014		100			113
Digicel Group Ltd. 8.875% 20155		400			390
Seneca Gaming Corp., Series B, 7.25% 2012		550			539
Seneca Gaming Corp. 7.25% 2012		75			73
Esterline Technologies Corp. 6.625% 2017		625			612
Serena Software, Inc. 10.375% 2016		625			604
Gaz Capital SA 6.51% 20225		400			368
Gaz Capital SA, Series 9, 6.51% 2022		250			230
Norwegian Cruise Lines 11.75% 20165		600			595
Forest Oil Corp. 7.25% 2019		600			595
Hospira, Inc. 6.40% 2015		310			344
Hospira, Inc. 6.05% 2017		240			252
Georgia Gulf Corp. 9.00% 20175		575			584
Elan Finance PLC and Elan Finance Corp. 4.273% 20112		70			66
Elan Finance PLC and Elan Finance Corp. 8.875% 2013		100			100
Elan Finance PLC and Elan Finance Corp. 8.75% 20165		430			413
RailAmerica, Inc. 9.25% 2017		540			577
Wind Acquisition SA 11.75% 20175		525			576
Citigroup Commercial Mortgage Trust, Series 2006-C4, Class A-3, 5.725% (undated)1,2		600			576
Valeant Pharmaceuticals 8.375% 20165		550			569
PTS Acquisition Corp. 10.25% 20152,6		625			568
Australia Government Agency-Guaranteed, National Australia Bank 3.375% 20145		560			564
Clearwire Communications LLC/Finance 12.00% 20155		550			561
Realogy Corp., Letter of Credit, 3.271% 20131,2,8		5			5
Realogy Corp., Term Loan B, 3.287% 20131,2,8		19			17
Realogy Corp., Second Lien Term Loan A, 13.50% 20171,8		500			531
Wendy’s/Arby’s Restaurants, LLC 10.00% 2016		500			547
Surgical Care Affiliates, Inc. 9.625% 20152,5,6		314			291
Surgical Care Affiliates, Inc. 10.00% 20175		275			254
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 20361		527			544
Turkey (Republic of) 6.75% 2018		500			543
AmeriCredit Automobile Receivables Trust, Series 2006-R-M, Class A-2, MBIA insured, 5.42% 20111		201			204
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-3-A, MBIA insured, 5.42% 20121		330			335
Denbury Resources Inc. 9.75% 2016		500			536
Hewlett-Packard Co. 5.50% 2018		500			533
StatoilHydro ASA 5.25% 2019		500			531
Kansas City Southern Railway Co. 13.00% 2013		450			524
Owens-Brockway Glass Container Inc. 7.375% 2016		500			519
Newpage Corp. 11.375% 20145		510			518
Cott Beverages Inc. 8.375% 20175		500			517
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012		500			513
Express Scripts Inc. 5.25% 2012		480			510
Israeli Government 5.125% 2019		500			508
Capital One Capital IV 6.745% 20372		600			504
RBS Global, Inc. and Rexnord LLC 9.50% 2014		500			504
H&E Equipment Services, Inc. 8.375% 2016		500			503
American Express Co. 8.15% 2038		400			502
Rouse Co. 5.375% 20139		500			483
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.336% 20441,2		500			478
Unum Group 7.125% 2016		460			477
Ingles Markets, Inc. 8.875% 2017		450			470
Cinemark USA, Inc. 8.625% 20195		450			470
Target Corp. 7.00% 2038		400			468
Lafarge 6.15% 2011		390			407
Lafarge 6.50% 2016		50			53
BHP Billiton Finance (USA) Ltd. 5.50% 2014		395			434
ACE INA Holdings Inc. 5.80% 2018		400			426
Concho Resources Inc. 8.625% 2017		400			422
CenterPoint Energy Transition Bond Company III, LLC, Series 2008, Class A-2, 5.234% 20231		400			420
AstraZeneca PLC 5.40% 2012		380			415
Atlas Copco AB 5.60% 20175		400			404
Northwest Airlines, Inc., Term Loan B, 3.76% 20131,2,8		6			5
Delta Air Lines, Inc. 9.50% 20145		375			391
Northwest Airlines, Inc., Term Loan A, 2.01% 20181,2,8		9			7
Dow Chemical Co. 8.55% 2019		330			394
Lehman Brothers Holdings Inc., Series I, 6.875% 20189		1,830			389
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.581% 20371,2		791			357
Sunoco, Inc. 5.75% 2017		350			354
Quintiles Transnational 9.50% 20142,5,6		350			353
CSC Holdings, Inc. 8.625% 20195		325			351
State of California Various Purpose General Obligation Bonds, 7.50% 2034		350			343
Tops Markets 10.125% 20155		325			336
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-3B, 5.316% 20371,2		200			201
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 20421		130			131
Burlington Coat Factory Warehouse Corp. 11.125% 2014		320			332
Drivetime Auto Owner Trust, Series 2006-B, Class A-3, MBIA insured, 5.227% 20121,2,5		323			330
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20201		45			44
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20211		58			55
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20221		67			66
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20221		162			161
CEMEX Finance LLC 9.50% 20165		300			316
Structured Products Asset Return Certificates Trust, Series 2001-CF1, Class A, 6.36% 20331,4		307			309
Reynolds Group 7.75% 20165		300			308
Fox Acquisition LLC, Term Loan B, 7.50% 20151,2,8		139			130
Fox Acquisition LLC 13.375% 20165		215			168
Rio Tinto Finance (USA) Ltd. 8.95% 2014		230			276
Thomson Reuters Corp. 5.95% 2013		250			274
National Grid PLC 6.30% 2016		250			272
Holcim Ltd. 6.875% 20395		250			263
AXA SA 8.60% 2030		220			256
Washington Mutual Master Note Trust, Series 2007-A4A, Class A-4, 5.20% 20141,5		250			255
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20371,5		250			253
Associated Materials Inc. 9.875% 20165		225			238
Nalco Co. 8.875% 2013		25			26
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 9.00% 2014		25			26
Nalco Co. 8.25% 20175		175			187
Continental Resources 8.25% 20195		225			237
Commercial Mortgage Trust, Series 2000-C1, Class A-2, 7.416% 20331		88			88
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 20381		150			147
CEVA Group PLC 11.625% 20165		225			232
CNA Financial Corp. 7.35% 2019		230			231
Chubb Corp. 6.375% 20672		245			230
SLM Corp., Series A, 0.512% 20112		240			225
Triad Automobile Receivables Trust, Series 2007-A, Class A-3, FSA insured, 5.28% 20121		215			216
Capital One Auto Finance Trust, Series 2007-B, Class A3A, MBIA insured, 5.03% 20121		213			215
Smurfit Capital Funding PLC 7.50% 2025		225			193
Advanced Micro Devices, Inc. 8.125% 20175		175			175
General Electric Co. 5.00% 2013		150			159
Alabama Power Co., Series 2008-B, 5.80% 2013		125			137
Charles Schwab Corp., Series A, 6.375% 2017		125			136
Allstate Corp., Series B, 6.125% 20672		150			131
Credit-Based Asset Servicing and Securitization LLC, Series 2007-CB4, Class A-2B, 5.723% 20371,2		250			130
J.P. Morgan Mortgage Trust, Series 2006-A7, Class 2-A-4, 5.762% 20371,2		195			128
United States Government Agency-Guaranteed (FDIC insured), PNC Funding Corp. 2.30% 2012		125			127
Fifth Third Bancorp 8.25% 2038		130			124
Canadian Natural Resources Ltd. 5.70% 2017		100			107
Development Bank of Singapore Ltd. 7.125% 20115		100			106
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-2, 4.98% 20151		100			106
Cox Communications, Inc. 4.625% 2010		100			100
HealthSouth Corp. 10.75% 2016		75			82
Home Equity Mortgage Trust, Series 2006-2, Class 1A-1, 5.367% 20361,2		253			47
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20371,2		334			33
DAE Aviation Holdings, Inc. 11.25% 20155		90			76
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20131		75			75
Cooper-Standard Automotive Inc. 7.00% 20129		25			24
Cooper-Standard Automotive Inc. 8.375% 20149		125			32
Tyson Foods, Inc. 7.85% 20162		40			41
Argentina (Republic of) GDP-Linked 2035		435			28
Team Finance LLC and Health Finance Corp. 11.25% 2013		25			26
Goodyear Tire & Rubber Co. 8.625% 2011		23			24
Federated Department Stores, Inc. 6.90% 2029		20			18
Northern Rock PLC 6.594% (undated)2,5		100			13
Hawaiian Telcom Communications, Inc. 9.75% 20139		25			1
Hawaiian Telcom Communications, Inc., Term Loan C, 4.75% 20141,2,6,8		14			11
Young Broadcasting Inc. 10.00% 20119		150			1
Atrium Companies, Inc. 15.00% 20125,6		13			—
					560,385
Total bonds, notes & other debt instruments (cost: $1,227,344,000)					1,274,880
Preferred stocks — 0.62%	Shares
U.S. DOLLARS — 0.35%
SMFG Preferred Capital USD 3 Ltd. 9.50%2,5		1,405,000			1,482
Barclays Bank PLC 6.86%2,5		150,000			124
Barclays Bank PLC 7.434%2,5		800,000			740
Wells Fargo & Co. 7.98%2		750,000			756
JPMorgan Chase & Co., Series I, 7.90%2		450,000			466
Bank of America Corp., Series M, 8.125% noncumulative2		450,000			434
Resona Preferred Global Securities (Cayman) Ltd. 7.191%2,5		303,000			248
Lloyds Banking Group PLC 6.657% preference shares2,5		400,000			241
AXA SA, Series B, 6.379%2,5		230,000			186
Citigroup Inc. 6.00%		5,600			102
Citigroup Inc. 6.10%		3,600			66
					4,845
EUROS — 0.22%
Commerzbank Capital Funding Trust I, Class B, 5.012% noncumulative2		3,000,000			2,063
HVB Funding Trust VIII 7.055%2		750,000			878
					2,941
BRITISH POUNDS — 0.05%
Barclays Bank PLC 14.00%2		250,000			520
SMFG Preferred Capital GBP 1 Ltd. 6.164%2		100,000			125
					645
Total preferred stocks (cost: $8,837,000)					8,431
Common stocks — 0.00%
U.S. DOLLARS — 0.00%
American Media Operations, Inc.4,5,10		9,043			—
Total common stocks (cost: $0)					—
Rights & warrants — 0.00%
U.S. DOLLARS — 0.00%
Atrium Corp., warrants, expire 20184,5,10		5			—
Total rights & warrants (cost: $0)					—
	Principal amount
Short-term securities — 5.94%		(000	)
Fannie Mae 0.09%–0.43% due 3/10–12/3/2010	US$30,400				30,358
Freddie Mac 0.17% due 5/4/2010		17,300			17,292
ING (U.S.) Funding LLC 0.17% due 1/4/2010		10,300			10,300
KfW 0.16% due 1/25/20105		8,500			8,499
Caisse d’Amortissement de la Dette Sociale 0.21% due 2/1/2010		6,400			6,399
Eni Finance USA Inc. 0.15% due 1/28/20105		5,800			5,799
GDF SUEZ 0.20% due 1/19/20105		2,400			2,400
Total short-term securities (cost: $81,044,000)					81,047
Total investment securities (cost: $1,317,225,000)					1,364,358
Other assets less liabilities					458
Net assets				US$1,364,816

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

2Coupon rate may change periodically.

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

4Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $21,717,000, which represented 1.59% of the net assets of the fund.

5Purchased 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 $99,717,000, which represented 7.31% of the net assets of the fund.

6Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

7Step bond; coupon rate will increase at a later date.

8Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $6,262,000, which represented .46% of the net assets of the fund.

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

10Security did not produce income during the last 12 months.

Global Bond Fund

Summary investment portfolio, December 31, 2009

	Principal						Percent
	amount			Value			of net
Bonds, notes & other debt instruments - 93.41%		(000	)		(000	)	assets
Euros - 26.64%
German Government:
3.75% 2013	€	12,134		US$18,408
Series 6, 4.00% 2016		14,160			21,587
3.75% 2017		9,905			14,858
4.25% 2017		10,400			16,043
Series 7, 4.00% 2018		8,285			12,572
6.25% 2030		5,700			10,428
3.75%-5.00% 2012-2034		11,340			17,440			8.16	%
Irish Government:
5.00% 2013		6,000			9,128
4.00% 2014		9,035			13,282
5.90% 2019		12,690			19,654
4.40%-4.50% 2018-2019		2,940			4,130			3.38
Netherlands Government Eurobond:
4.25% 2013		12,610			19,400
4.50% 2017		7,815			12,125
4.00% 2018		7,225			10,787
4.00% 2011		2,450			3,621			3.37
Greek Government:
5.50% 2014		5,815			8,444
6.00% 2019		9,610			13,914			1.64
Italian Government:
3.75% 2013		4,750			7,074
4.50% 2019		6,050			9,102
3.75% 2011		1,220			1,796			1.32
French Government:
B.T.A.N. Eurobond 4.50% 2013		5,250			8,115
O.A.T. Eurobond 4.00% 2014		1,960			2,984			.81
KfW 4.375% 2013		7,125			10,922			.80
Polish Government 5.875% 2014		1,250			1,947			.14
Other securities					95,828			7.02
					363,589			26.64
Japanese yen - 5.84%
Japanese Government:
1.30% 2011	¥	1,163,950			12,716
1.30% 2015		1,895,000			21,163
1.70% 2016		2,312,650			26,397
0.50%-2.40% 2012-2038 (1)  (2)		1,766,600			19,401			5.84
					79,677			5.84
Polish zloty - 3.10%
Polish Government:
5.25% 2013	PLN 43,250				15,110
5.75% 2014		37,500			13,155
5.25% 2017		42,555			14,088			3.10
					42,353			3.10
South Korean won - 2.86%
South Korean Government:
4.75% 2014	KRW 7,680,000				6,609
5.75% 2018		13,100,000			11,631
4.25%-5.75% 2010-2017		23,938,060			20,766			2.86
					39,006			2.86
Australian dollars - 2.40%
Queensland Treasury Corp., Series 15, 6.00% 2015	$	A 10,075			9,111			.67
KfW 6.25% 2012		1,600			1,465			.11
Other securities					22,158			1.62
					32,734			2.40
Mexican pesos - 2.05%
United Mexican States Government:
Series MI10, 9.50% 2014	MXN 80,100				6,651
Series M10, 8.00% 2015		88,300			6,874
7.25%-10.00% 2012-2036		186,200			14,461			2.05
					27,986			2.05
Danish kroner - 2.03%
Nykredit:
5.00% 2038 (3)	DKr 45,501				8,809
6.00% 2038-2041 (3)		25,026			4,997			1.01
Kingdom of Denmark 4.00% 2012		41,000			8,299			.61
Other securities					5,649			.41
					27,754			2.03
British pounds - 1.80%
United Kingdom:
4.00% 2016	£	4,945			8,264
2.75%-6.00% 2011-2028		8,340			14,266			1.65
Other securities					2,077			.15
					24,607			1.80
Swedish kronor - 1.19%
Swedish Government:
6.75% 2014	SKr 41,010				6,751
4.00%-5.50% 2012-2015 (3)		63,000			9,492			1.19
					16,243			1.19
Malaysian ringgits - 1.17%
Malaysian Government:
5.094% 2014	MYR 28,120				8,697
3.718%-4.24% 2012-2018		24,970			7,350			1.17
					16,047			1.17
U.S. dollars - 41.06%
U.S. Treasury:
4.625% 2011	US$ 11,900				12,716
2.75% 2013		12,500			12,804
3.875% 2013		8,775			9,348
4.00% 2015		10,630			11,301
5.125% 2016		22,750			25,377
7.50% 2016		14,900			18,787
4.75% 2017		6,375			6,919
8.875% 2017		8,000			10,910
1.625%-8.125% 2010-2039 (1)  (2)		54,001			55,471			11.99
Fannie Mae:
4.00% 2024 (3)		7,700			7,760
5.50% 2038 (3)		9,793			10,264
0%-6.50% 2024-2040  (3)  (4)		45,606			47,108			4.77
Freddie Mac:
6.50% 2039 (3)		5,997			6,426
0%-6.50% 2010-2040  (3)  (4)		26,134			27,386			2.48
Polish Government 6.375% 2019		4,415			4,824			.35
United Mexican States Government Global 5.875%-5.95% 2014-2019		2,410			2,581			.19
South Korean Government 5.75% 2014		700			767			.06
Other securities					289,636			21.22
					560,385			41.06
Other currencies - 3.27%
KfW 5.00% 2015	NKr 5,500				988			.07
Other securities					43,511			3.20
					44,499			3.27
Total bonds, notes & other debt instruments (cost: $1,227,344,000)					1,274,880			93.41
							Percent
				Value			of net
Preferred stocks - 0.62%					(000	)	assets
U.S. dollars - 0.35%
Other securities					4,845			.35
Other currencies - 0.27%
Other securities					3,586			.27
Total preferred stocks (cost: $8,837,000)					8,431			.62
							Percent
				Value			of net
Common stocks - 0.00%					(000	)	assets
U.S. dollars - 0.00%
Other securities					-			.00
Total common stocks (cost: $0)					-			.00
							Percent
				Value			of net
Rights & warrants - 0.00%					(000	)	assets
U.S. dollars - 0.00%
Other securities					-			.00
Total rights & warrants (cost: $0)					-			.00
	Principal						Percent
	amount			Value			of net
Short-term securities - 5.94%		(000	)		(000	)	assets
Fannie Mae 0.09%-0.43% due 3/10-12/3/2010	US$ 30,400				30,358			2.22
Freddie Mac 0.17% due 5/4/2010		17,300			17,292			1.27
ING (U.S.) Funding LLC 0.17% due 1/4/2010		10,300			10,300			.75
KfW 0.16% due 1/25/2010 (5)		8,500			8,499			.62
Caisse d'Amortissement de la Dette Sociale 0.21% due 2/1/2010		6,400			6,399			.47
Other securities					8,199			.61
Total short-term securities (cost: $81,044,000)					81,047			5.94
Total investment securities (cost: $1,317,225,000)					1,364,358			99.97
Other assets less liabilities					458			.03
Net assets				US$1,364,816				100.00	%

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

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

(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 $21,717,000, which represented 1.59% of the net assets of the fund.

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

(4) Coupon rate may change periodically.

(5) 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 $99,717,000, which represented 7.31% of the net assets of the fund.

See Notes to Financial Statements

High-Income Bond Fund

Investment portfolio

December 31, 2009

Bonds, notes & other debt instruments — 86.51%	Principal amount (000)			Value (000)
CONSUMER DISCRETIONARY — 20.42%
Univision Communications, Inc., First Lien Term Loan B, 2.501% 20141,2,3	$	19,345		$	16,854
Univision Communications Inc. 12.00% 20144		1,300			1,438
Univision Communications Inc. 10.50% 20151,4,5		17,854			15,734
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20124		2,875			2,968
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 20136		8,858			9,135
Charter Communications Operating, LLC, Term Loan B, 4.24% 20141,2,3		4,165			3,912
Charter Communications Operating, LLC, Term Loan B, 7.25% 20141,2,3		2,702			2,763
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 20144		4,800			4,956
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20144		3,050			3,431
Charter Communications, Inc. 13.50% 20164		856			1,003
NTL Cable PLC 8.75% 2014		1,401			1,454
NTL Cable PLC 8.75% 20142	€	105			157
NTL Cable PLC 9.75% 20142	£	63			107
NTL Cable PLC 9.125% 2016	$	9,175			9,714
NTL Cable PLC 9.50% 2016		10,100			10,895
Virgin Media Finance 8.375% 20194		2,375			2,455
Allison Transmission Holdings, Inc., Term Loan B, 3.00% 20141,2,3		6,137			5,665
Allison Transmission Holdings, Inc. 11.00% 20154		1,585			1,672
Allison Transmission Holdings, Inc. 11.25% 20151,4,5		8,941			9,388
Michaels Stores, Inc., Term Loan B1, 2.563% 20131,2,3		1,266			1,153
Michaels Stores, Inc. 10.00% 2014		9,400			9,776
Michaels Stores, Inc., Term Loan B2, 4.813% 20161,2,3		429			406
Michaels Stores, Inc. 11.375% 2016		4,500			4,759
MGM MIRAGE 6.75% 2012		1,050			942
MGM MIRAGE 6.75% 2013		3,130			2,715
MGM MIRAGE 13.00% 2013		3,075			3,544
MGM MIRAGE 5.875% 2014		2,250			1,814
MGM MIRAGE 10.375% 20144		1,550			1,689
MGM MIRAGE 6.625% 2015		1,550			1,213
MGM MIRAGE 11.125% 20174		2,400			2,670
Royal Caribbean Cruises Ltd. 8.00% 2010		875			895
Royal Caribbean Cruises Ltd. 8.75% 2011		275			289
Royal Caribbean Cruises Ltd. 6.875% 2013		2,000			1,975
Royal Caribbean Cruises Ltd. 11.875% 2015		6,550			7,606
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015		6,425			6,521
Mediacom LLC and Mediacom Capital Corp. 9.125% 20194		4,000			4,100
AMC Entertainment Inc. 8.00% 2014		500			480
AMC Entertainment Inc., Series B, 11.00% 2016		1,750			1,837
AMC Entertainment Inc. 8.75% 2019		7,900			8,098
Cinemark USA, Inc., Term Loan B, 2.04% 20131,2,3		411			393
Cinemark USA, Inc. 8.625% 20194		9,100			9,510
Toys “R” Us, Inc. 7.625% 2011		6,240			6,373
Toys “R” Us-Delaware, Inc., Term Loan B, 4.481% 20121,2,3		1,244			1,219
Toys “R” Us, Inc. 8.50% 20174		2,250			2,301
Macy’s Retail Holdings, Inc. 8.875% 20151		550			609
Federated Retail Holdings, Inc. 5.90% 2016		6,000			5,880
Federated Retail Holdings, Inc. 6.375% 2037		4,000			3,400
CSC Holdings, Inc., Series B, 6.75% 2012		500			519
Cablevision Systems Corp., Series B, 8.00% 2012		500			531
CSC Holdings, Inc. 8.50% 20144		2,850			3,049
CSC Holdings, Inc. 8.50% 20154		3,000			3,210
CSC Holdings, Inc. 8.625% 20194		2,175			2,352
TL Acquisitions, Inc., Term Loan B, 2.75% 20141,2,3		2,466			2,249
Thomson Learning 10.50% 20154		6,925			6,657
Quebecor Media Inc. 7.75% 2016		6,740			6,757
Quebecor Media Inc. 7.75% 2016		1,500			1,504
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014		8,225			7,989
Mohegan Tribal Gaming Authority 8.00% 2012		3,475			2,975
Mohegan Tribal Gaming Authority 6.125% 2013		250			202
Mohegan Tribal Gaming Authority 7.125% 2014		5,125			3,517
Mohegan Tribal Gaming Authority 6.875% 2015		1,200			786
Clear Channel Worldwide, Series B, 9.25% 20174		7,225			7,478
Boyd Gaming Corp. 7.75% 2012		1,300			1,321
Boyd Gaming Corp. 6.75% 2014		2,050			1,858
Boyd Gaming Corp. 7.125% 2016		4,225			3,697
Neiman Marcus Group, Inc. 9.00% 20151,5		5,052			4,963
Neiman Marcus Group, Inc. 10.375% 2015		1,275			1,256
J.C. Penney Co., Inc. 8.00% 2010		750			759
J.C. Penney Co., Inc. 9.00% 2012		495			561
J.C. Penney Co., Inc. 6.875% 2015		1,464			1,552
J.C. Penney Corp., Inc. 5.75% 2018		1,000			991
J.C. Penney Co., Inc. 7.125% 2023		2,300			2,291
Regal Cinemas Corp., Series B, 9.375% 2012		1,000			1,006
Regal Cinemas Corp. 8.625% 2019		4,625			4,833
Norwegian Cruise Lines 11.75% 20164		5,450			5,409
Local T.V. Finance LLC, Term Loan B, 2.26% 20131,2,3		2,524			2,129
Local T.V. Finance LLC 10.00% 20151,4,5		4,945			2,151
Warner Music Group 7.375% 2014		1,875			1,821
Warner Music Group 9.50% 20164		1,850			1,991
Hanesbrands Inc., Series B, 3.831% 20141		2,870			2,730
Hanesbrands Inc. 8.00% 2016		1,025			1,049
Kabel Deutschland GmbH 10.625% 2014		3,350			3,518
LBI Media, Inc. 8.50% 20174		4,210			3,515
Bon-Ton Department Stores, Inc. 10.25% 2014		3,750			3,478
Beazer Homes USA, Inc. 6.50% 2013		1,000			795
Beazer Homes USA, Inc. 8.125% 2016		3,385			2,573
Dollar General Corp. 10.625% 2015		1,375			1,530
Dollar General Corp. 11.875% 20171,5		1,563			1,813
Meritage Corp. 7.00% 2014		1,400			1,344
Meritage Homes Corp. 6.25% 2015		550			509
Meritage Corp. 7.731% 20174		1,500			1,252
Edcon (Proprietary) Ltd. 3.964% 20141	€	2,500			2,321
Edcon (Proprietary) Ltd. 3.964% 20141		835			775
Atlantic Broadband Finance, LLC and Atlantic Broadband Finance, Inc. 9.375% 2014	$	2,675			2,682
UPC Germany GmbH 8.125% 20174		500			508
UPC Germany GmbH 9.625% 2019	€	800			1,162
Liberty Media Corp. 8.25% 2030	$	1,050			967
Burlington Coat Factory Warehouse Corp. 11.125% 2014		2,485			2,578
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012		2,750			2,447
Education Management LLC and Education Management Finance Corp. 8.75% 2014		2,345			2,433
American Media Operation 9.00% 20134,5		257			166
American Media Operation 14.00% 20131,4,5		3,328			2,147
UPC Holding BV 9.875% 20184		2,000			2,120
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014		1,300			1,355
Sally Holdings LLC and Sally Capital Inc. 10.50% 2016		600			648
Vitamin Shoppe Industries Inc. 7.773% 20121		1,941			1,956
Tenneco Automotive Inc. 8.625% 2014		850			862
Tenneco Inc. 8.125% 2015		845			859
KB Home 6.25% 2015		1,810			1,697
Fox Acquisition LLC, Term Loan B, 7.50% 20151,2,3		459			428
Fox Acquisition LLC 13.375% 20164		1,610			1,256
DISH DBS Corp 7.875% 2019		1,500			1,581
American Axle & Manufacturing Holdings, Inc. 9.25% 20174		1,500			1,530
Vidéotron Ltée 6.875% 2014		1,120			1,131
Vidéotron Ltée 6.375% 2015		380			373
TRW Automotive Inc. 7.00% 20144		1,000			985
TRW Automotive Inc. 7.25% 20174		500			487
FCE Bank PLC 7.125% 2013	€	1,000			1,397
Wendy’s/Arby’s Restaurants, LLC 10.00% 2016	$	1,200			1,314
Seneca Gaming Corp., Series B, 7.25% 2012		1,250			1,225
Standard Pacific Corp. 7.00% 2015		1,215			1,063
Gaylord Entertainment Co. 6.75% 2014		900			842
Cooper-Standard Automotive Inc. 7.00% 20126		250			238
Cooper-Standard Automotive Inc. 8.375% 20146		1,275			332
Jarden Corp. 8.00% 2016		450			467
Radio One, Inc. 6.375% 2013		575			425
Visteon Corp. 12.25% 20164,6		973			414
Young Broadcasting Inc. 10.00% 20116		7,467			26
KAC Acquisition Corp. 8.00% 20264,5,7		98			—
					351,535
FINANCIALS — 12.50%
CIT Group Inc., Term Loan 2A, 9.50% 20121,2,3		8,500			8,734
CIT Group Inc., Term Loan, 13.00% 20121,2,3		12,000			12,447
CIT Group Inc., Series A, 7.00% 2013		2,296			2,158
CIT Group Inc., Series A, 7.00% 2014		4,994			4,650
CIT Group Inc., Series A, 7.00% 2015		7,609			6,848
CIT Group Inc., Series A, 7.00% 2016		3,940			3,486
CIT Group Inc., Series A, 7.00% 2017		1,560			1,361
Ford Motor Credit Co. 8.625% 2010		215			221
Ford Motor Credit Co. 9.75% 20101		750			774
Ford Motor Credit Co. 7.375% 2011		975			995
Ford Motor Credit Co. 9.875% 2011		4,575			4,792
Ford Motor Credit Co. 3.034% 20121		7,170			6,677
Ford Motor Credit Co. 7.50% 2012		2,000			2,018
Ford Motor Credit Co. 7.80% 2012		1,000			1,011
Ford Motor Credit Co. 8.70% 2014		250			262
Ford Motor Credit Co. 8.00% 2016		1,800			1,805
Liberty Mutual Group Inc. 6.50% 20354		2,289			1,843
Liberty Mutual Group Inc. 7.50% 20364		2,650			2,433
Liberty Mutual Group Inc., Series A, 7.80% 20871,4		4,245			3,545
Liberty Mutual Group Inc., Series C, 10.75% 20881,4		6,625			7,089
Realogy Corp., Letter of Credit, 3.271% 20131,2,3		1,749			1,560
Realogy Corp., Term Loan B, 3.287% 20131,2,3		6,491			5,789
Realogy Corp., Term Loan DD, 3.287% 20131,2,3		1,992			1,777
Realogy Corp., Second Lien Term Loan A, 13.50% 20172,3		5,050			5,366
Residential Capital Corp. 8.375% 2010		7,400			6,327
General Motors Acceptance Corp. 7.25% 20114		1,549			1,549
General Motors Acceptance Corp. 6.625% 20124		316			313
General Motors Acceptance Corp. 6.875% 20124		189			187
General Motors Acceptance Corp. 7.00% 20124		2,038			2,028
General Motors Acceptance Corp. 7.50% 20134		477			465
General Motors Acceptance Corp. 2.456% 20141,4		1,013			817
General Motors Acceptance Corp. 6.75% 2014		2,000			1,902
General Motors Acceptance Corp. 6.75% 20144		153			147
General Motors Acceptance Corp. 8.00% 20184		469			417
Developers Diversified Realty Corp. 5.375% 2012		1,750			1,646
Developers Diversified Realty Corp. 5.50% 2015		1,390			1,226
Developers Diversified Realty Corp. 9.625% 2016		8,325			8,701
National City Preferred Capital Trust I 12.00% (undated)1		7,762			8,926
Host Marriott, LP, Series M, 7.00% 2012		1,025			1,047
Host Marriott, LP, Series K, 7.125% 2013		300			306
Host Marriott, LP, Series O, 6.375% 2015		900			887
Host Hotels & Resorts, LP, Series Q, 6.75% 2016		2,200			2,200
Host Hotels & Resorts LP 9.00% 20174		4,050			4,399
Hospitality Properties Trust 7.875% 2014		3,900			4,030
Hospitality Properties Trust 5.125% 2015		155			140
Hospitality Properties Trust 6.30% 2016		295			273
Hospitality Properties Trust 5.625% 2017		2,570			2,228
Hospitality Properties Trust 6.70% 2018		1,650			1,512
Capital One Capital III 7.686% 20361		4,210			3,852
Capital One Capital IV 6.745% 20371		1,400			1,176
Capital One Capital V 10.25% 2039		1,400			1,632
SLM Corp., Series A, 0.582% 20141		1,200			927
SLM Corp., Series A, 8.45% 2018		5,500			5,435
UnumProvident Finance Co. PLC 6.85% 20154		800			815
Unum Group 7.125% 2016		4,225			4,383
Rouse Co. 7.20% 20126		1,495			1,545
Rouse Co. 5.375% 20136		1,250			1,208
Rouse Co. 6.75% 20134,6		1,575			1,577
Rouse Co. 3.625% 20096		615			602
Countrywide Financial Corp., Series A, 4.50% 2010		255			259
Countrywide Financial Corp., Series B, 5.80% 2012		245			260
Bank of America Corp., Series L, 7.375% 2014		1,500			1,704
Bank of America Corp. 5.75% 2017		2,250			2,308
BankAmerica Capital II, Series 2, 8.00% 2026		265			262
MetLife Capital Trust IV 7.875% 20671,4		175			176
MetLife Capital Trust X 9.25% 20681,4		3,000			3,420
MetLife Inc. 10.75% 20691		500			617
Zions Bancorporation 5.65% 2014		370			276
Zions Bancorporation 7.75% 2014		875			773
Zions Bancorporation 6.00% 2015		3,910			2,769
International Lease Finance Corp., Series Q, 5.75% 2011		500			460
International Lease Finance Corp. 4.75% 2012		1,500			1,267
International Lease Finance Corp., Series R, 5.30% 2012		950			807
International Lease Finance Corp., Series R, 5.65% 2014		1,300			983
ProLogis 5.625% 2016		930			858
ProLogis 6.625% 2018		1,570			1,491
ProLogis 7.375% 2019		1,000			988
Royal Bank of Scotland Group PLC 5.00% 2014		1,220			1,079
Royal Bank of Scotland Group PLC 5.05% 2015		540			469
Royal Bank of Scotland Group PLC 4.70% 2018		1,555			1,212
Royal Bank of Scotland Group PLC 6.99% (undated)1,4		750			439
HBOS PLC 6.75% 20184		3,440			3,197
Nationwide Mutual Insurance Co. 9.375% 20394		3,000			3,175
Citigroup Inc. 6.125% 2017		800			808
Citigroup Inc. 6.125% 2018		875			881
Citigroup Capital XXI 8.30% 20771		1,000			968
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20144		245			253
Westfield Group 5.70% 20164		30			31
Westfield Group 7.125% 20184		1,700			1,862
Boston Properties, Inc. 5.875% 2019		2,000			2,010
Regions Financial Corp. 7.75% 2014		2,000			1,974
Simon Property Group, LP 10.35% 2019		1,500			1,887
Catlin Insurance Ltd. 7.249% (undated)1,4		2,500			1,850
Korea Development Bank 8.00% 2014		1,500			1,711
Lazard Group LLC 7.125% 2015		565			587
Lazard Group LLC 6.85% 2017		750			756
Brandywine Operating Partnership, LP 7.50% 2015		1,200			1,221
SunTrust Banks, Inc. 5.25% 2012		1,050			1,090
HVB Funding Trust I 8.741% 20314		1,200			1,056
CNA Financial Corp. 7.35% 2019		1,000			1,003
AXA SA 6.667% (undated)1	£	700			952
ZFS Finance (USA) Trust V 6.50% 20671,4	$	1,000			865
Schwab Capital Trust I 7.50% 20371		755			734
Northern Rock PLC 5.60% (undated)1,4		1,105			145
Northern Rock PLC 6.594% (undated)1,4		3,835			503
HSBK (Europe) BV 7.75% 20134		270			267
					215,129
INDUSTRIALS — 10.46%
Nielsen Finance LLC, Term Loan A, 2.235% 20131,2,3		2,599			2,447
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014		11,025			11,549
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014		4,225			4,769
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20168		17,690			16,231
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016		6,155			6,909
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20122		2,500			2,533
Northwest Airlines, Inc., Term Loan B, 3.76% 20131,2,3		1,669			1,356
Delta Air Lines, Inc., Series 2001-1, Class A-2, 7.111% 20132		1,000			1,012
Delta Air Lines, Inc., Second Lien Term Loan B, 3.534% 20141,2,3		2,925			2,457
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20142		2,110			2,020
Northwest Airlines, Inc., Term Loan A, 2.01% 20181,2,3		3,197			2,525
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20242		987			879
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.231% 20141,2,3		6,190			4,679
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.231% 20141,2,3		365			276
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.50% 20141,2,3		668			639
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015		2,225			1,580
Hawker Beechcraft Acquisition Co., LLC 9.625% 20151,5		8,282			5,094
TransDigm Inc. 7.75% 2014		5,685			5,784
TransDigm Inc. 7.75% 20144		5,150			5,240
Continental Airlines, Inc. 8.75% 2011		1,250			1,216
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20182		317			290
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20192		632			625
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20192		1,296			1,186
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20202		568			562
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20202		2,417			2,084
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20222		2,356			2,208
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20222		894			871
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20222		808			747
ARAMARK Corp., Term Loan B, 2.126% 20141,2,3		622			590
ARAMARK Corp., Letter of Credit, 4.721% 20141,2,3		41			39
ARAMARK Corp. 3.781% 20151		600			552
ARAMARK Corp. 8.50% 2015		8,000			8,280
Ashtead Group PLC 8.625% 20154		3,550			3,586
Ashtead Capital, Inc. 9.00% 20164		4,400			4,428
RailAmerica, Inc. 9.25% 2017		7,267			7,767
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013		7,491			7,622
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B2, 4.03% 20141,2,3		842			773
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B1, 4.04% 20141,2,3		863			792
DAE Aviation Holdings, Inc. 11.25% 20154		6,845			5,818
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20122		2,000			1,930
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20132		1,440			1,446
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20192		2,912			2,286
AMR Corp. 10.00% 2021		1,000			620
US Investigations Services, Inc., Term Loan B, 3.253% 20151,2,3		1,467			1,319
US Investigations Services, Inc. 10.50% 20154		2,925			2,625
US Investigations Services, Inc. 11.75% 20164		2,570			2,226
Allied Waste North America, Inc., Series B, 6.125% 2014		1,250			1,273
Allied Waste North America, Inc. 7.25% 2015		100			105
Allied Waste North America, Inc. 6.875% 2017		3,700			3,932
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20122		119			119
United Air Lines, Inc., Term Loan B, 2.313% 20141,2,3		4,626			3,664
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20212,4		437			309
Nortek, Inc. 11.00% 2013		3,867			4,060
RBS Global, Inc. and Rexnord LLC 9.50% 2014		3,575			3,602
RBS Global, Inc. and Rexnord LLC 8.875% 2016		500			438
Kansas City Southern Railway Co. 13.00% 2013		2,450			2,854
Kansas City Southern Railway Co. 8.00% 2015		1,075			1,119
B/E Aerospace 8.50% 2018		3,330			3,538
Navistar International Corp. 8.25% 2021		2,825			2,910
CEVA Group PLC 10.00% 20144		500			478
CEVA Group PLC, Bridge Loan, 7.984% 20151,2,3,7		2,355			1,507
CEVA Group PLC 11.625% 20164		375			387
Alion Science and Technology Corp. 10.25% 2015		2,500			1,925
Navios Maritime Holdings Inc. 8.875% 20174		1,690			1,764
United Rentals (North America), Inc., Series B, 6.50% 2012		1,750			1,754
Iron Mountain Inc. 7.75% 2015		1,325			1,338
H&E Equipment Services, Inc. 8.375% 2016		1,000			1,006
Atrium Companies, Inc., Term Loan B, 11.75% 20121,2,3,5		1,378			795
Atrium Companies, Inc. 15.00% 20124,5		1,593			32
RSC Holdings III, LLC, Second Lien Term Loan B, 3.79% 20131,2,3		455			426
FTI Consulting, Inc. 7.625% 2013		225			229
					180,031
TELECOMMUNICATION SERVICES — 9.71%
Sprint Capital Corp. 8.375% 2012		2,600			2,704
Nextel Communications, Inc., Series E, 6.875% 2013		2,205			2,150
Nextel Communications, Inc., Series F, 5.95% 2014		12,095			11,354
Nextel Communications, Inc., Series D, 7.375% 2015		11,205			10,953
Qwest Capital Funding, Inc. 7.90% 2010		700			717
Qwest Capital Funding, Inc. 7.25% 2011		13,100			13,362
Qwest Communications International Inc. 7.25% 2011		600			606
Qwest Corp. 7.875% 2011		1,475			1,552
Qwest Communications International Inc., Series B, 7.50% 2014		2,500			2,522
Qwest Communications International Inc. 8.00% 20154		2,250			2,323
U S WEST Capital Funding, Inc. 6.875% 2028		1,200			978
Cricket Communications, Inc. 9.375% 2014		9,255			9,348
Cricket Communications, Inc. 7.75% 2016		12,600			12,632
MetroPCS Wireless, Inc. 9.25% 2014		11,050			11,243
MetroPCS Wireless, Inc. 9.25% 2014		4,425			4,502
Clearwire Communications LLC/Finance 12.00% 20154		10,450			10,659
Clearwire Communications LLC/Finance 12.00% 20154		1,450			1,479
Crown Castle International Corp. 9.00% 2015		6,025			6,432
Crown Castle International Corp. 7.75% 20174		4,175			4,467
Windstream Corp. 8.125% 2013		2,000			2,085
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015		1,775			1,830
Windstream Corp. 8.625% 2016		4,375			4,473
Windstream Corp. 7.00% 2019		2,650			2,491
Digicel Group Ltd. 12.00% 20144		4,650			5,237
Digicel Group Ltd. 8.875% 20154		5,150			5,021
Wind Acquisition SA 11.75% 20174		9,100			9,987
Intelsat, Ltd. 0%/9.50% 20158		1,000			1,032
Intelsat Jackson Holding Co., Series B, 8.875% 20154		1,875			1,950
Intelsat, Ltd. 8.875% 2015		325			338
Intelsat, Ltd. 9.25% 2016		2,000			2,075
Intelsat Jackson Holding Co. 9.50% 2016		2,000			2,150
Intelsat Jackson Holding Co. 8.50% 20194		1,500			1,552
Centennial Communications Corp. 6.04% 20131		1,450			1,450
AT&T Inc. 6.70% 2013		1,500			1,694
Centennial Communications Corp. 10.00% 2013		3,750			3,938
American Tower Corp. 7.00% 2017		1,500			1,669
American Tower Corp. 7.25% 20194		1,825			2,044
Hawaiian Telcom Communications, Inc. 8.765% 20131,6		1,725			39
Hawaiian Telcom Communications, Inc. 9.75% 20136		3,135			71
Hawaiian Telcom Communications, Inc., Term Loan C, 4.75% 20141,2,3,5		2,285			1,674
Hawaiian Telcom Communications, Inc., Series B, 12.50% 20156		425			—
SBA Telecommunications, Inc. 8.00% 20164		1,650			1,733
Orascom Telecom 7.875% 20144		1,500			1,365
Rogers Wireless Inc. 7.50% 2015		1,100			1,286
					167,167
INFORMATION TECHNOLOGY — 7.46%
NXP BV and NXP Funding LLC 3.034% 20131		13,400			11,172
NXP BV and NXP Funding LLC 3.492% 20131	€	2,747			3,109
NXP BV and NXP Funding LLC 10.00% 20134,9	$	1,312			1,343
NXP BV and NXP Funding LLC 7.875% 2014		10,555			9,631
NXP BV and NXP Funding LLC 8.625% 2015	€	3,250			3,469
NXP BV and NXP Funding LLC 9.50% 2015	$	11,045			9,471
Freescale Semiconductor, Inc., Term Loan B, 1.985% 20131,2,3		2,278			1,999
Freescale Semiconductor, Inc. 4.129% 20141		450			365
Freescale Semiconductor, Inc. 8.875% 2014		7,725			7,126
Freescale Semiconductor, Inc. 9.875% 20141,5		8,448			7,508
Freescale Semiconductor, Inc., Term Loan B, 12.50% 20142,3		9,143			9,429
Freescale Semiconductor, Inc. 10.125% 2016		4,188			3,392
Sanmina-SCI Corp. 6.75% 2013		5,125			5,080
Sanmina-SCI Corp. 3.004% 20141,4		3,825			3,529
Sanmina-SCI Corp. 8.125% 2016		7,400			7,419
First Data Corp., Term Loan B2, 2.999% 20141,2,3		8,812			7,853
First Data Corp. 9.875% 2015		6,625			6,211
First Data Corp. 9.875% 2015		1,350			1,266
SunGard Data Systems Inc. 9.125% 2013		8,660			8,920
SunGard Data Systems Inc. 10.625% 2015		500			553
Ceridian Corp. 11.25% 2015		6,400			6,136
Serena Software, Inc. 10.375% 2016		5,975			5,773
Advanced Micro Devices, Inc. 8.125% 20174		2,725			2,728
Jabil Circuit, Inc. 8.25% 2018		2,270			2,440
Xerox Corp. 7.125% 2010		1,250			1,279
Xerox Corp. 7.625% 2013		1,000			1,020
Celestica Inc. 7.625% 2013		275			286
					128,507
HEALTH CARE — 6.82%
HCA Inc., Term Loan B1, 2.501% 20131,2,3		3,913			3,752
HCA Inc. 9.125% 2014		2,145			2,268
HCA Inc. 9.625% 20161,5		2,382			2,584
HCA Inc. 8.50% 20194		8,670			9,385
HCA Inc. 7.875% 20204		3,975			4,149
Tenet Healthcare Corp. 7.375% 2013		7,000			7,053
Tenet Healthcare Corp. 9.00% 20154		375			407
Tenet Healthcare Corp. 9.25% 2015		1,355			1,450
Tenet Healthcare Corp. 8.875% 20194		7,030			7,628
Elan Finance PLC and Elan Finance Corp. 4.273% 20111		2,300			2,174
Elan Finance PLC and Elan Finance Corp. 4.381% 20131		4,520			3,876
Elan Finance PLC and Elan Finance Corp. 8.875% 2013		2,970			2,970
Elan Finance PLC and Elan Finance Corp. 8.75% 20164		6,415			6,158
HealthSouth Corp., Term Loan B, 2.51% 20131,2,3		2,119			2,026
HealthSouth Corp., Term Loan B, 4.01% 20141,2,3		1,744			1,698
HealthSouth Corp. 10.75% 2016		6,380			6,970
Bausch & Lomb Inc. 9.875% 2015		9,780			10,367
PTS Acquisition Corp. 10.25% 20151,5		7,984			7,246
PTS Acquisition Corp. 9.75% 2017	€	275			294
Boston Scientific Corp. 6.00% 2011	$	1,875			1,969
Boston Scientific Corp. 5.45% 2014		2,080			2,194
Boston Scientific Corp. 5.125% 2017		310			311
Boston Scientific Corp. 7.00% 2035		565			557
Boston Scientific Corp. 7.375% 2040		1,385			1,493
VWR Funding, Inc. 11.25% 20151,5		6,210			6,489
Coventry Health Care, Inc. 5.875% 2012		4,675			4,744
Coventry Health Care, Inc. 5.95% 2017		1,000			908
Quintiles Transnational 9.50% 20141,4,5		4,695			4,730
Surgical Care Affiliates, Inc. 9.625% 20151,4,5		2,269			2,099
Surgical Care Affiliates, Inc. 10.00% 20174		1,825			1,688
CHS/Community Health Systems, Inc. 8.875% 2015		1,900			1,971
Viant Holdings Inc. 10.125% 20174		1,842			1,842
Team Finance LLC and Health Finance Corp. 11.25% 2013		1,485			1,559
Symbion Inc. 11.75% 20151,5		1,587			1,206
Valeant Pharmaceuticals 8.375% 20164		1,165			1,206
					117,421
MATERIALS — 5.95%
Owens-Brockway Glass Container Inc. 6.75% 2014	€	375			529
Owens-Brockway Glass Container Inc. 7.375% 2016	$	9,610			9,970
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015		780			851
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		8,765			9,611
Nalco Co. 8.875% 2013		500			517
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 9.00% 2014		1,900			1,948
Nalco Co., Term Loan B, 5.75% 20161,2,3		2,358			2,388
Nalco Co. 8.25% 20174		5,190			5,540
Georgia Gulf Corp. 9.00% 20174		8,950			9,084
Smurfit Kappa Acquisition 7.25% 2017	€	100			141
Smurfit Kappa Acquisition 7.75% 2019		3,730			5,285
Smurfit Capital Funding PLC 7.50% 2025	$	300			257
Georgia-Pacific Corp., First Lien Term Loan B, 2.256% 20121,2,3		395			384
Georgia-Pacific LLC 8.25% 20164		4,975			5,298
Graphic Packaging International, Inc. 9.50% 2017		5,125			5,458
AMH Holdings, Inc. 11.25% 2014		1,000			970
Associated Materials Inc. 9.875% 20164		3,625			3,843
CEMEX Finance LLC 9.50% 20164		4,500			4,736
Reynolds Group 7.75% 20164		4,315			4,434
Teck Resources Ltd. 9.75% 2014		3,650			4,229
International Paper Co. 9.375% 2019		3,190			3,927
Rockwood Specialties Group, Inc. 7.50% 2014		2,500			2,538
Rockwood Specialties Group, Inc. 7.625% 2014	€	750			1,077
Rio Tinto Finance (USA) Ltd. 8.95% 2014	$	2,665			3,196
FMG Finance Pty Ltd. 10.00% 20134		700			731
FMG Finance Pty Ltd. 10.625% 20164		1,875			2,084
Plastipak Holdings, Inc. 8.50% 20154		2,610			2,692
Newpage Corp. 11.375% 20144		2,635			2,675
Ball Corp. 7.125% 2016		1,350			1,391
Ball Corp. 7.375% 2019		1,000			1,032
Dow Chemical Co. 7.60% 2014		2,000			2,278
CSN Islands XI Corp. 6.875% 20194		1,500			1,500
Gerdau Holdings Inc. 7.00% 20204		1,400			1,446
MacDermid 9.50% 20174		370			372
					102,412
UTILITIES — 5.20%
Edison Mission Energy 7.50% 2013		4,800			4,536
Edison Mission Energy 7.75% 2016		2,200			1,881
Midwest Generation, LLC, Series B, 8.56% 20162		3,777			3,815
Edison Mission Energy 7.00% 2017		10,525			8,367
Edison Mission Energy 7.20% 2019		5,725			4,365
Edison Mission Energy 7.625% 2027		5,925			4,044
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 3.735% 20141,2,3		11,564			9,421
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 2015		7,955			6,483
Texas Competitive Electric Holdings Co. LLC, Series A, 10.25% 2015		7,665			6,247
Texas Competitive Electric Holdings Co. LLC 11.25% 20161,5		581			413
AES Corp. 9.375% 2010		1,497			1,553
AES Corp. 8.75% 20134		5,311			5,470
AES Gener SA 7.50% 2014		500			547
AES Corp. 7.75% 2015		500			510
AES Corp. 8.00% 2017		3,000			3,094
AES Red Oak, LLC, Series A, 8.54% 20192		382			383
AES Corp. 8.00% 2020		2,000			2,045
NRG Energy, Inc. 7.25% 2014		1,900			1,929
NRG Energy, Inc. 7.375% 2016		11,250			11,292
NRG Energy, Inc. 7.375% 2017		175			176
Intergen Power 9.00% 20174		9,775			10,239
Sierra Pacific Resources 8.625% 2014		875			911
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015		275			296
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016		500			531
FPL Energy National Wind Portfolio, LLC 6.125% 20192,4		1,049			997
					89,545
CONSUMER STAPLES — 3.17%
Stater Bros. Holdings Inc. 8.125% 2012		5,175			5,253
Stater Bros. Holdings Inc. 7.75% 2015		5,800			5,916
SUPERVALU INC. 7.50% 2012		340			352
Albertson’s, Inc. 7.25% 2013		460			468
SUPERVALU INC. 8.00% 2016		6,500			6,630
Albertson’s, Inc. 8.00% 2031		2,575			2,350
Smithfield Foods, Inc. 10.00% 20144		5,425			5,913
Smithfield Foods, Inc. 7.75% 2017		3,525			3,269
Constellation Brands, Inc. 8.375% 2014		1,250			1,337
Constellation Brands, Inc. 7.25% 2017		4,770			4,859
Tyson Foods, Inc. 10.50% 2014		3,775			4,332
Rite Aid Corp. 8.625% 2015		1,000			875
Rite Aid Corp., Term Loan T4, 9.50% 20151,2,3		500			519
Rite Aid Corp. 9.75% 2016		1,750			1,908
Rite Aid Corp. 10.25% 20194		500			530
Tops Markets 10.125% 20154		3,275			3,390
Duane Reade Inc. 11.75% 2015		2,003			2,183
CEDC Finance Corp. 9.125% 20164		1,500			1,553
Ingles Markets, Inc. 8.875% 2017		1,475			1,541
Cott Beverages Inc. 8.375% 20174		850			880
Dole Food Co., Inc. 8.875% 2011		506			510
					54,568
ENERGY — 3.16%
Petroplus Finance Ltd. 6.75% 20144		6,700			6,332
Petroplus Finance Ltd. 7.00% 20174		5,900			5,340
Petroplus Finance Ltd. 9.375% 20194		1,600			1,600
Williams Partners L.P. and Williams Partners Finance Corp. 7.50% 2011		3,825			3,912
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017		5,525			5,589
Williams Companies, Inc. 6.375% 20104		1,000			1,018
Williams Companies, Inc. 8.125% 2012		1,900			2,087
Williams Companies, Inc. 7.875% 2021		250			287
Transcontinental Gas Pipe Line Corp. 7.25% 2026		975			1,063
Williams Companies, Inc. 8.75% 2032		3,300			3,960
Forest Oil Corp. 8.50% 20144		1,650			1,733
Forest Oil Corp. 7.25% 2019		3,500			3,474
Gaz Capital SA 7.288% 20374		4,000			3,710
Enterprise Products Operating LLC 7.00% 20671		3,525			3,129
General Maritime Corp. 12.00% 20174		2,500			2,616
TransCanada PipeLines Ltd. 6.35% 20671		2,715			2,551
Continental Resources 8.25% 20194		2,000			2,110
Premcor Refining Group Inc. 6.75% 2011		1,150			1,185
Kinder Morgan Energy Partners LP 9.00% 2019		880			1,085
Denbury Resources Inc. 9.75% 2016		900			965
Enbridge Energy Partners, LP 9.875% 2019		500			634
					54,380
MORTGAGE-BACKED OBLIGATIONS2 — 1.11%
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20374		1,750			1,800
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20374		6,050			6,222
Crown Castle Towers LLC, Series 2006-1, Class F, 6.65% 20364		4,600			4,689
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20364		700			713
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20364		235			237
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20364		2,235			2,301
SBA CMBS Trust, Series 2006-1A, Class H, 7.389% 20364		1,235			1,271
SBA CMBS Trust, Series 2006-1A, Class J, 7.825% 20364		1,235			1,271
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.581% 20371		1,216			550
					19,054
BONDS & NOTES OF GOVERNMENTS OUTSIDE THE U.S. — 0.30%
Panama (Republic of) Global 7.125% 2026		310			351
Panama (Republic of) Global 9.375% 2029		130			174
Panama (Republic of) Global 6.70% 20362		1,522			1,613
Brazilian Treasury Bill 6.00% 20457,10	BRL3,709				2,018
Colombia (Republic of) Global 10.75% 2013	$	500			610
Colombia (Republic of) Global 12.00% 2015	COP780,000				470
					5,236
BONDS & NOTES OF U.S. GOVERNMENT — 0.25%
U.S. Treasury 1.375% 2012	$	2,000			1,991
U.S. Treasury 6.00% 2026		2,000			2,341
					4,332
Total bonds, notes & other debt instruments (cost: $1,450,067,000)					1,489,317
	Principal amount			Value
Convertible securities — 0.64%		(000	)		(000	)
INFORMATION TECHNOLOGY — 0.32%
Linear Technology Corp., Series A, 3.00% convertible notes 2027	$	2,000		$	2,015
Micron Technology, Inc. 1.875% convertible notes 2014		2,035			1,969
Advanced Micro Devices, Inc. 6.00% convertible notes 2015		505			457
Advanced Micro Devices, Inc. 5.75% convertible notes 2012		1,119			1,109
					5,550
CONSUMER DISCRETIONARY — 0.22%
Beazer Homes USA, Inc. 4.625% convertible notes 2024		3,360			3,133
Saks Inc. 2.00% convertible notes 2024		833			693
					3,826
FINANCIALS — 0.10%
Alexandria Real Estate Equities, Inc. 8.00% convertible notes 20294		240			411
Alexandria Real Estate Equities, Inc. 3.70% convertible notes 20274		1,250			1,188
					1,599
Total convertible securities (cost: $9,156,000)					10,975
Preferred stocks — 2.19%	Shares
FINANCIALS — 1.96%
Barclays Bank PLC 7.434%1,4		9,000,000			8,325
Barclays Bank PLC 8.55%1,4		1,500,000			1,395
Barclays Bank PLC 6.86%1,4		300,000			249
JPMorgan Chase & Co., Series I, 7.90%1		4,985,000			5,159
Wells Fargo & Co. 7.98%1		5,020,000			5,058
Swire Pacific Ltd. 8.84% cumulative guaranteed perpetual capital securities4		160,000			3,610
PNC Financial Services Group, Inc., Series K, 8.25%1		2,000,000			2,041
PNC Preferred Funding Trust I 6.517%1,4		1,000,000			749
Fleet Capital Trust II 7.92% 2026		1,300,000			1,235
Bank of America Corp., Series M, 8.125% noncumulative1		975,000			940
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative1,4		2,700,000			1,539
ILFC E-Capital Trust II 6.25%1,4		2,000,000			1,060
Royal Bank of Scotland Group PLC, Series U, 7.64%1		1,200,000			649
RBS Capital Trust II 6.425% noncumulative trust1		500,000			307
SMFG Preferred Capital USD 3 Ltd. 9.50%1,4		395,000			417
GMAC LLC, Series G, 7.00%4,11		490			323
Citigroup Inc. 6.00%		10,400			190
Citigroup Inc. 6.10%		6,900			126
Lloyds Banking Group PLC 6.657% preference shares1,4		500,000			301
Fannie Mae, Series O, 0%1,4,11		20,000			32
IndyMac Bancorp, Inc., Series A, 8.50% noncumulative4,11		134,000			1
					33,706
CONSUMER DISCRETIONARY — 0.23%
Gray Television Inc., Series D, 17.00%4,7,9,11		5,500,000			3,980
Total preferred stocks (cost: $39,395,000)					37,686
				Value
Common stocks — 1.39%	Shares				(000	)
FINANCIALS — 0.76%
Bank of America Corp.		480,244		$	7,233
Citigroup Inc.		1,427,723			4,726
CIT Group Inc.11		37,755			1,042
					13,001
MATERIALS — 0.25%
Georgia Gulf Corp.11		245,797			4,272
CONSUMER DISCRETIONARY — 0.21%
Ford Motor Co.11		342,877			3,429
Time Warner Cable Inc.		2,666			110
Adelphia Recovery Trust, Series Arahova11		388,601			70
Adelphia Recovery Trust, Series ACC-111		449,306			14
Adelphia Recovery Trust, Series ACC-6B7,11		1,000,000			5
Charter Communications, Inc., Class A11		1,331			47
ACME Communications, Inc.11		13,100			7
Mobil Travel Guide, Inc.7,9,11		7,285			2
American Media Operations, Inc.4,7,11		84,516			1
					3,685
INDUSTRIALS — 0.11%
Delta Air Lines, Inc.11		153,267			1,744
Nortek, Inc.11		3,850			135
World Color Press Inc.11		6,466			60
					1,939
TELECOMMUNICATION SERVICES — 0.05%
Sprint Nextel Corp., Series 111		127,382			466
CenturyTel, Inc.		8,725			316
XO Holdings, Inc.11		651			—
					782
INFORMATION TECHNOLOGY — 0.01%
ZiLOG, Inc.11		52,250			185
HSW International, Inc.4,7,11		22,356			5
					190
HEALTH CARE — 0.00%
Clarent Hospital Corp. Liquidating Trust7,11		80,522			4
Total common stocks (cost: $23,586,000)					23,873
Rights & warrants — 0.00%
INDUSTRIALS — 0.00%
World Color Press Inc., Series I, warrants, expire 201411		3,664			15
World Color Press Inc., Series II, warrants, expire 201411		3,664			11
Atrium Corp., warrants, expire 20184,7,11		691			—
					26
TELECOMMUNICATION SERVICES — 0.00%
XO Holdings, Inc., Series B, warrants, expire 201011		978			—
XO Holdings, Inc., Series A, warrants, expire 201011		1,305			—
XO Holdings, Inc., Series C, warrants, expire 201011		978			—
GT Group Telecom Inc., warrants, expire 20104,7,11		4,000			—
					—
Total rights & warrants (cost: $216,000)					26
	Principal amount			Value
Short-term securities — 7.12%		(000	)		(000	)
U.S. Treasury Bills 0.10%–0.307% due 5/13–6/17/2010	$	34,800		$	34,777
Freddie Mac 0.14%–0.17% due 4/19–5/18/2010		33,500			33,481
Jupiter Securitization Co., LLC 0.15% due 1/4/20104		21,400			21,400
Ranger Funding Co. LLC 0.16% due 1/20/20104		17,600			17,598
Federal Home Loan Bank 0.122% due 1/13/2010		10,800			10,800
Private Export Funding Corp. 0.08% due 1/11/20104		4,600			4,600
Total short-term securities (cost: $122,650,000)					122,656
Total investment securities (cost: $1,645,070,000)					1,684,533
Other assets less liabilities					37,008
Net assets				$	1,721,541

1Coupon rate may change periodically.

2Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

3Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $138,271,000, which represented 8.03% of the net assets of the fund.

4Purchased 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 $454,688,000, which represented 26.41% of the net assets of the fund.

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

6Scheduled interest and/or principal payment was not received.

7Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $7,522,000, which represented .44% of the net assets of the fund.

8Step bond; coupon rate will increase at a later date.

9Purchased 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
Gray Television Inc., Series D, 17.00%	6/26/2008–7/15/2008	$	5,225	$	3,980		.23	%
NXP BV and NXP Funding LLC 10.00% 2013	7/17/2009		1,048		1,343		.08
Mobil Travel Guide, Inc.	12/17/2007		2		2		.00
Total restricted securities		$	6,275	$	5,325		.31	%

10Index-linked bond whose principal amount moves with a government retail price index.

11Security did not produce income during the last 12 months.

Key to abbreviations and symbols

BRL = Brazilian reais

COP = Colombian pesos

€ = Euros

£ = British pounds

High Income Bond Fund

Summary investment portfolio, December 31, 2009

Largest Holdings (By issuer)	Percent of net assets
Nielsen Co.		2.43
CIT Group		2.37
NXP		2.22
Univision Communications		1.98
Freescale Semiconductor		1.73
Charter Communications		1.64
Sprint Nextel		1.61
Edison International		1.57
Virgin Media		1.44
Ford Motor		1.36

	Principal						Percent
	amount			Value			of net
Bonds, notes & other debt instruments - 86.51%		(000	)		(000	)	assets
Consumer discretionary - 20.42%
Univision Communications, Inc.:
First Lien Term Loan B, 2.501% 2014 (1) (2) (3)	$	19,345		$	16,854
10.50% 2015   (1)  (4)  (5)		17,854			15,734
12.00% 2014   (4)		1,300			1,438			1.98	%
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00%-10.875% 2012-2014 (4)		10,725			11,355
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013 (6)		8,858			9,135
Charter Communications Operating, LLC, Term Loans, 4.24%-7.25% 2014 (1) (2) (3)		6,867			6,675
Charter Communications, Inc. 13.50% 2016 (4)		856			1,003			1.64
NTL Cable PLC:
9.125% 2016		9,175			9,714
9.50% 2016		10,100			10,895
8.75% 2014		1,401			1,454
8.75% 2014 (2)	€	105			157
9.75% 2014 (2)	£	63			107
Virgin Media Finance 8.375% 2019 (4)	$	2,375			2,455			1.44
Michaels Stores, Inc. 10.00% 2014		9,400			9,776			.57
Cinemark USA, Inc. 8.625% 2019 (4)		9,100			9,510			.55
Allison Transmission Holdings, Inc. 11.25% 2015 (1) (4) (5)		8,941			9,388			.54
AMC Entertainment Inc. 8.75% 2019		7,900			8,098			.47
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014		8,225			7,989			.46
Royal Caribbean Cruises Ltd. 11.875% 2015		6,550			7,606			.44
FCE Bank PLC 7.125% 2013	€	1,000			1,397			.08
Other securities					210,795			12.25
					351,535			20.42
Financials - 12.50%
CIT Group Inc.:
Term Loan 2A, 9.50% 2012 (1) (2) (3)	$	8,500			8,734
Term Loan, 13.00% 2012 (1) (2) (3)		12,000			12,447
7.00% 2013-2017		20,399			18,503			2.31
Ford Motor Credit Co. 3.034%-9.875% 2010-2016 (1)		18,735			18,555			1.08
National City Preferred Capital Trust I 12.00% (undated) (1)		7,762			8,926			.52
Developers Diversified Realty Corp. 9.625% 2016		8,325			8,701			.50
Bank of America Corp. 5.75%-7.375% 2014-2017		3,750			4,012
Countrywide Financial Corp. 4.50%-5.80% 2010-2012		500			519
BankAmerica Capital II, Series 2, 8.00% 2026		265			262			.28
Other securities					134,470			7.81
					215,129			12.50
Industrials - 10.46%
Nielsen Finance LLC and Nielsen Finance Co.:
10.00% 2014		11,025			11,549
0%/12.50% 2016 (7)		17,690			16,231
11.50%-11.625% 2014-2016		10,380			11,678
Nielsen Finance LLC, Term Loan A, 2.235% 2013 (1) (2) (3)		2,599			2,447			2.43
ARAMARK Corp. 8.50% 2015		8,000			8,280			.48
RailAmerica, Inc. 9.25% 2017		7,267			7,767			.45
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013		7,491			7,622			.45
Other securities					114,457			6.65
					180,031			10.46
Telecommunication services - 9.71%
Nextel Communications, Inc.:
Series F, 5.95% 2014		12,095			11,354
Series D, 7.375% 2015		11,205			10,953
Series E, 6.875% 2013		2,205			2,150
Sprint Capital Corp. 8.375% 2012		2,600			2,704			1.58
Qwest Capital Funding, Inc.:
7.25% 2011		13,100			13,362
7.90% 2010		700			717
Qwest Communications International Inc. 7.25%-8.00% 2011-2015 (4)		5,350			5,451
Qwest Corp. 7.875% 2011		1,475			1,552
U S WEST Capital Funding, Inc. 6.875% 2028		1,200			978			1.28
Cricket Communications, Inc.:
9.375% 2014		9,255			9,348
7.75% 2016		12,600			12,632			1.28
MetroPCS Wireless, Inc. 9.25% 2014		11,050			11,243			.65
Clearwire Communications LLC/Finance 12.00% 2015 (4)		10,450			10,659			.62
Wind Acquisition SA 11.75% 2017 (4)		9,100			9,987			.58
Other securities					64,077			3.72
					167,167			9.71
Information technology - 7.46%
NXP BV and NXP Funding LLC:
3.034% 2013 (1)		13,400			11,172
7.875% 2014		10,555			9,631
9.50% 2015		11,045			9,471
10.00% 2013   (8)		1,312			1,343
3.492%-8.625% 2013-2015 (1)	€	5,997			6,578			2.22
Freescale Semiconductor, Inc.:
Term Loan B, 12.50% 2014 (2) (3)	$	9,143			9,429
Term Loan B, 1.985% 2013 (1) (2) (3)		2,278			1,999
4.129%-10.125% 2014-2016 (1)  (5)		20,811			18,391			1.73
SunGard Data Systems Inc. 9.125% 2013		8,660			8,920			.52
First Data Corp., Term Loan B2, 2.999% 2014 (1) (2) (3)		8,812			7,853			.45
Other securities					43,720			2.54
					128,507			7.46
Health care - 6.82%
HCA Inc.:
8.50% 2019   (4)		8,670			9,385
Term Loan B1, 2.501% 2013 (1) (2) (3)		3,913			3,752
7.875%-9.625% 2014-2020   (1)  (4)  (5)		8,502			9,001			1.29
Bausch & Lomb Inc. 9.875% 2015		9,780			10,367			.60
Tenet Healthcare Corp. 8.875% 2019 (4)		7,030			7,628			.44
Other securities					77,288			4.49
					117,421			6.82
Materials - 5.95%
Owens-Brockway Glass Container Inc. 7.375% 2016		9,610			9,970			.58
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017		8,765			9,611			.56
Georgia Gulf Corp. 9.00% 2017 (4)		8,950			9,084			.53
Other securities					73,747			4.28
					102,412			5.95
Utilities - 5.20%
Edison Mission Energy:
7.00% 2017		10,525			8,367
7.20%-7.75% 2013-2027		18,650			14,826
Midwest Generation, LLC, Series B, 8.56% 2016 (2)		3,777			3,815			1.57
Texas Competitive Electric Holdings Co. LLC:
Term Loan B2, 3.735% 2014 (1) (2) (3)		11,564			9,421
10.25%-11.25% 2015-2016 (1)  (5)		16,201			13,143			1.31
NRG Energy, Inc. 7.375% 2016		11,250			11,292			.66
Intergen Power 9.00% 2017 (4)		9,775			10,239			.59
Other securities					18,442			1.07
					89,545			5.20
Consumer staples - 3.17%
Other securities					54,568			3.17
Energy - 3.16%
Other securities					54,380			3.16
Mortgage-backed obligations - 1.11%
Other securities					19,054			1.11
Other - 0.55%
U.S. Treasury 1.375%-6.00% 2012-2026		4,000			4,332			.25
Other securities					5,236			.30
					9,568			.55
Total bonds, notes & other debt instruments (cost: $1,450,067,000)					1,489,317			86.51
							Percent
				Value			of net
Convertible securities - 0.64%					(000	)	assets
Other - 0.64%
Other securities					10,975			.64
Total convertible securities (cost: $9,156,000)					10,975			.64
	Shares						Percent
				Value			of net
Preferred stocks - 2.19%					(000	)	assets
Financials - 1.96%
Barclays Bank PLC 7.434% (1) (4)		9,000,000			8,325			.48
JPMorgan Chase & Co., Series I, 7.90% (1)		4,985,000			5,159			.30
Fleet Capital Trust II 7.92% 2026		1,300,000			1,235
Bank of America Corp., Series M, 8.125% noncumulative (1)		975,000			940			.13
Other securities					18,047			1.05
					33,706			1.96
Other - 0.23%
Other securities					3,980			.23
Total preferred stocks (cost: $39,395,000)					37,686			2.19
	Shares						Percent
				Value			of net
Common stocks - 1.39%					(000	)	assets
Other - 1.39%
Bank of America Corp.		480,244			7,233			.42
Ford Motor Co. (9)		342,877			3,429			.20
CIT Group Inc. (9)		37,755			1,042			.06
Sprint Nextel Corp., Series 1 (9)		127,382			466			.03
Charter Communications, Inc., Class A (9)		1,331			47			.00
Other securities					11,656			.68
Total common stocks (cost: $23,586,000)					23,873			1.39
	Shares						Percent
				Value			of net
Rights & warrants - 0.00%					(000	)	assets
Other - 0.00%
Other securities					26			.00
Total rights & warrants (cost: $216,000)					26			.00
	Principal						Percent
	amount			Value			of net
Short-term securities - 7.12%		(000	)		(000	)	assets
U.S. Treasury Bills 0.10%-0.307% due 5/13-6/17/2010	$	34,800		$	34,777			2.02	%
Freddie Mac 0.14%-0.17% due 4/19-5/18/2010		33,500			33,481			1.94
Jupiter Securitization Co., LLC 0.15% due 1/4/2010 (4)		21,400			21,400			1.24
Ranger Funding Co. LLC 0.16% due 1/20/2010 (4)		17,600			17,598			1.02
Federal Home Loan Bank 0.122% due 1/13/2010		10,800			10,800			.63
Other securities					4,600			.27
Total short-term securities (cost: $122,650,000)					122,656			7.12
Total investment securities (cost: $1,645,070,000)					1,684,533			97.85
Other assets less liabilities					37,008			2.15
Net assets				$	1,721,541			100.00	%

“Other securities” includes all issues that are not disclosed separately in the summary investment portfolio, including securities which were valued under fair value procedures adopted by the authority of the board of trustees. The total value of all such securities was $7,522,000, which represented .44% of the net assets of the fund.

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) Coupon rate may change periodically.

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

(3) Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans, including those in "Other securities," was $138,271,000, which represented 8.03% 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 $454,688,000, which represented 26.41% 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) Scheduled interest and/or principal payment was not received.

(7) Step bond; coupon rate will increase at a later date.

(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	Cost		Value		Percent of
	date	(000)		(000)		net assets
NXP BV and NXP Funding LLC 10.00% 2013	7/17/2009	$	1,048	$	1,343		.08	%
Other restricted securities			5,227		3,982		.23
Total restricted securities		$	6,275	$	5,325		.31	%

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

Key to symbols

€ = Euros

£ = British pounds

See Notes to Financial Statements

U.S. Government/AAA-Rated Securities Fund

Investment portfolio

December 31, 2009

Bonds, notes & other debt instruments — 91.31%	Principal amount (000)		Value (000)
MORTGAGE-BACKED OBLIGATIONS — 39.58%
Federal agency mortgage-backed obligations1 — 38.26%
Fannie Mae 4.50% 2020	$	5,616	$	5,842
Fannie Mae 4.50% 2020		2,098		2,182
Fannie Mae 6.00% 2021		2,601		2,793
Fannie Mae 6.00% 2021		206		221
Fannie Mae 6.00% 2021		71		76
Fannie Mae 5.00% 2023		7,974		8,354
Fannie Mae 4.00% 2024		24,558		24,751
Fannie Mae 4.00% 2024		19,193		19,343
Fannie Mae 4.00% 2024		11,407		11,493
Fannie Mae 4.00% 2024		9,643		9,717
Fannie Mae 4.00% 2024		9,510		9,582
Fannie Mae 4.50% 2024		17,970		18,517
Fannie Mae 4.50% 2024		15,835		16,312
Fannie Mae 4.50% 2024		15,614		16,090
Fannie Mae 4.50% 2024		7,993		8,234
Fannie Mae 4.50% 2024		6,307		6,499
Fannie Mae 4.50% 2024		3,095		3,188
Fannie Mae 4.50% 2024		2,127		2,191
Fannie Mae 4.50% 2024		1,280		1,319
Fannie Mae 4.50% 2024		1,262		1,300
Fannie Mae 4.50% 2024		1,202		1,239
Fannie Mae 4.50% 2024		1,130		1,164
Fannie Mae 4.50% 2024		1,129		1,163
Fannie Mae 4.50% 2025		63,860		65,696
Fannie Mae 6.00% 2027		4,645		4,952
Fannie Mae 5.00% 2028		3,821		3,957
Fannie Mae 6.50% 2028		3,743		4,017
Fannie Mae 4.00% 2029		19,297		18,931
Fannie Mae 5.50% 2033		11,318		11,901
Fannie Mae 6.50% 2034		6,965		7,504
Fannie Mae 4.50% 2035		8,439		8,468
Fannie Mae 5.50% 2035		8,961		9,423
Fannie Mae 5.50% 2035		1,238		1,302
Fannie Mae 6.50% 2035		833		900
Fannie Mae 5.518% 20362		2,050		2,162
Fannie Mae 6.00% 2036		1,379		1,467
Fannie Mae 6.50% 2036		2,856		3,048
Fannie Mae 5.00% 2037		3,899		4,007
Fannie Mae 5.312% 20372		2,811		2,947
Fannie Mae 5.616% 20372		988		1,041
Fannie Mae 6.00% 2037		2,044		2,171
Fannie Mae 6.358% 20372		3,406		3,601
Fannie Mae 6.50% 2037		9,155		9,821
Fannie Mae 6.50% 2037		5,223		5,600
Fannie Mae 6.50% 2037		3,797		4,053
Fannie Mae 6.50% 2037		2,193		2,353
Fannie Mae 6.50% 2037		664		709
Fannie Mae 7.00% 2037		5,569		6,069
Fannie Mae 7.00% 2037		3,344		3,644
Fannie Mae 7.00% 2037		1,155		1,258
Fannie Mae 4.445% 20382		1,565		1,623
Fannie Mae 5.00% 2038		8,200		8,425
Fannie Mae 5.456% 20382		3,987		4,191
Fannie Mae 5.50% 2038		13,905		14,573
Fannie Mae 5.50% 2038		9,656		10,121
Fannie Mae 5.50% 2038		6,787		7,114
Fannie Mae 5.50% 2038		3,917		4,112
Fannie Mae 5.50% 2038		2,788		2,922
Fannie Mae 6.00% 2038		14,257		15,117
Fannie Mae 6.00% 2038		5,326		5,650
Fannie Mae 6.00% 2038		3,941		4,181
Fannie Mae 6.00% 2038		2,500		2,641
Fannie Mae 6.50% 2038		8,396		9,012
Fannie Mae 6.50% 2038		3,193		3,427
Fannie Mae 3.62% 20392		3,497		3,557
Fannie Mae 3.626% 20392		2,934		2,986
Fannie Mae 3.643% 20392		9,657		9,827
Fannie Mae 3.762% 20392		6,690		6,832
Fannie Mae 3.79% 20392		686		701
Fannie Mae 3.83% 20392		1,346		1,376
Fannie Mae 3.91% 20392		1,348		1,379
Fannie Mae 3.912% 20392		476		488
Fannie Mae 3.95% 20392		1,199		1,229
Fannie Mae 4.50% 2039		9,010		9,007
Fannie Mae 5.50% 2039		8,928		9,356
Fannie Mae 6.00% 2039		17,905		19,002
Fannie Mae 5.00% 2040		15,000		15,394
Fannie Mae 6.00% 2040		795		842
Fannie Mae 6.50% 2040		6,345		6,796
Fannie Mae 6.492% 20472		4,261		4,531
Fannie Mae, Series 2001-4, Class GB, 10.157% 20182		261		298
Fannie Mae, Series 2003-48, Class TJ, 4.50% 2022		1,029		1,065
Fannie Mae, Series 2001-4, Class GA, 10.037% 20252		84		97
Fannie Mae, Series 2001-4, Class NA, 11.829% 20252		183		206
Fannie Mae, Series 2002-W7, Class A-5, 7.50% 2029		339		383
Fannie Mae, Series 2005-29, Class AK, 4.50% 2035		1,259		1,306
Fannie Mae, Series 2006-56, Class OG, principal only, 0% 2036		1,385		1,133
Fannie Mae, Series 2006-96, Class MO, principal only, 0% 2036		994		826
Fannie Mae, Series 2007-33, Class HE, 5.50% 2037		3,624		3,824
Fannie Mae, Series 2007-40, Class PT, 5.50% 2037		1,580		1,673
Fannie Mae, Series 2007-24, Class P, 6.00% 2037		1,514		1,618
Fannie Mae, Series 1999-T2, Class A-1, 7.50% 20392		355		398
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		348		387
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041		334		362
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2041		422		476
Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042		59		66
Freddie Mac 4.50% 2019		4,490		4,663
Freddie Mac 4.50% 2023		8,393		8,642
Freddie Mac 5.00% 2023		545		571
Freddie Mac 5.00% 2023		224		235
Freddie Mac 6.00% 2023		4,308		4,621
Freddie Mac 4.50% 2024		19,132		19,690
Freddie Mac 4.50% 2024		13,756		14,157
Freddie Mac 4.50% 2024		7,614		7,836
Freddie Mac 4.50% 2024		4,267		4,392
Freddie Mac 5.00% 2024		7,675		8,037
Freddie Mac 5.50% 2024		20,537		21,801
Freddie Mac 6.00% 2026		4,087		4,362
Freddie Mac 6.00% 2027		8,208		8,761
Freddie Mac 4.632% 20352		1,008		1,049
Freddie Mac 5.872% 20362		10,503		11,120
Freddie Mac 6.00% 2036		3,441		3,678
Freddie Mac 6.00% 2036		2,055		2,185
Freddie Mac 5.692% 20372		1,437		1,507
Freddie Mac 5.965% 20372		942		991
Freddie Mac 6.00% 2037		3,124		3,348
Freddie Mac 6.00% 2037		2,570		2,755
Freddie Mac 6.00% 2037		2,226		2,386
Freddie Mac 6.00% 2037		2,165		2,303
Freddie Mac 6.00% 2037		1,935		2,059
Freddie Mac 6.00% 2037		1,453		1,557
Freddie Mac 6.50% 2037		6,028		6,466
Freddie Mac 4.802% 20382		4,159		4,308
Freddie Mac 5.50% 2038		4,386		4,617
Freddie Mac 5.50% 2038		4,152		4,362
Freddie Mac 5.514% 20382		1,634		1,715
Freddie Mac 6.00% 2038		12,759		13,569
Freddie Mac 6.00% 2038		9,858		10,510
Freddie Mac 6.50% 2038		11,647		12,481
Freddie Mac 6.50% 2038		6,657		7,136
Freddie Mac 6.50% 2038		6,225		6,671
Freddie Mac 6.50% 2038		4,576		4,904
Freddie Mac 3.959% 20392		1,127		1,153
Freddie Mac 5.00% 2040		12,135		12,444
Freddie Mac, Series K003, Class A2, 3.607% 2014		3,500		3,582
Freddie Mac, Series 2356, Class GD, 6.00% 2016		1,124		1,199
Freddie Mac, Series 1567, Class A, 0.65% 20232		281		270
Freddie Mac, Series 3061, Class PN, 5.50% 2035		471		497
Freddie Mac, Series 3213, Class OG, principal only, 0% 2036		1,464		1,187
Freddie Mac, Series 3171, Class MO, principal only, 0% 2036		1,405		1,139
Freddie Mac, Series 3257, Class PA, 5.50% 2036		1,546		1,643
Freddie Mac, Series 3233, Class PA, 6.00% 2036		1,432		1,536
Freddie Mac, Series 3312, Class PA, 5.50% 2037		6,441		6,787
Government National Mortgage Assn. 4.50% 2024		18,149		18,871
Government National Mortgage Assn. 4.50% 2024		4,591		4,773
Government National Mortgage Assn. 4.50% 2024		2,359		2,453
Government National Mortgage Assn. 4.50% 2024		2,182		2,268
Government National Mortgage Assn. 4.50% 2024		1,834		1,907
Government National Mortgage Assn. 4.50% 2024		1,472		1,530
Government National Mortgage Assn. 4.50% 2024		983		1,022
Government National Mortgage Assn. 4.00% 2025		17,000		17,252
Government National Mortgage Assn. 5.00% 2038		28,731		29,589
Government National Mortgage Assn. 5.50% 2038		7,052		7,408
Government National Mortgage Assn. 5.50% 2038		5,213		5,476
Government National Mortgage Assn. 5.50% 2038		4,622		4,853
Government National Mortgage Assn. 5.50% 2038		3,577		3,756
Government National Mortgage Assn. 5.50% 2038		2,513		2,640
Government National Mortgage Assn. 6.00% 2038		6,997		7,433
Government National Mortgage Assn. 6.00% 2038		4,281		4,539
Government National Mortgage Assn. 6.00% 2038		2,997		3,176
Government National Mortgage Assn. 6.50% 2038		11,867		12,689
Government National Mortgage Assn. 6.50% 2038		1,642		1,756
Government National Mortgage Assn. 4.00% 2039		11,979		11,565
Government National Mortgage Assn. 4.50% 2039		14,974		14,988
Government National Mortgage Assn. 5.00% 2039		9,578		9,870
Government National Mortgage Assn. 6.172% 2058		297		309
Government National Mortgage Assn. 6.22% 2058		3,773		3,976
Government National Mortgage Assn., Series 2003, 6.116% 2058		1,675		1,743
				989,826
Commercial mortgage-backed securities1 — 1.20%
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010		2,000		2,042
Fannie Mae, Series 2003-T1, Class B, 4.491% 2012		6,750		7,015
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20373		4,500		4,545
Wachovia Bank Commercial Mortgage Trust, Series 2004-C12, Class M-AD, 5.262% 20412,3		2,618		2,807
Wachovia Bank Commercial Mortgage Trust, Series 2005-C20, Class A-7, 5.118% 20422		500		484
Wachovia Bank Commercial Mortgage Trust, Series 2006-C23, Class A-PB, 5.446% 2045		1,000		978
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 2036		968		1,009
CS First Boston Mortgage Securities Corp., Series 2005-C5, Class A-AB, 5.10% 20382		1,000		1,008
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 20402		1,000		987
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2002-C2, Class A-1, 4.326% 2034		484		490
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039		448		454
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-PM1, Class A-2, 4.262% 2040		357		358
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP3, Class A-4A, 4.936% 20422		1,000		950
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036		2,065		2,133
Salomon Brothers Commercial Mortgage Trust, Series 2001-C1, Class A-3, 6.428% 2035		1,327		1,371
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034		1,167		1,201
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 20372		1,000		1,012
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 20353		1,000		1,009
COBALT CMBS Commerical Mortgage Trust, Series 2006-C1, Class A-2, 5.174% 2048		969		977
LB-UBS Commercial Mortgage Trust, Series 2001-C7, Class A-3, 5.642% 2025		141		144
LB-UBS Commercial Mortgage Trust, Series 2000-C3, Class A-2, 7.95% 2025		67		67
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 2033		20		20
				31,061
Collateralized mortgage-backed obligations (privately originated)1 — 0.12%
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.462% 20352		2,000		1,532
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.245% 20272,3		358		323
Structured Asset Securities Corp., Series 1998-RF1, Class A, 8.399% 20272,3		589		532
Structured Asset Securities Corp., Series 1999-RF1, Class A, 7.70% 20282,3		293		278
Ocwen Residential MBS Corp., Series 1998-R1, Class AWAC, 5.42% 20402,3,4		958		239
CS First Boston Mortgage Securities Corp., Series 2003-29, Class V-A-1, 7.00% 2033		91		89
				2,993
Total mortgage-backed obligations				1,023,880
U.S. TREASURY BONDS & NOTES — 39.30%
U.S. Treasury 5.75% 2010		5,000		5,167
U.S. Treasury 0.875% 2011		5,000		5,016
U.S. Treasury 1.00% 2011		7,500		7,498
U.S. Treasury 1.125% 2011		25,000		25,011
U.S. Treasury 1.75% 2012		29,250		29,443
U.S. Treasury 3.00% 20124,5		3,907		4,211
U.S. Treasury 4.25% 2012		10,000		10,733
U.S. Treasury 1.875% 20134,5		7,650		8,074
U.S. Treasury 3.125% 2013		107,425		111,655
U.S. Treasury 3.375% 2013		12,000		12,598
U.S. Treasury 3.625% 2013		20,000		21,180
U.S. Treasury 1.75% 2014		38,500		37,777
U.S. Treasury 2.25% 2014		58,750		58,360
U.S. Treasury 2.00% 20144,5		5,734		6,088
U.S. Treasury 2.00% 20144,5		14,039		14,880
U.S. Treasury 2.625% 2014		57,250		57,675
U.S. Treasury 4.00% 2014		18,500		19,785
U.S. Treasury 4.25% 2015		24,500		26,230
U.S. Treasury 11.25% 2015		10,000		14,114
U.S. Treasury 2.375% 2016		17,500		16,747
U.S. Treasury 2.625% 2016		10,000		9,731
U.S. Treasury 2.75% 2016		5,000		4,814
U.S. Treasury 3.125% 2016		33,750		33,331
U.S. Treasury 3.25% 2016		118,250		118,481
U.S. Treasury 3.25% 2016		13,000		13,056
U.S. Treasury 5.125% 2016		32,225		35,946
U.S. Treasury 4.625% 2017		13,000		14,043
U.S. Treasury 8.875% 2017		28,190		38,444
U.S. Treasury 3.50% 2018		16,750		16,616
U.S. Treasury 3.875% 2018		24,750		25,137
U.S. Treasury 2.75% 2019		20,750		19,109
U.S. Treasury 3.125% 2019		23,250		22,021
U.S. Treasury 3.375% 2019		20,000		19,241
U.S. Treasury 3.625% 2019		15,000		14,750
U.S. Treasury 8.125% 2019		50,915		68,554
U.S. Treasury 7.125% 2023		13,000		16,683
U.S. Treasury 5.25% 2028		5,000		5,421
U.S. Treasury 6.25% 2030		5,000		6,112
U.S. Treasury 4.50% 2036		33,600		33,117
U.S. Treasury 4.50% 2038		6,500		6,369
U.S. Treasury Principal Strip 0% 2019		5,000		3,475
				1,016,693
FEDERAL AGENCY BONDS & NOTES — 10.37%
Federal Home Loan Bank 3.375% 2010		3,000		3,070
Federal Home Loan Bank 1.75% 2012		21,000		20,999
Federal Home Loan Bank 2.25% 2012		4,500		4,575
Federal Home Loan Bank 3.625% 2013		42,250		44,198
Federal Home Loan Bank 3.25% 2014		8,500		8,620
Federal Home Loan Bank 5.375% 2016		13,250		14,630
Federal Home Loan Bank 5.375% 2016		2,025		2,219
Federal Home Loan Bank 5.00% 2017		1,000		1,065
Federal Home Loan Bank 4.75% 2018		2,325		2,433
Freddie Mac 2.875% 2010		3,000		3,064
Freddie Mac 2.125% 2012		20,000		20,176
Freddie Mac 2.50% 2014		4,000		3,981
Fannie Mae 3.625% 2011		5,000		5,199
Fannie Mae 6.125% 2012		10,000		11,013
Fannie Mae 3.00% 2014		2,750		2,776
Fannie Mae 5.375% 2017		5,000		5,528
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 1.25% 2011		3,000		3,003
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.125% 2012		3,400		3,440
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.125% 2012		3,000		3,029
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 2.25% 2012		3,250		3,281
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp. 2.10% 2012		2,500		2,525
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp. 2.375% 2012		6,750		6,869
United States Government Agency-Guaranteed (FDIC insured), Bank of America Corp., Series L, 3.125% 2012		2,750		2,846
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 3.00% 2011		2,750		2,833
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.20% 2012		5,000		5,065
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.25% 2012		3,750		3,804
United States Government Agency-Guaranteed (FDIC insured), JPMorgan Chase & Co. 3.125% 2011		2,750		2,841
United States Government Agency-Guaranteed (FDIC insured), JPMorgan Chase & Co. 2.20% 2012		6,000		6,097
Small Business Administration, Series SBIC-PS 2006-10A, Participating Securities, 5.408% 20161		3,361		3,569
Small Business Administration, Series 2001-20K, 5.34% 20211		580		612
Small Business Administration, Series 2001-20J, 5.76% 20211		437		466
Small Business Administration, Series 2001-20F, 6.44% 20211		1,219		1,316
Small Business Administration, Series 2003-20B, 4.84% 20231		2,009		2,096
United States Government Agency-Guaranteed (FDIC insured), Goldman Sachs Group, Inc. 3.25% 2012		7,750		8,045
United States Government Agency-Guaranteed (FDIC insured), GMAC LLC 1.75% 2012		2,500		2,487
United States Government Agency-Guaranteed (FDIC insured), GMAC LLC 2.20% 2012		5,000		5,030
United States Government Agency-Guaranteed (FDIC insured), Morgan Stanley 1.95% 2012		3,300		3,324
United States Government Agency-Guaranteed (FDIC insured), Morgan Stanley 2.25% 2012		3,000		3,046
United States Government Agency-Guaranteed (FDIC insured), John Deere Capital Corp. 2.875% 2012		6,000		6,177
United States Government Agency-Guaranteed (FDIC insured), KeyBank NA 3.20% 2012		5,750		5,962
United States Government Agency-Guaranteed (FDIC insured), PNC Funding Corp. 2.30% 2012		5,500		5,587
Federal Agricultural Mortgage Corp. 4.875% 20113		2,000		2,092
Federal Agricultural Mortgage Corp. 5.50% 20113		2,000		2,119
Federal Agricultural Mortgage Corp. 5.125% 20173		1,250		1,306
Federal Farm Credit Banks, Consolidated Systemwide Designated Bonds, 2.625% 2014		5,000		4,962
United States Government Agency-Guaranteed (FDIC insured), Sovereign Bancorp, Inc. 2.75% 2012		4,100		4,205
United States Government Agency-Guaranteed (FDIC insured), State Street Corp. 2.15% 2012		3,300		3,333
United States Agency for International Development, Republic of Egypt 4.45% 2015		1,000		1,057
United States Agency for International Development, State of Israel, Class 1-A, 5.50% 2023		2,000		2,143
				268,113
ASSET-BACKED OBLIGATIONS1 — 1.65%
CPS Auto Receivables Trust, Series 2006-C, Class A-4, XLCA insured, 5.14% 20133		4,684		4,762
CPS Auto Receivables Trust, Series 2007-C, Class A-4, FSA insured, 5.92% 20143		1,000		1,039
CarMax Auto Owner Trust, Series 2007-2, Class A-4, 5.27% 2012		5,000		5,239
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012		491		499
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-2, 5.03% 2014		4,307		4,512
Reliant Energy Transition Bond Company LLC, Series 2001-1, Class A-4, 5.63% 2015		1,950		2,103
CenterPoint Energy Transition Bond Company III, LLC, Series 2008, Class A-1, 4.192% 2020		890		930
CenterPoint Energy Transition Bond Company III, LLC, Series 2008, Class A-2, 5.234% 2023		250		263
Countryplace Manufactured Housing Contract, Series 2005-1, Class A-3, AMBAC insured, 4.80% 20353		2,650		2,263
John Deere Owner Trust, Series 2008, Class A-4, 4.89% 2015		2,000		2,024
Massachusetts RRB Special Purpose Trust, Series 2005-1, Class A-4, 4.40% 2015		1,850		1,955
Drive Auto Receivables Trust, Series 2006-1, Class A-4, FSA insured, 5.54% 20133		1,814		1,847
Ford Credit Auto Owner Trust, Series 2008-A, Class A-4, 4.37% 2012		1,500		1,564
Nissan Auto Receivables Owner Trust, Series 2008-A, Class A-4, 4.28% 2014		1,500		1,561
AEP Texas Central Transitioning Funding II LLC, Secured Transition Bonds, Series A, Class A-3, 5.09% 2017		1,450		1,558
Consumers Funding LLC, Series 2001-1, Class A-6, 5.76% 2016		1,390		1,538
PSE&G Transition Funding II LLC, Series 2005-1, Class A-2, 4.34% 2014		1,447		1,500
Prestige Auto Receivables Trust, Series 2007-1, Class A-3, FSA insured, 5.58% 20143		1,379		1,421
Spirit Master Funding LLC, Net-Lease Mortgage Notes, Series 2005-1, Class A-1, AMBAC insured, 5.05% 20233,4		1,973		1,283
World Omni Auto Receivables Trust, Series 2008-A, Class A-4, 4.74% 2013		1,000		1,051
Long Beach Acceptance Auto Receivables Trust, Series 2005-B, Class A-4, FSA insured, 4.522% 2012		1,017		1,033
FPL Recovery Funding LLC, Series 2007-A, Class A-1, 5.053% 2013		897		912
Honda Auto Receivables Owner Trust, Series 2006-2, Class A-4, 5.28% 2012		617		624
West Penn Funding LLC, Transition Bonds, Series 2005-A, Class A-1, 4.46% 20103		498		503
AMRESCO Residential Securities Corp. Mortgage Loan Trust, Series 1997-2, Class A-7, 7.57% 2027		399		371
Saxon Asset Securities Trust, Series 2002-2, Class AF-5, 6.49% 20312		405		300
				42,655
BONDS & NOTES OF GOVERNMENT AGENCIES OUTSIDE THE U.S. — 0.39%
Nordic Investment Bank, Series C, 5.00% 2017		3,000		3,221
European Investment Bank 4.875% 2017		3,000		3,219
Asian Development Bank 2.75% 2014		1,800		1,801
France Government Agency-Guaranteed, Société Finance 2.875% 20143		1,810		1,795
				10,036
INDUSTRIALS — 0.02%
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 20131,3		599		611
ENERGY — 0.00%
Petroleum Export Ltd., Class A-1, MBIA insured, 4.623% 20101,3		56		55
Total bonds, notes & other debt instruments (cost: $2,338,672,000)				2,362,043
Short-term securities — 12.65%
Jupiter Securitization Co., LLC 0.15%–0.21% due 1/12–1/15/20103		51,400		51,393
JPMorgan Chase & Co. 0.03% due 1/4/2010		11,700		11,700
Abbott Laboratories 0.10% due 1/11–2/9/20103		51,600		51,596
Federal Farm Credit Banks 0.16%–0.17% due 5/26–5/27/2010		50,500		50,464
Coca-Cola Co. 0.18% due 1/22–3/18/20103		37,750		37,740
Variable Funding Capital Company LLC 0.16% due 1/6/20103		25,000		25,000
Microsoft Corp. 0.06% due 1/19/20103		25,000		24,999
Walt Disney Co. 0.12% due 2/2/20103		25,000		24,997
Straight-A Funding LLC 0.18% due 3/8/20103		25,000		24,993
NetJets Inc. 0.11% due 1/13/20103		21,000		20,999
Procter & Gamble International Funding S.C.A. 0.21% due 2/11/20103		3,400		3,399
Total short-term securities (cost: $327,284,000)				327,280
Total investment securities (cost: $2,665,956,000)				2,689,323
Other assets less liabilities				(102,381	)
Net assets			$	2,586,942

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

2Coupon rate may change periodically.

3Purchased 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 $295,945,000, which represented 11.44% of the net assets of the fund.

4Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $34,775,000, which represented 1.34% of the net assets of the fund.

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

U.S. Government / AAA-Rated Securities Fund

Summary investment portfolio, December 31, 2009

	Principal						Percent
	amount			Value			of net
Bonds, notes & other debt instruments - 91.31%		(000	)		(000	)	assets
Mortgage-backed obligations - 39.58%
Federal agency mortgage-backed obligations (1) - 38.26%
Fannie Mae:
4.00% 2024	$	24,558		$	24,751
4.00% 2024		19,193			19,343
4.50% 2024		17,970			18,517
4.50% 2024		15,835			16,312
4.50% 2024		15,614			16,090
4.50% 2025		63,860			65,696
4.00% 2029		19,297			18,931
6.00% 2038		14,257			15,117
6.00% 2039		17,905			19,002
5.00% 2040		15,000			15,394
0%-11.829% 2018-2047 (2)		320,250			333,949			21.76	%
Freddie Mac:
4.50% 2024		19,132			19,690
5.50% 2024		20,537			21,801
0%-6.50% 2014-2040  (2)		199,433			209,391			9.70
Government National Mortgage Assn.:
4.50% 2024		18,149			18,871
4.00% 2025		17,000			17,252
5.00% 2038		28,731			29,589
4.50% 2039		14,974			14,988
4.00%-6.50% 2024-2058		91,484			95,142			6.80
					989,826			38.26
Commercial mortgage-backed securities (1) - 1.20%
Fannie Mae 4.491%-7.30% 2010-2012		8,750			9,057			.35
Other securities					22,004			.85
					31,061			1.20
Collateralized mortgage-backed obligations (privately originated) - 0.12%
Other securities					2,993			.12
Total mortgage-backed obligations					1,023,880			39.58
U.S. Treasury bonds & notes - 39.30%
U.S. Treasury:
1.125% 2011		25,000			25,011
1.75% 2012		29,250			29,443
3.125% 2013		107,425			111,655
3.625% 2013		20,000			21,180
1.75% 2014		38,500			37,777
2.25% 2014		58,750			58,360
2.625% 2014		57,250			57,675
4.00% 2014		18,500			19,785
4.25% 2015		24,500			26,230
2.375% 2016		17,500			16,747
3.125% 2016		33,750			33,331
3.25% 2016		118,250			118,481
5.125% 2016		32,225			35,946
8.875% 2017		28,190			38,444
3.50% 2018		16,750			16,616
3.875% 2018		24,750			25,137
2.75% 2019		20,750			19,109
3.125% 2019		23,250			22,021
3.375% 2019		20,000			19,241
8.125% 2019		50,915			68,554
7.125% 2023		13,000			16,683
4.50% 2036		33,600			33,117
0%-11.25% 2010-2038 (3) (4)		158,330			166,150			39.30
					1,016,693			39.30
Federal agency bonds & notes - 10.37%
Federal Home Loan Bank:
1.75% 2012		21,000			20,999
3.625% 2013		42,250			44,198
2.25%-5.375% 2010-2018		34,600			36,612			3.94
Freddie Mac:
2.125% 2012		20,000			20,176
2.50%-2.875% 2010-2014		7,000			7,045			1.05
Fannie Mae 3.00%-6.125% 2011-2017		22,750			24,516			.95
United States Government Agency-Guaranteed (FDIC insured), JPMorgan Chase & Co. 2.20%-3.125% 2011-2012		8,750			8,938			.35
Federal Farm Credit Banks, Consolidated Systemwide Designated Bonds, 2.625% 2014		5,000			4,962			.19
Other securities					100,667			3.89
					268,113			10.37
Asset-backed obligations - 1.65%
Other securities					42,655			1.65
Other - 0.41%
Other securities					10,702			.41
Total bonds, notes & other debt instruments (cost: $2,338,672,000)					2,362,043			91.31
	Principal						Percent
	amount			Value			of net
Short-term securities - 12.65%		(000	)		(000	)	assets
Jupiter Securitization Co., LLC 0.15%-0.21% due 1/12-1/15/2010 (5)	$	51,400		$	51,393
JPMorgan Chase & Co. 0.03% due 1/4/2010		11,700			11,700			2.44	%
Abbott Laboratories 0.10% due 1/11-2/9/2010 (5)		51,600			51,596			1.99
Federal Farm Credit Banks 0.16%-0.17% due 5/26-5/27/2010		50,500			50,464			1.95
Coca-Cola Co. 0.18% due 1/22-3/18/2010 (5)		37,750			37,740			1.46
Variable Funding Capital Company LLC 0.16% due 1/6/2010 (5)		25,000			25,000			.97
Microsoft Corp. 0.06% due 1/19/2010 (5)		25,000			24,999			.97
Walt Disney Co. 0.12% due 2/2/2010 (5)		25,000			24,997			.97
Straight-A Funding LLC 0.18% due 3/8/2010 (5)		25,000			24,993			.96
NetJets Inc. 0.11% due 1/13/2010 (5)		21,000			20,999			.81
Other securities					3,399			.13
Total short-term securities (cost: $327,284,000)					327,280			12.65
Total investment securities (cost: $2,665,956,000)					2,689,323			103.96
Other assets less liabilities					(102,381	)		(3.96	)
Net assets				$	2,586,942			100.00	%

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

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

(4) 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 $34,775,000, which represented 1.34% of the net assets of the fund.

(5) 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 $295,945,000, which represented 11.44% of the net assets of the fund.

See Notes to Financial Statements

Cash Management Fund

Investment portfolio

December 31, 2009

Short-term securities — 99.97%	Principal amount (000)		Value (000)
Corporate short-term notes — 81.50%
CBA (Delaware) Finance Inc. 0.20% due 2/12/2010	$	35,000	$	34,992
BNZ International Funding Ltd. 0.22% due 2/12/20101		35,000		34,992
Québec (Province of) 0.11% due 1/11–1/12/20101		31,500		31,499
Medtronic Inc. 0.10% due 1/27/20101		30,900		30,898
Eni Finance USA Inc. 0.15% due 1/12/20101		30,000		29,998
Caisse d’Amortissement de la Dette Sociale 0.14% due 2/2/2010		30,000		29,996
Variable Funding Capital Company LLC 0.16%–0.17% due 1/22–2/9/20101		30,000		29,994
Bank of America Corp. 0.20% due 3/8–3/9/2010		30,000		29,988
Straight-A Funding LLC 0.18% due 2/3/20101		29,100		29,096
Private Export Funding Corp. 0.10% due 1/11/20101		28,000		27,999
General Electric Capital Services, Inc. 0.17% due 2/18/2010		28,000		27,991
Coca-Cola Co. 0.13% due 2/4/20101		27,300		27,297
Thunder Bay Funding, LLC 0.16% due 1/19/20101		26,612		26,610
Abbott Laboratories 0.10% due 1/4/20101		26,000		26,000
Calyon North America Inc. 0.16% due 1/28/2010		25,700		25,697
Barton Capital LLC 0.20% due 1/11/20101		25,000		24,998
Hewlett-Packard Co. 0.11% due 1/15/20101		24,000		23,999
Westpac Banking Corp. 0.18%–0.20% due 1/15–2/11/20101		22,700		22,696
ING (U.S.) Funding LLC 0.17% due 1/14/2010		20,000		19,999
Rhode Island Health and Educational Building Corp. (Brown University), Series A, TECP, 0.20% due 2/5/2010		15,200		15,197
GDF SUEZ 0.19% due 1/21/20101		15,000		14,998
Walt Disney Co. 0.11% due 1/21/20101		13,000		12,999
Harvard University 0.12% due 1/14/2010		12,049		12,048
NetJets Inc. 0.12% due 1/29/20101		11,400		11,398
Johnson & Johnson 0.25% due 8/3/20101		10,600		10,582
Toronto-Dominion Holdings USA Inc. 0.23% due 5/17/20101		10,500		10,490
UBS Finance (Delaware) LLC 0.62% due 9/24/2010		10,000		9,966
Barclays U.S. Funding Corp. 0.18% due 3/3/2010		8,000		7,997
				640,414
Federal agency discount notes — 14.09%
Fannie Mae 0.07%–0.195% due 2/1–6/23/2010		32,200		32,186
Freddie Mac 0.18%–0.21% due 6/14–8/4/2010		30,000		29,966
Federal Home Loan Bank 0.122% due 1/13/2010		28,400		28,399
Federal Farm Credit Banks 0.20% due 6/15/2010		13,000		12,988
International Bank for Reconstruction and Development 0.12% due 1/15/2010		7,200		7,200
				110,739
U.S. Treasuries — 4.38%
U.S. Treasury Bills 0.165%–0.267% due 5/27–10/21/2010		34,500		34,442
Total investment securities (cost: $785,609,000)				785,595
Other assets less liabilities				220
Net assets			$	785,815

1Purchased 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 $426,543,000, which represented 54.28% of the net assets of the fund.

Key to abbreviation

TECP = Tax-Exempt Commercial Paper

Cash Management Fund

Investment portfolio, December 31, 2009

	Principal						Percent
	amount			Value			of net
Short-term securities  - 99.97%		(000	)		(000	)	assets
Corporate short-term notes  -  81.50%
CBA (Delaware) Finance Inc. 0.20% due 2/12/2010	$	35,000		$	34,992			4.45	%
BNZ International Funding Ltd. 0.22% due 2/12/2010 (1)		35,000			34,992			4.45
Québec (Province of) 0.11% due 1/11-1/12/2010 (1)		31,500			31,499			4.01
Medtronic Inc. 0.10% due 1/27/2010 (1)		30,900			30,898			3.93
Eni Finance USA Inc. 0.15% due 1/12/2010 (1)		30,000			29,998			3.82
Caisse d'Amortissement de la Dette Sociale 0.14% due 2/2/2010		30,000			29,996			3.82
Variable Funding Capital Company LLC 0.16%-0.17% due 1/22-2/9/2010 (1)		30,000			29,994			3.82
Bank of America Corp. 0.20% due 3/8-3/9/2010		30,000			29,988			3.82
Straight-A Funding LLC 0.18% due 2/3/2010 (1)		29,100			29,096			3.70
Private Export Funding Corp. 0.10% due 1/11/2010 (1)		28,000			27,999			3.56
General Electric Capital Services, Inc. 0.17% due 2/18/2010		28,000			27,991			3.56
Coca-Cola Co. 0.13% due 2/4/2010 (1)		27,300			27,297			3.47
Thunder Bay Funding, LLC 0.16%  due 1/19/2010 (1)		26,612			26,610			3.39
Abbott Laboratories 0.10% due 1/4/2010 (1)		26,000			26,000			3.31
Calyon North America Inc. 0.16% due 1/28/2010		25,700			25,697			3.27
Barton Capital LLC 0.20%  due 1/11/2010 (1)		25,000			24,998			3.18
Hewlett-Packard Co. 0.11% due 1/15/2010 (1)		24,000			23,999			3.05
Westpac Banking Corp. 0.18%-0.20% due 1/15-2/11/2010 (1)		22,700			22,696			2.89
ING (U.S.) Funding LLC 0.17% due 1/14/2010		20,000			19,999			2.55
Rhode Island Health and Educational Building Corp. (Brown University), Series A, TECP, 0.20% due 2/5/2010		15,200			15,197			1.93
GDF SUEZ 0.19% due 1/21/2010 (1)		15,000			14,998			1.91
Walt Disney Co. 0.11% due 1/21/2010 (1)		13,000			12,999			1.65
Harvard University 0.12% due 1/14/2010		12,049			12,048			1.53
NetJets Inc. 0.12% due 1/29/2010 (1)		11,400			11,398			1.45
Johnson & Johnson 0.25% due 8/3/2010 (1)		10,600			10,582			1.35
Toronto-Dominion Holdings USA Inc. 0.23% due 5/17/2010 (1)		10,500			10,490			1.34
UBS Finance (Delaware) LLC 0.62%  due 9/24/2010		10,000			9,966			1.27
Barclays U.S. Funding Corp. 0.18% due 3/3/2010		8,000			7,997			1.02
					640,414			81.50
Federal agency discount notes  -  14.09%
Fannie Mae 0.07%-0.195% due 2/1-6/23/2010		32,200			32,186			4.10
Freddie Mac 0.18%-0.21% due 6/14-8/4/2010		30,000			29,966			3.81
Federal Home Loan Bank 0.122% due 1/13/2010		28,400			28,399			3.61
Federal Farm Credit Banks 0.20% due 6/15/2010		13,000			12,988			1.65
International Bank for Reconstruction and Development 0.12% due 1/15/2010		7,200			7,200			.92
					110,739			14.09
U.S. Treasuries  -  4.38%
U.S. Treasury Bills 0.165%-0.267% due 5/27-10/21/2010		34,500			34,442			4.38
Total investment securities (cost: $785,609,000)					785,595			99.97
Other assets less liabilities					220			.03
Net assets				$	785,815			100.00	%

(1) 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 $426,543,000, which represented 54.28% of the net assets of the fund.

See Notes to Financial Statements

Financial Statements

Statements of assets and liabilities at December 31, 2009
	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	$	222,523		$	5,133,960		$	3,100,809		$	24,079,155		$	9,333,422		$	1,992,186		$	3,773,499		$	2,107,485
Affiliated issuers		-			-			179,651			947,949			-			-			-			7,294
Cash denominated in currencies other than U.S. dollars		-			-			340			-			-			428			-			92
Cash		134			134			81			113			140			118			81			366
Unrealized appreciation on open forward currency contracts		-			-			-			-			-			26			-			-
Receivables for:
Sales of investments		305			15,889			12,267			11,524			2,744			94			790			1,974
Sales of fund's shares		218			2,487			2,231			4,800			15,585			638			211			218
Closed forward currency contracts		-			-			-			-			-			-			-			-
Dividends and interest		165			4,305			4,907			18,283			11,541			5,777			4,975			4,085
		223,345			5,156,775			3,300,286			25,061,824			9,363,432			1,999,267			3,779,556			2,121,514
Liabilities:
Unrealized depreciation on open forward currency contracts		-			-			-			-			-			-			-			-
Payables for:
Purchases of investments		343			153			13,005			17,916			2,762			800			19,982			7,900
Repurchases of fund's shares		234			10,869			2,787			36,829			12,351			1,579			5,202			635
Closed forward currency contracts		-			-			-			-			-			-			-			-
Investment advisory services		108			2,303			1,941			6,837			3,896			1,254			1,341			1,055
Distribution services		40			869			557			3,882			1,369			314			709			412
Trustees' deferred compensation		-	*		13			8			244			115			3			8			2
Non-U.S. taxes		-			5,225			369			-			10,152			3,125			-			174
Other		2			48			14			34			2,698			56			1			16
		727			19,480			18,681			65,742			33,343			7,131			27,243			10,194
Net assets at December 31, 2009 (total: $100,137,746)	$	222,618		$	5,137,295		$	3,281,605		$	24,996,082		$	9,330,089		$	1,992,136		$	3,752,313		$	2,111,320
Investment securities, at cost:
Unaffiliated issuers	$	205,984		$	4,147,173		$	2,663,925		$	20,762,265		$	7,832,040		$	1,590,848		$	3,399,449		$	1,930,796
Affiliated issuers	$	-		$	-		$	212,105		$	838,719		$	-		$	-		$	-		$	15,878
Cash denominated in currencies other than U.S. dollars, at cost	$	-		$	-		$	340		$	-		$	-		$	428		$	-		$	91
Net assets consist of:
Capital paid in on shares of beneficial interest	$	237,204		$	5,113,605		$	3,467,597		$	26,375,800		$	9,057,616		$	1,756,715		$	4,204,331		$	2,573,588
Undistributed (distributions in excess of) net investment income		99			10,202			(15,995	)		46,571			17,735			(425	)		10,324			8,575
(Accumulated) undistributed net realized (loss) gain		(31,225	)		(968,141	)		(574,186	)		(4,852,639	)		(1,236,876	)		(162,427	)		(836,392	)		(638,829	)
Net unrealized appreciation (depreciation)		16,540			981,629			404,189			3,426,350			1,491,614			398,273			374,050			167,986
Net assets at December 31, 2009	$	222,618		$	5,137,295		$	3,281,605		$	24,996,082		$	9,330,089		$	1,992,136		$	3,752,313		$	2,111,320
Shares of beneficial interest issued and outstanding (no stated par value) - unlimited shares authorized:
Class 1:
Net assets (total: $30,152,356)	$	30,329		$	1,037,596		$	603,439		$	6,565,105		$	2,851,184		$	499,591		$	408,178		$	160,513
Shares outstanding		2,709			52,908			33,526			141,327			166,011			24,930			48,747			17,561
Net asset value per share	$	11.20		$	19.61		$	18.00		$	46.45		$	17.17		$	20.04		$	8.37		$	9.14
Class 2:
Net assets (total: $69,350,001)	$	192,289		$	4,099,699		$	2,678,166		$	18,200,705		$	6,410,915		$	1,492,545		$	3,344,135		$	1,950,807
Shares outstanding		17,250			210,275			150,928			394,825			374,583			75,050			402,318			213,872
Net asset value per share	$	11.15		$	19.50		$	17.74		$	46.10		$	17.11		$	19.89		$	8.31		$	9.12
Class 3:
Net assets (total: $635,389)		-			-			-		$	230,272		$	67,990			-			-			-
Shares outstanding		-			-			-			4,953			3,957			-			-			-
Net asset value per share		-			-			-		$	46.49		$	17.18			-			-			-
(*) Amount less than one thousand.
See Notes to Financial Statements

Statements of assets and liabilities at December 31, 2009
													(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	$	24,591,375		$	125,594		$	9,766,064		$	8,703,997		$	1,364,358		$	1,684,533		$	2,689,323	$	785,595
Affiliated issuers		-			-			-			-			-			-			-		-
Cash denominated in currencies other than U.S. dollars		-			-			-			-			-			-			-		-
Cash		107			125			420			809			137			955			103		114
Unrealized appreciation on open forward currency contracts		-			-			-			9,167			2,246			2			-		-
Receivables for:
Sales of investments		18,608			-			7,838			983			2			13,752			392		-
Sales of fund's shares		6,081			960			8,495			32,816			3,258			940			1,953		889
Closed forward currency contracts		-			-			-			1,056			508			-			-		-
Dividends and interest		28,309			146			31,561			82,038			20,966			28,464			16,583		-
		24,644,480			126,825			9,814,378			8,830,866			1,391,475			1,728,646			2,708,354		786,598
Liabilities:
Unrealized depreciation on open forward currency contracts		-			-			-			67			4,170			1			-		-
Payables for:
Purchases of investments		14,937			-			76,436			412,817			21,325			5,014			119,903		-
Repurchases of fund's shares		33,491			-	*		2,499			4,002			18			671			302		406
Closed forward currency contracts		-			-			-			-			230			-			-		-
Investment advisory services		5,576			71			2,477			2,642			637			671			844		218
Distribution services		3,467			20			1,180			988			254			227			337		147
Trustees' deferred compensation		287			-	*		68			15			1			29			25		12
Non-U.S. taxes		-			-			-			-			-			-			-		-
Other		29			2			114			190			24			492			1		-
		57,787			93			82,774			420,721			26,659			7,105			121,412		783
Net assets at December 31, 2009 (total: $100,137,746)	$	24,586,693		$	126,732		$	9,731,604		$	8,410,145		$	1,364,816		$	1,721,541		$	2,586,942	$	785,815
Investment securities, at cost:
Unaffiliated issuers	$	22,780,025		$	107,418		$	8,916,055		$	8,595,392		$	1,317,225		$	1,645,070		$	2,665,956	$	785,609
Affiliated issuers	$	-		$	-		$	-		$	-		$	-		$	-		$	-	$	-
Cash denominated in currencies other than U.S. dollars, at cost	$	-		$	-		$	-		$	-		$	-		$	-		$	-	$	-
Net assets consist of:
Capital paid in on shares of beneficial interest	$	25,891,025		$	107,800		$	9,968,430		$	8,750,224		$	1,318,976		$	1,915,309		$	2,541,260	$	785,841
Undistributed (distributions in excess of) net investment income		66,424			24			34,933			38,336			7,939			18,214			9,475		(12	)
(Accumulated) undistributed net realized (loss) gain		(3,182,257	)		731			(1,121,746	)		(496,030	)		(7,259	)		(251,443	)		12,840		-
Net unrealized appreciation (depreciation)		1,811,501			18,177			849,987			117,615			45,160			39,461			23,367		(14	)
Net assets at December 31, 2009	$	24,586,693		$	126,732		$	9,731,604		$	8,410,145		$	1,364,816		$	1,721,541		$	2,586,942	$	785,815
Shares of beneficial interest issued and outstanding (no stated par value) - unlimited shares authorized:
Class 1:
Net assets (total: $30,152,356)	$	8,141,984		$	27,528		$	4,151,192		$	3,774,872		$	162,008		$	635,090		$	999,075	$	104,672
Shares outstanding		259,542			1,845			281,521			365,326			13,998			60,537			82,010		9,178
Net asset value per share	$	31.37		$	14.92		$	14.75		$	10.33		$	11.57		$	10.49		$	12.18	$	11.40
Class 2:
Net assets (total: $69,350,001)	$	16,219,484		$	99,204		$	5,537,085		$	4,635,273		$	1,202,808		$	1,062,751		$	1,560,520	$	663,615
Shares outstanding		520,154			6,659			378,037			453,171			104,282			102,244			129,134		58,622
Net asset value per share	$	31.18		$	14.90		$	14.65		$	10.23		$	11.53		$	10.39		$	12.08	$	11.32
Class 3:
Net assets (total: $635,389)	$	225,225		$	-		$	43,327			-			-		$	23,700		$	27,347	$	17,528
Shares outstanding		7,175			-			2,937			-			-			2,256			2,243		1,540
Net asset value per share	$	31.39		$	-		$	14.75			-			-		$	10.51		$	12.19	$	11.38
(*) Amount less than one thousand.
See Notes to Financial Statements

Statements of operations for the year ended December 31, 2009
	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	$	2,179		$	91,806		$	33,949		$	256,390		$	172,320		$	30,801		$	83,889		$	46,732
Interest		50			2,741			1,917			5,817			3,590			14,620			722			12,248
		2,229			94,547			35,866			262,207			175,910			45,421			84,611			58,980
Fees and expenses(3):
Investment advisory services		1,063			23,377			18,901			69,008			38,935			12,223			13,233			10,803
Distribution services - Class 2		399			8,773			5,409			38,216			13,589			3,060			6,943			4,165
Distribution services - Class 3		-			-			-			371			108			-			-			-
Transfer agent services		-	(4)		-	(4)		-	(4)		1			-	(4)		-	(4)		-	(4)		-	(4)
Reports to shareholders		11			257			152			1,256			458			91			182			107
Registration statement and prospectus		5			164			95			789			295			58			103			79
Trustees' compensation		2			59			34			360			142			20			41			22
Auditing and legal		8			38			43			148			75			23			22			14
Custodian		25			590			570			470			1,803			606			29			184
State and local taxes		2			48			30			231			83			17			33			21
Other		7			29			56			49			80			38			7			26
Total fees and expenses before waiver		1,522			33,335			25,290			110,899			55,568			16,136			20,593			15,421
Less waiver of fees and expenses:
Investment advisory services		-			-			-			-			-			-			-			-
Total fees and expenses after waiver		1,522			33,335			25,290			110,899			55,568			16,136			20,593			15,421
Net investment income (loss)		707			61,212			10,576			151,308			120,342			29,285			64,018			43,559
Net realized (loss) gain and unrealized appreciation (depreciation) on investments, forward currency contracts and currency:
Net realized (loss) gain on:
Investments(2)		(21,503	)		(577,740	)		(343,257	)		(3,041,995	)		(877,105	)		(69,390	)		(449,056	)		(309,654	)
Forward currency contracts		-			-			-			-			-			(135	)		-			-
Currency transactions		5			293			(1,004	)		(737	)		677			(437	)		-			733
		(21,498	)		(577,447	)		(344,261	)		(3,042,732	)		(876,428	)		(69,962	)		(449,056	)		(308,921	)
Net unrealized appreciation (depreciation) on:
Investments		96,135			2,083,303			1,594,406			9,997,073			3,605,114			687,894			1,200,546			883,134
Forward currency contracts		-			-			-			-			-			6			-			-
Currency translations		1			39			124			204			245			252			-			155
		96,136			2,083,342			1,594,530			9,997,277			3,605,359			688,152			1,200,546			883,289
Net realized (loss) gain and unrealized appreciation (depreciation) on investments, forward currency contracts and currency		74,638			1,505,895			1,250,269			6,954,545			2,728,931			618,190			751,490			574,368
Net increase (decrease) in net assets resulting from operations	$	75,345		$	1,567,107		$	1,260,845		$	7,105,853		$	2,849,273		$	647,475		$	815,508		$	617,927
(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.
See Notes to Financial Statements

Statements of operations for the year ended December 31, 2009
																			(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
Investment income:
Income (net of non-U.S. taxes)(1) (2):
Dividends	$	427,958		$	1,608		$	118,240		$	1,937		$	1		$	559		$	-		$	-
Interest		11,018			241			128,255			319,492			48,838			119,446			73,204			2,601
		438,976			1,849			246,495			321,429			48,839			120,005			73,204			2,601
Fees and expenses(3):
Investment advisory services		56,835			417			25,476			26,317			5,945			6,760			8,397			3,299
Distribution services - Class 2		34,865			107			12,411			10,036			2,312			2,332			3,431			2,201
Distribution services - Class 3		368			-			73			-			-			38			54			41
Transfer agent services		1			-	(4)		1			1			-	(4)		-	(4)		-	(4)		-	(4)
Reports to shareholders		1,223			2			486			409			60			85			127			73
Registration statement and prospectus		679			4			287			254			56			51			95			52
Trustees' compensation		374			-	(4)		127			85			12			29			34			19
Auditing and legal		143			1			57			50			8			10			15			6
Custodian		395			14			80			159			113			7			6			2
State and local taxes		227			-	(4)		93			82			13			17			26			18
Other		77			10			23			20			8			9			5			3
Total fees and expenses before waiver		95,187			555			39,114			37,413			8,527			9,338			12,190			5,714
Less waiver of fees and expenses:
Investment advisory services		-			-			-			6			-			-			-			-
Total fees and expenses after waiver		95,187			555			39,114			37,407			8,527			9,338			12,190			5,714
Net investment income (loss)		343,789			1,294			207,381			284,022			40,312			110,667			61,014			(3,113	)
Net realized (loss) gain and unrealized appreciation (depreciation) on investments, forward currency contracts and currency:
Net realized (loss) gain on:
Investments(2)		(1,551,210	)		2,445			(639,326	)		(328,609	)		(7,657	)		(92,599	)		15,865			2
Forward currency contracts		-			-			(746	)		(34,335	)		(8,286	)		(39	)		-			-
Currency transactions		844			20			11			(1,994	)		(872	)		(33	)		-			-
		(1,550,366	)		2,465			(640,061	)		(364,938	)		(16,815	)		(92,671	)		15,865			2
Net unrealized appreciation (depreciation) on:
Investments		7,059,667			17,095			2,289,474			908,610			75,606			461,595			(22,761	)		(23	)
Forward currency contracts		-			-			1,120			17,598			(3,647	)		-			-			-
Currency translations		253			1			29			117			231			88			-			-
		7,059,920			17,096			2,290,623			926,325			72,190			461,683			(22,761	)		(23	)
Net realized (loss) gain and unrealized appreciation (depreciation) on investments, forward currency contracts and currency		5,509,554			19,561			1,650,562			561,387			55,375			369,012			(6,896	)		(21	)
Net increase (decrease) in net assets resulting from operations	$	5,853,343		$	20,855		$	1,857,943		$	845,409		$	95,687		$	479,679		$	54,118		$	(3,134	)
(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.
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, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008
Operations:
Net investment income (loss)	$	707		$	2,503		$	61,212		$	112,099		$	10,576		$	24,278		$	151,308		$	262,063		$	120,342		$	210,486
Net realized (loss) gain on investments, forward currency contracts and currency transactions		(21,498	)		(9,849	)		(577,447	)		(393,456	)		(344,261	)		(219,494	)		(3,042,732	)		(1,805,002	)		(876,428	)		(325,182	)
Net unrealized appreciation (depreciation) on investments, forward currency contracts and currency translations		96,136			(118,825	)		2,083,342			(2,144,093	)		1,594,530			(2,107,720	)		9,997,277			(12,402,377	)		3,605,359			(4,851,926	)
Net increase (decrease) in net assets resulting from operations		75,345			(126,171	)		1,567,107			(2,425,450	)		1,260,845			(2,302,936	)		7,105,853			(13,945,316	)		2,849,273			(4,966,622	)
Dividends and distributions paid to shareholders:
Dividends from net investment income:
Class 1		(203	)		(277	)		(14,409	)		(18,705	)		(2,295	)		-			(48,554	)		(74,161	)		(42,244	)		(57,453	)
Class 2		(962	)		(1,515	)		(49,897	)		(80,484	)		(6,036	)		-			(101,700	)		(161,761	)		(83,779	)		(135,888	)
Class 3		-			-			-			-			-			-			(1,414	)		(2,621	)		(933	)		(1,652	)
Total dividends from net investment income		(1,165	)		(1,792	)		(64,306	)		(99,189	)		(8,331	)		-			(151,668	)		(238,543	)		(126,956	)		(194,993	)
Distributions from net realized gain on investments:
Short-term net realized gains:
Class 1		-			(365	)		-			(8,688	)		-			(7,339	)		-			(78,011	)		-			(35,879	)
Class 2		-			(2,739	)		-			(48,505	)		-			(63,935	)		-			(249,962	)		-			(106,959	)
Class 3		-			-			-			-			-			-			-			(4,124	)		-			(1,383	)
Long-term net realized gains:
Class 1		-			(358	)		-			(58,847	)		-			(40,224	)		-			(618,631	)		(12,249	)		(290,130	)
Class 2		-			(2,684	)		-			(328,542	)		-			(350,423	)		-			(1,982,221	)		(28,704	)		(864,914	)
Class 3		-			-			-			-			-			-			-			(32,706	)		(316	)		(11,178	)
Total distributions from net realized gain on investments		-			(6,146	)		-			(444,582	)		-			(461,921	)		-			(2,965,655	)		(41,269	)		(1,310,443	)
Total dividends and distributions paid to shareholders		(1,165	)		(7,938	)		(64,306	)		(543,771	)		(8,331	)		(461,921	)		(151,668	)		(3,204,198	)		(168,225	)		(1,505,436	)
Capital share transactions:
Class 1:
Proceeds from initial capitalization		-			-			-			-			-			-			-			-			-			-
Proceeds from shares sold		7,055			2,400			152,420			621,804			156,323			319,417			1,133,307			3,762,573			492,072			1,737,223
Proceeds from reinvestment of dividends and distributions		203			1,000			14,409			86,240			2,295			47,563			48,554			770,803			54,493			383,462
Cost of shares repurchased		(4,461	)		(4,466	)		(98,881	)		(250,373	)		(82,880	)		(119,721	)		(1,202,331	)		(744,896	)		(364,115	)		(378,505	)
Net increase (decrease) from Class 1 transactions		2,797			(1,066	)		67,948			457,671			75,738			247,259			(20,470	)		3,788,480			182,450			1,742,180
Class 2:
Proceeds from shares sold		28,318			34,335			175,261			461,271			231,775			305,775			1,076,675			1,909,204			394,974			816,329
Proceeds from reinvestment of dividends and distributions		962			6,938			49,897			457,531			6,036			414,358			101,700			2,393,944			112,483			1,107,761
Cost of shares repurchased		(32,843	)		(31,698	)		(532,009	)		(397,952	)		(338,277	)		(492,404	)		(1,430,613	)		(3,409,648	)		(853,869	)		(1,916,909	)
Net (decrease) increase from Class 2 transactions		(3,563	)		9,575			(306,851	)		520,850			(100,466	)		227,729			(252,238	)		893,500			(346,412	)		7,181
Class 3:
Proceeds from shares sold		-			-			-			-			-			-			2,265			2,203			1,209			676
Proceeds from reinvestment of dividends and distributions		-			-			-			-			-			-			1,414			39,451			1,249			14,213
Cost of shares repurchased		-			-			-			-			-			-			(38,105	)		(60,450	)		(11,488	)		(20,357	)
Net (decrease) increase  from Class 3 transactions		-			-			-			-			-			-			(34,426	)		(18,796	)		(9,030	)		(5,468	)
Net (decrease) increase in net assets resulting from capital share transactions		(766	)		8,509			(238,903	)		978,521			(24,728	)		474,988			(307,134	)		4,663,184			(172,992	)		1,743,893
Total increase (decrease) in net assets		73,414			(125,600	)		1,263,898			(1,990,700	)		1,227,786			(2,289,869	)		6,647,051			(12,486,330	)		2,508,056			(4,728,165	)
Net assets:
Beginning 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
End of period	$	222,618		$	149,204		$	5,137,295		$	3,873,397		$	3,281,605		$	2,053,819		$	24,996,082		$	18,349,031		$	9,330,089		$	6,822,033
Undistributed (distributions in excess of) net investment income	$	99		$	552		$	10,202		$	13,764		$	(15,995	)	$	(21,213	)	$	46,571		$	44,711		$	17,735		$	17,082
Shares of beneficial interest:
Class 1:
Shares issued from initial capitalization		-			-			-			-			-			-			-			-			-			-
Shares sold		762			239			9,692			28,686			11,706			17,356			30,528			67,645			36,037			83,834
Shares issued on reinvestment of dividends and distributions		20			95			779			4,469			130			2,210			1,129			14,290			3,462			21,402
Shares repurchased		(502	)		(400	)		(5,953	)		(11,957	)		(5,697	)		(5,755	)		(32,634	)		(14,771	)		(26,005	)		(21,555	)
Net increase (decrease) in shares outstanding		280			(66	)		4,518			21,198			6,139			13,811			(977	)		67,164			13,494			83,681
Class 2:
Shares sold		3,089			2,929			11,097			22,272			16,688			16,749			28,456			38,460			27,365			41,995
Shares issued on reinvestment of dividends and distributions		100			643			2,729			23,454			347			19,490			2,410			44,065			7,223			61,328
Shares repurchased		(3,595	)		(3,007	)		(33,950	)		(22,507	)		(24,566	)		(25,275	)		(38,315	)		(60,320	)		(62,079	)		(94,449	)
Net (decrease) increase in shares outstanding		(406	)		565			(20,124	)		23,219			(7,531	)		10,964			(7,449	)		22,205			(27,491	)		8,874
Class 3:
Shares sold		-			-			-			-			-			-			59			43			78			31
Shares issued on reinvestment of dividends and distributions		-			-			-			-			-			-			33			719			80			781
Shares repurchased		-			-			-			-			-			-			(1,033	)		(1,199	)		(837	)		(1,155	)
Net (decrease) increase in shares outstanding		-			-			-			-			-			-			(941	)		(437	)		(679	)		(343	)
(*)For the period November 18, 2008, commencement of operations, through December 31, 2008.
(†)Amount less than one thousand.
See Notes to Financial Statements

Statements of changes in net assets
	New World Fund						Blue Chip Income and Growth Fund						Global Growth and Income Fund						Growth-Income Fund						International Growth and Income Fund
	Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Period ended December 31, 2008(*)
Operations:
Net investment income (loss)	$	29,285		$	36,272		$	64,018		$	78,607		$	43,559		$	57,292		$	343,789		$	447,478		$	1,294		$	15
Net realized (loss) gain on investments, forward currency contracts and currency transactions		(69,962	)		(100,565	)		(449,056	)		(385,264	)		(308,921	)		(329,696	)		(1,550,366	)		(1,610,536	)		2,465			48
Net unrealized appreciation (depreciation) on investments, forward currency contracts and currency translations		688,152			(897,077	)		1,200,546			(1,311,260	)		883,289			(807,607	)		7,059,920			(9,906,142	)		17,096			1,081
Net increase (decrease) in net assets resulting from operations		647,475			(961,370	)		815,508			(1,617,917	)		617,927			(1,080,011	)		5,853,343			(11,069,200	)		20,855			1,144
Dividends and distributions paid to shareholders:
Dividends from net investment income:
Class 1		(7,030	)		(6,036	)		(7,922	)		(6,456	)		(3,542	)		(2,936	)		(126,710	)		(132,802	)		(327	)		(8	)
Class 2		(18,903	)		(23,170	)		(60,270	)		(71,777	)		(40,323	)		(43,953	)		(225,593	)		(313,153	)		(1,017	)		(1	)
Class 3		-			-			-			-			-			-			(3,277	)		(5,210	)		-			-
Total dividends from net investment income		(25,933	)		(29,206	)		(68,192	)		(78,233	)		(43,865	)		(46,889	)		(355,580	)		(451,165	)		(1,344	)		(9	)
Distributions from net realized gain on investments:
Short-term net realized gains:
Class 1		-			(3,297	)		-			(2,408	)		-			(394	)		-			(42,380	)		(377	)		-
Class 2		-			(19,413	)		-			(32,987	)		-			(9,569	)		-			(130,677	)		(1,337	)		-
Class 3		-			-			-			-			-			-			-			(2,231	)		-			-
Long-term net realized gains:
Class 1		-			(18,570	)		-			(14,843	)		-			(236	)		-			(351,389	)		-			-
Class 2		-			(109,350	)		-			(203,359	)		-			(5,742	)		-			(1,083,493	)		-			-
Class 3		-			-			-			-			-			-			-			(18,492	)		-			-
Total distributions from net realized gain on investments		-			(150,630	)		-			(253,597	)		-			(15,941	)		-			(1,628,662	)		(1,714	)		-
Total dividends and distributions paid to shareholders		(25,933	)		(179,836	)		(68,192	)		(331,830	)		(43,865	)		(62,830	)		(355,580	)		(2,079,827	)		(3,058	)		(9	)
Capital share transactions:
Class 1:
Proceeds from initial capitalization		-			-			-			-			-			-			-			-			-			10,000
Proceeds from shares sold		157,026			260,949			126,839			213,241			31,416			76,516			1,764,451			3,161,911			10,518			853
Proceeds from reinvestment of dividends and distributions		7,030			27,903			7,922			23,707			3,542			3,566			126,710			526,571			704			8
Cost of shares repurchased		(64,154	)		(116,713	)		(26,536	)		(31,478	)		(11,041	)		(11,387	)		(564,157	)		(1,017,390	)		(960	)		-	(†)
Net increase (decrease) from Class 1 transactions		99,902			172,139			108,225			205,470			23,917			68,695			1,327,004			2,671,092			10,262			10,861
Class 2:
Proceeds from shares sold		131,855			230,183			226,370			295,696			116,122			680,989			612,481			1,083,314			82,649			3,832
Proceeds from reinvestment of dividends and distributions		18,903			151,933			60,270			308,123			40,323			59,264			225,593			1,527,323			2,354			1
Cost of shares repurchased		(177,160	)		(251,926	)		(212,095	)		(454,222	)		(267,041	)		(118,283	)		(1,328,890	)		(3,077,453	)		(2,159	)		-	(†)
Net (decrease) increase from Class 2 transactions		(26,402	)		130,190			74,545			149,597			(110,596	)		621,970			(490,816	)		(466,816	)		82,844			3,833
Class 3:
Proceeds from shares sold		-			-			-			-			-			-			836			328			-			-
Proceeds from reinvestment of dividends and distributions		-			-			-			-			-			-			3,277			25,933			-			-
Cost of shares repurchased		-			-			-			-			-			-			(36,309	)		(62,387	)		-			-
Net (decrease) increase  from Class 3 transactions		-			-			-			-			-			-			(32,196	)		(36,126	)		-			-
Net (decrease) increase in net assets resulting from capital share transactions		73,500			302,329			182,770			355,067			(86,679	)		690,665			803,992			2,168,150			93,106			14,694
Total increase (decrease) in net assets		695,042			(838,877	)		930,086			(1,594,680	)		487,383			(452,176	)		6,301,755			(10,980,877	)		110,903			15,829
Net assets:
Beginning 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			-
End of period	$	1,992,136		$	1,297,094		$	3,752,313		$	2,822,227		$	2,111,320		$	1,623,937		$	24,586,693		$	18,284,938		$	126,732		$	15,829
Undistributed (distributions in excess of) net investment income	$	(425	)	$	67		$	10,324		$	14,491		$	8,575		$	7,532		$	66,424		$	77,379		$	24		$	54
Shares of beneficial interest:
Class 1:
Shares issued from initial capitalization		-			-			-			-			-			-			-			-			-			1,000
Shares sold		9,899			12,875			18,485			21,505			4,390			8,370			68,983			88,411			793			82
Shares issued on reinvestment of dividends and distributions		369			1,403			996			2,745			406			495			4,254			15,930			48			1
Shares repurchased		(4,019	)		(5,684	)		(3,755	)		(3,582	)		(1,513	)		(1,337	)		(21,293	)		(28,874	)		(79	)		-	(†)
Net increase (decrease) in shares outstanding		6,249			8,594			15,726			20,668			3,283			7,528			51,944			75,467			762			1,083
Class 2:
Shares sold		8,032			10,350			32,904			32,066			15,788			65,607			23,193			31,219			6,285			367
Shares issued on reinvestment of dividends and distributions		1,006			7,444			7,677			35,486			4,662			7,976			7,650			45,619			159			-	(†)
Shares repurchased		(11,463	)		(13,292	)		(31,184	)		(47,846	)		(35,763	)		(14,272	)		(51,758	)		(85,751	)		(152	)		-	(†)
Net (decrease) increase in shares outstanding		(2,425	)		4,502			9,397			19,706			(15,313	)		59,311			(20,915	)		(8,913	)		6,292			367
Class 3:
Shares sold		-			-			-			-			-			-			32			9			-			-
Shares issued on reinvestment of dividends and distributions		-			-			-			-			-			-			111			767			-			-
Shares repurchased		-			-			-			-			-			-			(1,417	)		(1,855	)		-			-
Net (decrease) increase in shares outstanding		-			-			-			-			-			-			(1,274	)		(1,079	)		-			-
(*)For the period November 18, 2008, commencement of operations, through December 31, 2008.
(†)Amount less than one thousand.
See Notes to Financial Statements

Statements of changes in net assets																												(dollars and shares in thousands)
	Asset Allocation Fund						Bond Fund						Global Bond Fund						High-Income Bond Fund						U.S. Government/AAA-Rated Securities Fund						Cash Management Fund
	Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2009			Year ended December 31, 2008
Operations:
Net investment income (loss)	$	207,381		$	237,190		$	284,022		$	312,834		$	40,312		$	31,394		$	110,667		$	102,697		$	61,014		$	48,064		$	(3,113	)	$	15,421
Net realized (loss) gain on investments, forward currency contracts and currency transactions		(640,061	)		(479,424	)		(364,938	)		(146,198	)		(16,815	)		5,002			(92,671	)		(69,935	)		15,865			24,592			2			52
Net unrealized appreciation (depreciation) on investments, forward currency contracts and currency translations		2,290,623			(2,650,307	)		926,325			(735,203	)		72,190			(31,288	)		461,683			(374,921	)		(22,761	)		33,068			(23	)		30
Net increase (decrease) in net assets resulting from operations		1,857,943			(2,892,541	)		845,409			(568,567	)		95,687			5,108			479,679			(342,159	)		54,118			105,724			(3,134	)		15,503
Dividends and distributions paid to shareholders:
Dividends from net investment income:
Class 1		(93,285	)		(75,328	)		(113,953	)		(130,394	)		(2,339	)		(5,117	)		(40,037	)		(29,619	)		(25,309	)		(12,502	)		(316	)		(2,670	)
Class 2		(117,534	)		(159,530	)		(137,087	)		(210,186	)		(15,691	)		(37,266	)		(68,526	)		(70,268	)		(38,568	)		(30,378	)		(1,604	)		(14,466	)
Class 3		(945	)		(1,396	)		-			-			-			-			(1,530	)		(1,668	)		(714	)		(870	)		(46	)		(396	)
Total dividends from net investment income		(211,764	)		(236,254	)		(251,040	)		(340,580	)		(18,030	)		(42,383	)		(110,093	)		(101,555	)		(64,591	)		(43,750	)		(1,966	)		(17,532	)
Distributions from net realized gain on investments:
Short-term net realized gains:
Class 1		-			(2,375	)		-			(3,045	)		-			(23	)		-			-			(4,791	)		-			(12	)		-
Class 2		-			(7,163	)		-			(6,365	)		-			(262	)		-			-			(9,261	)		-			(76	)		-
Class 3		-			(65	)		-			-			-			-			-			-			(207	)		-			(2	)		-
Long-term net realized gains:
Class 1		-			(85,489	)		-			(1,523	)		-			-			-			-			(1,226	)		-			-			-
Class 2		-			(257,869	)		-			(3,182	)		-			-			-			-			(2,369	)		-			-			-
Class 3		-			(2,333	)		-			-			-			-			-			-			(53	)		-			-			-
Total distributions from net realized gain on investments		-			(355,294	)		-			(14,115	)		-			(285	)		-			-			(17,907	)		-			(90	)		-
Total dividends and distributions paid to shareholders		(211,764	)		(591,548	)		(251,040	)		(354,695	)		(18,030	)		(42,668	)		(110,093	)		(101,555	)		(82,498	)		(43,750	)		(2,056	)		(17,532	)
Capital share transactions:
Class 1:
Proceeds from initial capitalization		-			-			-			-			-			-			-			-			-			-			-			-
Proceeds from shares sold		1,291,806			1,212,808			1,488,336			2,343,349			93,061			122,622			223,658			219,626			561,764			346,530			41,500			108,538
Proceeds from reinvestment of dividends and distributions		93,285			163,192			113,953			134,962			2,339			5,140			40,037			29,619			31,326			12,502			328			2,670
Cost of shares repurchased		(156,605	)		(140,613	)		(168,758	)		(496,411	)		(54,163	)		(40,178	)		(89,997	)		(94,708	)		(79,283	)		(90,947	)		(95,018	)		(65,037	)
Net increase (decrease) from Class 1 transactions		1,228,486			1,235,387			1,433,531			1,981,900			41,237			87,584			173,698			154,537			513,807			268,085			(53,190	)		46,171
Class 2:
Proceeds from shares sold		167,583			330,159			891,201			557,306			387,303			696,760			179,017			166,838			446,211			585,103			245,303			801,545
Proceeds from reinvestment of dividends and distributions		117,534			424,562			137,087			219,733			15,691			37,528			68,526			70,268			50,198			30,378			1,680			14,466
Cost of shares repurchased		(528,840	)		(698,531	)		(168,324	)		(1,427,995	)		(70,390	)		(178,394	)		(206,867	)		(140,321	)		(137,945	)		(37,148	)		(601,048	)		(243,682	)
Net (decrease) increase from Class 2 transactions		(243,723	)		56,190			859,964			(650,956	)		332,604			555,894			40,676			96,785			358,464			578,333			(354,065	)		572,329
Class 3:
Proceeds from shares sold		1,407			1,176			-			-			-			-			4,542			3,359			3,034			9,104			11,746			22,468
Proceeds from reinvestment of dividends and distributions		945			3,794			-			-			-			-			1,530			1,668			974			870			48			396
Cost of shares repurchased		(7,954	)		(12,304	)		-			-			-			-			(6,093	)		(7,012	)		(9,441	)		(7,273	)		(19,384	)		(17,849	)
Net (decrease) increase  from Class 3 transactions		(5,602	)		(7,334	)		-			-			-			-			(21	)		(1,985	)		(5,433	)		2,701			(7,590	)		5,015
Net (decrease) increase in net assets resulting from capital share transactions		979,161			1,284,243			2,293,495			1,330,944			373,841			643,478			214,353			249,337			866,838			849,119			(414,845	)		623,515
Total increase (decrease) in net assets		2,625,340			(2,199,846	)		2,887,864			407,682			451,498			605,918			583,939			(194,377	)		838,458			911,093			(420,035	)		621,486
Net assets:
Beginning of period		7,106,264			9,306,110			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
End of period	$	9,731,604		$	7,106,264		$	8,410,145		$	5,522,281		$	1,364,816		$	913,318		$	1,721,541		$	1,137,602		$	2,586,942		$	1,748,484		$	785,815		$	1,205,850
Undistributed (distributions in excess of) net investment income	$	34,933		$	40,422		$	38,336		$	25,297		$	7,939		$	1,276		$	18,214		$	16,493		$	9,475		$	10,612		$	(12	)	$	1,902
Shares of beneficial interest:
Class 1:
Shares issued from initial capitalization		-			-			-			-			-			-			-			-			-			-			-			-
Shares sold		102,533			78,479			149,856			215,356			8,516			11,157			24,161			20,911			45,477			29,015			3,630			9,431
Shares issued on reinvestment of dividends and distributions		6,550			11,171			11,086			14,256			202			485			3,917			3,668			2,560			1,030			29			233
Shares repurchased		(12,025	)		(9,302	)		(16,953	)		(47,442	)		(5,154	)		(3,772	)		(9,740	)		(8,842	)		(6,426	)		(7,661	)		(8,315	)		(5,654	)
Net increase (decrease) in shares outstanding		97,058			80,348			143,989			182,170			3,564			7,870			18,338			15,737			41,611			22,384			(4,656	)		4,010
Class 2:
Shares sold		12,899			20,423			90,070			51,745			34,340			62,564			19,607			16,293			36,359			49,249			21,588			70,023
Shares issued on reinvestment of dividends and distributions		8,334			28,402			13,480			23,300			1,363			3,545			6,784			8,688			4,139			2,522			149			1,270
Shares repurchased		(42,295	)		(47,156	)		(17,148	)		(132,359	)		(6,671	)		(16,718	)		(21,748	)		(13,609	)		(11,281	)		(3,099	)		(52,942	)		(21,302	)
Net (decrease) increase in shares outstanding		(21,062	)		1,669			86,402			(57,314	)		29,032			49,391			4,643			11,372			29,217			48,672			(31,205	)		49,991
Class 3:
Shares sold		107			72			-			-			-			-			512			324			245			760			1,029			1,956
Shares issued on reinvestment of dividends and distributions		67			251			-			-			-			-			150			203			80			72			4			35
Shares repurchased		(609	)		(806	)		-			-			-			-			(652	)		(657	)		(765	)		(608	)		(1,699	)		(1,553	)
Net (decrease) increase in shares outstanding		(435	)		(483	)		-			-			-			-			10			(130	)		(440	)		224			(666	)		438
(*)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”). On November 24, 2009, shareholders approved a proposal to reorganize the Series from a Massachusetts business trust to a Delaware statutory trust. The reorganization may be completed in 2010 or early 2011; however, the Series reserves the right to delay the implementation. Shareholders also approved amendments to the Series’ Investment Advisory and Service Agreement and amendments to and elimination of certain fundamental investment policies of the funds.

The assets of each fund are segregated, with each fund accounted for separately. The funds’ investment objectives and the principle strategies the funds use to achieve these objectives are as follows:

Global Discovery Fund	Seeks long-term growth of capital through investments in services and information companies in the U.S. and around the world. On November 24, 2009, shareholders approved a proposal to change the investment objective to seek long term growth of capital by investing in securities of companies that can benefit from innovation, exploit new technologies or provide products and services that meet the demands of an evolving global economy. The new investment objective is expected to become effective on May 1, 2010.
Global Growth Fund	Seeks growth of capital over time by investing primarily in common stocks of companies around the world.
Global Small Capitalization Fund	Seeks long-term growth of capital by investing primarily in stocks of smaller companies around the world.
Growth Fund	Seeks long-term growth of capital by investing primarily in U.S. common stocks.
International Fund	Seeks growth of capital over time by investing primarily in common stocks of companies based outside the U.S.
New World Fund	Seeks long-term growth of capital by investing primarily in stocks of companies with significant exposure to countries that have developing economies and/or markets. The fund also may invest in bonds.
Blue Chip Income and Growth Fund	Seeks to produce dividend income exceeding the average yield on the S&P 500 and provide an opportunity for growth of principal.
Global Growth and Income Fund	Seeks capital growth over time and to provide current income by investing primarily in stocks of well-established companies located around the world.
Growth-Income Fund	Seeks capital growth and income over time by investing primarily in U.S. common stocks or other securities that appear to offer potential for capital appreciation and/or dividends.
International Growth and Income Fund	Seeks capital growth over time and current income by investing primarily in stocks of larger, well-established companies domiciled outside 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 securities guaranteed by the U.S. government and in 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:

Net asset values – The funds generally determine their net asset values as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.

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 one or more independent pricing vendors when such prices are available. However, 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 bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Vendors base bond prices on, among other things, valuation matrices that incorporate dealer-supplied valuations, proprietary pricing models and evaluations of the yield curve as of approximately 3:00 p.m. New York time. 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 guidelines 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. 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.

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 recognizedon 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.

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.

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 or experience sharp, short-term declines in value 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 U.S. may be affected to a greater extent than investments in the U.S. 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 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 their 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, 2009, 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 interest or penalties.

All of the funds, with the exception of International Growth and Income Fund, are not subject to examination by U.S. federal tax authorities for years before 2006. 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 state tax authorities for years before 2005. Global Growth and Income Fund and Global Bond Fund were each launched in 2006; therefore, their only tax years, 2006 to 2009, 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 years, 2008 to 2009, remain 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, New World Fund and 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 different 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 pages, 13 funds had capital loss carryforwards available at December 31, 2009. 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			Global			Global Small												Blue Chip			Global
	Discovery			Growth			Capitalization			Growth			International			New World			Income and			Growth and
	Fund			Fund			Fund			Fund			Fund			Fund			Growth Fund			Income Fund
As of December 31, 2009:
Undistributed ordinary income	$	100		$	19,766		$	43,819		$	47,361		$	66,764		$	9,687		$	10,330		$	16,565
Post-October currency loss deferrals (realized during the period  November 1, 2009, through  December 31, 2009)*		-			(143	)		-			(451	)		-			(4	)		-			(218	)
Undistributed long-term capital gain		-			-			-			-			-			-			-			-
Post-October capital loss deferrals (realized during the period  November 1, 2009, through  December 31, 2009)*		-			-			(16,711	)		(33,984	)		(28,119	)		-			(27,928	)		-
Capital loss carryforwards:
Expiring 2010		-			-			-			-			-			-			-			-
Expiring 2011		-			-			-			-			-			-			-			-
Expiring 2016		(1,077	)		(215,002	)		(57,654	)		(1,280,904	)		-			(23,949	)		(304,021	)		(116,550	)
Expiring 2017		(30,033	)		(752,750	)		(496,582	)		(3,348,190	)		(1,185,778	)		(138,476	)		(495,895	)		(526,741	)
	$	(31,110	)	$	(967,752	)	$	(554,236	)	$	(4,629,094	)	$	(1,185,778	)	$	(162,425	)	$	(799,916	)	$	(643,291	)
Capital loss carryforwards expired	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Reclassification to (from) undistributed (distributions in excess of) net investment income from (to) (accumulated) undistributed net realized (loss) gain	$	5		$	(468	)	$	8,386		$	2,220		$	7,267		$	(3,844	)	$	7		$	1,349
Reclassification to capital paid in on shares of beneficial interest from distributions in excess of net investment income		-			-			5,413			-			-			-			-			-
Reclassification to undistributed (distributions in excess of) net investment income from capital paid in on shares of beneficial interest		-			-			-			-			-			-			-			-
Reclassification to (accumulated) undistributed net realized (loss) gain  from capital paid in on shares of beneficial interest		-			-			-			-			-			-			-			-
Gross unrealized appreciation on investment securities	$	40,053		$	1,081,980		$	703,319		$	4,905,719		$	1,929,182		$	464,899		$	638,257		$	321,978
Gross unrealized depreciation on investment securities		(23,629	)		(104,990	)		(361,840	)		(1,669,254	)		(500,328	)		(73,642	)		(272,752	)		(157,195	)
Net unrealized appreciation (depreciation) on investment securities		16,424			976,990			341,479			3,236,465			1,428,854			391,257			365,505			164,783
Cost of investment securities	$	206,099		$	4,156,970		$	2,938,981		$	21,790,639		$	7,904,568		$	1,600,929		$	3,407,994		$	1,949,996
*These deferrals are considered incurred in the subsequent year.
†Amount less than one thousand.

																			(dollars in thousands)
																			U.S.
				International			Asset						Global						Government/			Cash
	Growth-			Growth and			Allocation			Bond			Bond			High-Income			AAA-Rated			Management
	Income Fund			Income Fund			Fund			Fund			Fund			Bond Fund			Securities Fund			Fund
As of December 31, 2009:
Undistributed ordinary income	$	66,783		$	740		$	37,034		$	51,139		$	7,520		$	21,853		$	18,502		$	-
Post-October currency loss deferrals (realized during the period  November 1, 2009, through  December 31, 2009)*		-			-			(31	)		-			(732	)		-			-			-
Undistributed long-term capital gain		-			40			-			-			-			-			4,950			-
Post-October capital loss deferrals (realized during the period  November 1, 2009, through  December 31, 2009)*		(15,964	)		-			(48,416	)		(3,843	)		-			(510	)		-			-
Capital loss carryforwards:
Expiring 2010		-			-			-			-			-			(50,900	)		-			-
Expiring 2011		-			-			-			-			-			(35,517	)		-			-
Expiring 2016		(691,368	)		-			(400,076	)		(98,035	)		(5,498	)		(47,291	)		-			-
Expiring 2017		(2,423,213	)		-			(649,787	)		(383,007	)		(828	)		(113,685	)		-			-
	$	(3,114,581	)	$	-		$	(1,049,863	)	$	(481,042	)	$	(6,326	)	$	(247,393	)	$	-		$	-
Capital loss carryforwards expired	$	-		$	-		$	-		$	-		$	-		$	(41,518	)	$	-		$	-
Reclassification to (from) undistributed (distributions in excess of) net investment income from (to) (accumulated) undistributed net realized (loss) gain	$	836		$	20		$	(1,106	)	$	(19,943	)	$	(15,619	)	$	1,147		$	2,440		$	-
Reclassification to capital paid in on shares of beneficial interest from distributions in excess of net investment income		-			-			-			-			-			-			-			-
Reclassification to undistributed (distributions in excess of) net investment income from capital paid in on shares of beneficial interest		-			-	†		-			-			-			-			-			3,165
Reclassification to (accumulated) undistributed net realized (loss) gain from capital paid in on shares of beneficial interest		-			-			-			-			-			41,518			-			55
Gross unrealized appreciation on investment securities	$	4,313,383		$	20,083		$	1,224,923		$	238,763		$	59,435		$	99,778		$	37,477		$	16
Gross unrealized depreciation on investment securities		(2,554,039	)		(1,944	)		(399,779	)		(144,775	)		(13,966	)		(67,237	)		(15,222	)		(30	)
Net unrealized appreciation (depreciation) on investment securities		1,759,344			18,139			825,144			93,988			45,469			32,541			22,255			(14	)
Cost of investment securities	$	22,832,031		$	107,455		$	8,940,920		$	8,610,009		$	1,318,889		$	1,651,992		$	2,667,068		$	785,609
*These deferrals are considered incurred in the subsequent year.
†Amount less than one thousand.

4. Fees and transactions with related parties

Capital Research and Management Company (“CRMC”), the Series’ investment adviser, is the parent company of American Funds Distributors,® Inc. (“AFD”), the distributor of the Series’ shares, and American Funds Service Company® (“AFS”), the Series’ transfer agent.

Investment advisory services –The aggregate fee of $320,989,000 for management services was incurred by the Series pursuant to an agreement with CRMC. The Investment Advisory and Service Agreement 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 Bond Fund, U.S. Government/AAA-Rated Securities Fund and Cash Management Fund, effective January 1, 2010, that provides for reduced annual rates as reflected in the table below.During the year ended December 31, 2009, CRMC voluntarily reduced investment advisory services fees to the proposed rates for Bond Fund. The range of rates and asset levels and the current annualized rates of average net assets for each fund are as follows:

											For the year
	Rates						Net asset level (in billions)				ended
Fund	Beginning with			Ending with			Up to		In excess of		December 31, 2009
Global Discovery		.580	%		.440	%	$	.5	$	1.0		.58	%
Global Growth		.690			.460			.6		5.0		.54
Global Small Capitalization		.800			.635			.6		5.0		.72
Growth		.500			.280			.6		34.0		.33
International		.690			.430			.5		21.0		.50
New World		.850			.620			.5		2.5		.77
Blue Chip Income and Growth		.500			.370			.6		4.0		.43
Global Growth and Income		.690			.480			.6		3.0		.60
Growth-Income		.500			.219			.6		34.0		.28
International Growth and Income		.690			.530			.5		1.0		.69
Asset Allocation		.500			.250			.6		8.0		.31
Bond		.480			.330			.6		8.0		.38
Global Bond		.570			.500			1.0		1.0		.56
High-Income Bond		.500			.420			.6		2.0		.47
U.S. Government/AAA-Rated Securities		.460			.330			.6		3.0		.39
Cash Management		.320			.270			1.0		2.0		.32

Distribution services –The Series has adopted plans of distribution for Class 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, 2009, distribution expenses under the plans for the Series aggregated $148,249,000 for Class 2 and $1,053,000 for Class 3. Class 1 shares have not adopted a plan of distribution.

Transfer agent services –The aggregate fee of $4,000 was incurred during the year ended December 31, 2009, 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 shown on the accompanying financial statements includes current fees (either paid in cash or deferred) and a net increase in the value of the deferred amounts as follows:

	(dollars in thousands)
				Increase in value
Fund	Current fees			of deferred amounts
Global Discovery	$	2		$	-	*
Global Growth		53			6
Global Small Capitalization		30			4
Growth		234			126
International		86			56
New World		18			2
Blue Chip Income and Growth		37			4
Global Growth and Income		21			1
Growth-Income		231			143
International Growth and Income		-	*		-	*
Asset Allocation		92			35
Bond		79			6
Global Bond		12			-	*
High-Income Bond		16			13
U.S. Government/AAA-Rated Securities		23			11
Cash Management		13			6
*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, AFD and AFS. No affiliated officers or trustees received any compensation directly from the Series.

5. Investment transactions and other disclosures

The following table presents additional information for the year ended December 31, 2009:

	Global	Global	Global Small				Blue Chip	Global
	Discovery	Growth	Capitalization	Growth	International	New World	Income and	Growth and
	Fund	Fund	Fund	Fund	Fund	Fund	Growth Fund	Income Fund
Purchases of investment securities*	$          102,676	$       1,720,024	$       1,489,929	$       7,942,020	$       3,625,686	$          526,414	$          801,773	$          836,579
Sales of investment securities*	99,247	1,626,355	1,265,533	7,011,199	3,283,183	347,841	613,900	750,628
Non-U.S taxes paid on dividend income	180	8,586	2,198	6,322	21,719	2,891	936	3,204
Non-U.S taxes paid (refunded) on interest income	-	-	-	-	-	9	-	-
Non-U.S taxes paid (refunded) on realized gains	-	761	(44)	-	1,413	768	-	-
Non-U.S taxes provided on unrealized gains as of December 31, 2009	-	5,225	369	-	10,152	3,125	-	174
Dividends from affiliated issuers	-	-	3,429	8,133	-	-	-	1,465
Net realized loss from affiliated issuers	-	(93,088)	(34,695)	(93,568)	-	-	-	-
*Excludes short-term securities, except for Cash Management Fund, and U.S. government obligations, if any.

							U.S.
		International	Asset		Global		Government/	Cash
	Growth-	Growth and	Allocation	Bond	Bond	High-Income	AAA-Rated	Management
	Income Fund	Income Fund	Fund	Fund	Fund	Bond Fund	Securities Fund	Fund
Purchases of investment securities*	$       5,842,524	$            97,226	$       3,759,252	$       6,198,226	$       1,010,436	$          952,066	$       1,528,087	$       7,239,454
Sales of investment securities*	4,349,124	11,324	2,977,418	5,842,057	693,492	540,848	1,403,470	7,669,434
Non-U.S taxes paid on dividend income	7,982	195	1,034	-	-	-	-	-
Non-U.S taxes paid (refunded) on interest income	-	-	-	(28)	59	-	-	-
Non-U.S taxes paid (refunded) on realized gains	-	-	-	-	-	-	-	-
Non-U.S taxes provided on unrealized gains as of December 31, 2009	-	-	-	-	-	-	-	-
Dividends from affiliated issuers	-	-	-	-	-	-	-	-
Net realized loss from affiliated issuers	-	-	-	-	-	-	-	-
*Excludes short-term securities, except for Cash Management Fund, and U.S. government obligations, if any.

6. Disclosure of fair value measurements

The funds classify their assets and liabilities into three levels based on the method used to value the assets or liabilities. 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 or liquidity 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 tables present the funds’ valuation levels as of December 31, 2009, and reconcile the valuation of the funds’ Level 3 investment securities and related transactions, if any, during the year ended December 31, 2009 (dollars in thousands):

GLOBAL DISCOVERY FUND
Level classification	Level 1		Level 2			Level 3		Total
Investment securities:
Common stocks:
Software & services	$	34,902	$	3,072	*		-	$	37,974
Diversified financials		10,574		11,536	*		-		22,110
Technology hardware & equipment		17,349		3,870	*		-		21,219
Pharmaceuticals, biotechnology & life sciences		14,383		3,811	*		-		18,194
Banks		8,998		5,554	*		-		14,552
Health care equipment & services		10,297		1,217	*		-		11,514
Commercial & professional services		3,481		7,033	*		-		10,514
Media		7,422		2,906	*		-		10,328
Transportation		7,318		2,826	*		-		10,144
Energy		9,095		-			-		9,095
Utilities		-		8,258	*		-		8,258
Insurance		3,042		4,979	*		-		8,021
Retailing		6,458		-			-		6,458
Consumer services		1,291		2,353	*		-		3,644
Telecommunication services		1,415		2,084	*		-		3,499
Other		3,960		722	*		-		4,682
Miscellaneous		9,509		994	*		-		10,503
Convertible securities		33		781			-		814
Short-term securities		-		11,000			-		11,000
Total	$	149,527	$	72,996			-	$	222,523

	Beginning value		Net		Net unrealized			Net transfers out of			Ending value
Level 3 reconciliation	at 1/1/2009		purchases		depreciation (†)			Level 3			at 12/31/2009
Investment securities	$	-	$	1,900	$	(643	)	$	(1,257	)	$	-
(*) Includes 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, $61,215,000 of investment securities were classified as Level 2 instead of Level 1.
(†) Net unrealized depreciation is included in the related amounts on investments in the statement of operations.

GLOBAL GROWTH FUND
Level classification	Level 1		Level 2			Level 3		Total
Investment securities:
Common stocks:
Information technology	$	542,127	$	228,241	*	$	-	$	770,368
Health care		245,648		365,030	*		-		610,678
Consumer staples		128,512		477,536	*		-		606,048
Financials		140,969		456,548	*		4,622		602,139
Consumer discretionary		253,359		226,489	*		1,058		480,906
Telecommunication services		95,815		302,080	*		-		397,895
Industrials		227,273		132,985	*		-		360,258
Energy		180,764		169,000	*		-		349,764
Materials		162,615		114,611	*		-		277,226
Utilities		-		135,391	*		-		135,391
Miscellaneous		48,897		117,461	*		-		166,358
Preferred stocks		-		7,738			-		7,738
Convertible securities		-		-			8,828		8,828
Short-term securities		-		360,363			-		360,363
Total	$	2,025,979	$	3,093,473		$	14,508	$	5,133,960

	Beginning		Net		Net					Net transfers			Ending
	value		purchases		realized			Net unrealized		out of			value
Level 3 reconciliation	at 1/1/2009		and sales		loss (†)			appreciation (†)		Level 3			at 12/31/2009
Investment securities	$	23,544	$	5,698	$	(3,648	)	$	4,459	$	(15,545	)	$	14,508
Net unrealized appreciation during the period on Level 3 investment securities held at December 31, 2009 (dollars in thousands) (†):													$	4,095
(*) Includes 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, $2,707,415,000 of investment securities were classified as Level 2 instead of Level 1.
(†) Net realized loss and unrealized appreciation are included in the related amounts on investments in the statement of operations.

GLOBAL SMALL CAPITALIZATION FUND
Level classification	Level 1		Level 2			Level 3		Total
Investment securities:
Common stocks:
Consumer discretionary	$	176,292	$	425,823	*	$	55	$	602,170
Information technology		197,872		294,494	*		149		492,515
Industrials		164,370		261,948	*		-		426,318
Health care		260,291		98,889	*		-		359,180
Materials		114,577		241,731	*		55		356,363
Financials		146,671		116,719	*		10,212		273,602
Energy		79,187		87,180	*		2,007		168,374
Consumer staples		48,572		68,799	*		-		117,371
Utilities		-		115,844	*		-		115,844
Telecommunication services		11,426		29,307	*		-		40,733
Miscellaneous		83,755		77,620	*		951		162,326
Rights & warrants:		679		42			1,017		1,738
Convertible securities:		-		3,651			10,540		14,191
Bonds, notes & other debt instruments:		-		11,984			-		11,984
Short-term securities		-		137,751			-		137,751
Total	$	1,283,692	$	1,971,782		$	24,986	$	3,280,460

	Beginning		Net			Net					Net transfers		Ending
	value		purchases			realized		Net unrealized			into		value
Level 3 reconciliation	at 1/1/2009		and sales			gain (†)		depreciation (†)			Level 3		at 12/31/2009
Investment securities	$	13,661	$	(1,325	)	$	16,099	$	(3,596	)	$	147	$	24,986
Net unrealized appreciation during the period on Level 3 investment securities held at December 31, 2009 (dollars in thousands) (†):													$	3,834
(*) Includes 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, $1,812,473,000 of investment securities were classified as Level 2 instead of Level 1.
(†) Net realized gain and unrealized appreciation (depreciation) are included in the related amounts on investments in the statement of operations.

GROWTH FUND
Level classification	Level 1		Level 2			Level 3		Total
Investment securities:
Common stocks:
Information technology	$	4,763,780	$	165,324	*	$	-	$	4,929,104
Energy		3,094,021		87,096	*		-		3,181,117
Health care		2,837,798		305,592	*		-		3,143,390
Financials		2,900,507		138,429	*		-		3,038,936
Materials		1,963,170		676,503	*		-		2,639,673
Consumer discretionary		2,562,159		76,213	*		-		2,638,372
Industrials		1,946,447		83,269	*		-		2,029,716
Consumer staples		1,041,785		280,060	*		-		1,321,845
Telecommunication services		208,604		231,786	*		-		440,390
Utilities		302,399		-			18,997		321,396
Miscellaneous		126,766		209,753	*		-		336,519
Convertible securities:		11,550		-			-		11,550
Short-term securities		-		995,096			-		995,096
Total	$	21,758,986	$	3,249,121		$	18,997	$	25,027,104

	Beginning value		Net			Net realized			Net unrealized		Net transfers out of			Ending value
Level 3 reconciliation	at 1/1/2009		sales			loss (†)			appreciation (†)		Level 3			at 12/31/2009
Investment securities	$	37,520	$	(1,219	)	$	(67,186	)	$	50,674	$	(792	)	$	18,997
Net unrealized depreciation during the period on Level 3 investment securities held at December 31, 2009 (dollars in thousands) (†):														$	(11,081	)
(*) Includes 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, $2,230,667,000 of investment securities were classified as Level 2 instead of Level 1.
(†) Net realized loss and unrealized appreciation (depreciation) are included in the related amounts on investments in the statement of operations.

INTERNATIONAL FUND
Level classification	Level 1		Level 2			Level 3		Total
Investment securities:
Common stocks:
Financials	$	231,130	$	1,812,737	*	$	-	$	2,043,867
Health care		164,495		1,045,020	*		-		1,209,515
Consumer discretionary		-		1,166,250	*		5,389		1,171,639
Telecommunication services		243,349		579,210	*		-		822,559
Information technology		91,215		694,482	*		-		785,697
Consumer staples		-		755,540	*		-		755,540
Energy		70,193		654,720	*		-		724,913
Materials		11,118		629,065	*		-		640,183
Industrials		88,812		508,560	*		-		597,372
Utilities		-		168,402	*		-		168,402
Miscellaneous		20,547		116,511	*		-		137,058
Preferred stocks		-		10,537			-		10,537
Bonds, notes & other debt instruments		-		10,082			-		10,082
Short-term securities		-		256,058			-		256,058
Total	$	920,859	$	8,407,174		$	5,389	$	9,333,422

Level 3 reconciliation	Beginning value at 1/1/2009		Net unrealized depreciation (†)			Ending value at 12/31/2009
Investment securities	$	6,923	$	(1,534	)	$	5,389
Net unrealized depreciation during the period on Level 3 investment securities held at December 31, 2009 (dollars in thousands) (†):						$	(1,534	)
(*) Includes 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, $8,130,497,000 of investment securities were classified as Level 2 instead of Level 1.
(†) Net unrealized depreciation is included in the related amounts on investments in the statement of operations.

NEW WORLD FUND
Level classification	Level 1		Level 2				Level 3		Total
Investment securities:
Common stocks:
Consumer staples	$	63,966	$	246,238	(1	)		-	$	310,204
Financials		67,406		187,352	(1	)		-		254,758
Information technology		80,838		87,224	(1	)		-		168,062
Industrials		25,598		140,827	(1	)		-		166,425
Telecommunication services		50,955		99,286	(1	)		-		150,241
Materials		36,731		107,260	(1	)		-		143,991
Energy		53,066		69,321	(1	)		-		122,387
Consumer discretionary		24,413		93,631	(1	)		-		118,044
Miscellaneous		41,178		56,015	(1	)		-		97,193
Health care		21,212		71,523	(1	)		-		92,735
Utilities		14,054		22,332	(1	)		-		36,386
Rights & warrants		87		-				-		87
Bonds, notes & other debt instruments:
Bonds & notes of governments outside the U.S.		-		170,205				-		170,205
Corporate bonds & notes		-		14,909				-		14,909
Short-term securities		-		146,559				-		146,559
Total	$	479,504	$	1,512,682				-	$	1,992,186
	Level 1		Level 2				Level 3		Total
Forward currency contracts(2)		-	$	26				-	$	26

	Beginning value		Net			Net realized			Net unrealized		Net transfers out of			Ending value
Level 3 reconciliation	at 1/1/2009		sales			loss(3)			appreciation(3)		Level 3			at 12/31/2009
Investment securities	$	5,875	$	(5,408	)	$	(82	)	$	2,203	$	(2,588	)	$	-
(1) Includes 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, $1,155,714,000 of investment securities were classified as Level 2 instead of Level 1.
(2) Forward currency contracts are not included in the investment portfolio.
(3) Net realized loss and unrealized appreciation are included in the related amounts on investments in the statement of operations.

BLUE CHIP INCOME AND GROWTH FUND
Level classification	Level 1		Level 2		Level 3		Total
Investment securities:
Common stocks:
Information technology	$	810,283	$	-		-	$	810,283
Industrials		589,961		-		-		589,961
Health care		541,168		-		-		541,168
Consumer discretionary		362,497		-		-		362,497
Energy		283,826		-		-		283,826
Financials		274,280		-		-		274,280
Telecommunication services		262,412		-		-		262,412
Consumer staples		189,729		-		-		189,729
Utilities		73,084		-		-		73,084
Materials		20,265		-		-		20,265
Miscellaneous		77,624		-		-		77,624
Convertible securities		12,442		-		-		12,442
Short-term securities		-		275,928		-		275,928
Total	$	3,497,571	$	275,928		-	$	3,773,499

	Beginning value		Net unrealized		Net purchases			Net transfers out of			Ending value
Level 3 reconciliation	at 1/1/2009		appreciation(*)		and sales			Level 3			at 12/31/2009
Investment securities	$	-	$	2,955	$	(970	)	$	(1,985	)	$	-
(*)Net unrealized appreciation is included in the related amounts on investments in the statement of operations.

GLOBAL GROWTH AND INCOME FUND
Level classification	Level 1		Level 2			Level 3		Total
Investment securities:
Common stocks:
Financials	$	127,532	$	224,388	*	$	2,580	$	354,500
Materials		185,230		52,999	*		-		238,229
Information technology		184,600		50,510	*		-		235,110
Consumer staples		67,069		133,544	*		-		200,613
Industrials		118,958		71,368	*		-		190,326
Telecommunication services		59,103		125,616	*		-		184,719
Health care		65,794		91,631	*		-		157,425
Consumer discretionary		83,069		54,394	*		-		137,463
Energy		60,770		44,815	*		-		105,585
Utilities		24,168		63,486	*		-		87,654
Miscellaneous		13,171		-			-		13,171
Preferred stocks:		-		1,928			-		1,928
Convertible securities:		-		15,593			209		15,802
Bonds, notes & other debt instruments:		-		60,194			-		60,194
Short-term securities		-		132,060			-		132,060
Total	$	989,464	$	1,122,526		$	2,789	$	2,114,779

	Beginning				Net			Net			Net transfers			Ending
	value		Net unrealized		purchases			realized			out of			value
Level 3 reconciliation	at 1/1/2009		appreciation (†)		and sales			loss (†)			Level 3			at 12/31/2009
Investment securities	$	13,351	$	13,071	$	(2,613	)	$	(13,528	)	$	(7,492	)	$	2,789
(*) Includes 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, $912,751,000 of investment securities were classified as Level 2 instead of Level 1.
(†) Net realized loss and unrealized appreciation are included in the related amounts on investments in the statement of operations.

GROWTH-INCOME FUND
Level classification	Level 1		Level 2			Level 3		Total
Investment securities:
Common stocks
Information technology	$	5,660,555	$	312,497	*		-	$	5,973,052
Industrials		2,956,497		30,201	*		-		2,986,698
Consumer discretionary		2,340,890		202,226	*		-		2,543,116
Health care		2,048,945		143,589	*		-		2,192,534
Energy		1,910,977		155,038	*		-		2,066,015
Financials		1,473,719		402,983	*		-		1,876,702
Consumer staples		1,671,799		-			-		1,671,799
Materials		723,236		352,885	*		-		1,076,121
Telecommunication services		983,899		-			-		983,899
Utilities		440,129		79,805	*		-		519,934
Miscellaneous		463,250		156,021	*		-		619,271
Preferred stocks		-		12,969			-		12,969
Convertible securities		93,916		45,398			-		139,314
Bonds, notes & other debt instruments		-		2,471			-		2,471
Short-term securities		-		1,927,480			-		1,927,480
Total	$	20,767,812	$	3,823,563			-	$	24,591,375

	Beginning value		Net unrealized		Net purchases			Net transfers out of			Ending value
Level 3 reconciliation	at 1/1/2009		appreciation (†)		and sales			Level 3			at 12/31/2009
Investment securities	$	-	$	75,810	$	(17,019	)	$	(58,791	)	$	-
(*) Includes 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, $1,833,361,000 of investment securities were classified as Level 2 instead of Level 1.
(†) Net unrealized appreciation is included in the related amounts on investments in the statement of operations.

INTERNATIONAL GROWTH AND INCOME FUND
Level classification	Level 1		Level 2			Level 3		Total
Investment securities:
Common stocks:
Financials	$	923	$	28,279	*		-	$	29,202
Information technology		2,359		10,336	*		-		12,695
Materials		-		11,576	*		-		11,576
Telecommunication services		3,578		7,493	*		-		11,071
Health care		613		10,010	*		-		10,623
Consumer staples		3,218		7,275	*		-		10,493
Consumer discretionary		-		9,419	*		-		9,419
Industrials		393		8,240	*		-		8,633
Utilities		-		6,868	*		-		6,868
Energy		-		2,797	*		-		2,797
Miscellaneous		-		323	*		-		323
Preferred stocks		-		452			-		452
Convertible securities		-		166			-		166
Bonds, notes & other debt instruments		-		2,077			-		2,077
Short-term securities		-		9,199			-		9,199
Total	$	11,084	$	114,510			-	$	125,594
(*) Includes 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, $102,532,000 of investment securities were classified as Level 2 instead of Level 1.

ASSET ALLOCATION FUND
Level classification	Level 1		Level 2			Level 3		Total
Investment securities:
Common stocks:
Information technology	$	1,478,208	$	-		$	-	$	1,478,208
Health care		988,868		33,985	*		-		1,022,853
Materials		509,075		256,944	*		-		766,019
Financials		738,616		-			-		738,616
Industrials		651,157		23,846	*		-		675,003
Energy		659,696		-			-		659,696
Consumer discretionary		586,333		25,225	*		1		611,559
Consumer staples		319,864		5,422	*		-		325,286
Utilities		190,675		-			-		190,675
Telecommunication services		87,197		46,483	*		-		133,680
Miscellaneous		128,759		104,899	*		-		233,658
Preferred stocks		-		7,568			-		7,568
Bonds, notes & other debt instruments:
Bonds & notes of U.S. government & government agencies		-		864,051			-		864,051
Corporate bonds & notes		-		858,442			-		858,442
Mortgage-backed obligations		-		497,631			635		498,266
Other		-		31,235			-		31,235
Short-term securities		-		671,249			-		671,249
Total	$	6,338,448	$	3,426,980		$	636	$	9,766,064

	Beginning		Net								Net transfers			Ending
	value		purchases			Net realized			Net unrealized		out of			value
Level 3 reconciliation	at 1/1/2009		and sales			loss (†)			appreciation (†)		Level 3			at 12/31/2009
Investment securities	$	38,000	$	(28,132	)	$	(5,012	)	$	4,170	$	(8,390	)	$	636
Net unrealized appreciation during the period on Level 3 investment securities held at December 31, 2009 (dollars in thousands) (†):														$	149
(*) Includes 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, $496,228,000 of investment securities were classified as Level 2 instead of Level 1.
(†) Net realized loss and unrealized appreciation are included in the related amounts on investments in the statement of operations.

BOND FUND
Level classification	Level 1		Level 2		Level 3		Total
Investment securities:
Bonds, notes & other debt instruments:
Bonds & notes of U.S. government & government agencies	$	-	$	2,637,516	$	-	$	2,637,516
Corporate bonds & notes		-		2,433,433		-		2,433,433
Mortgage-backed obligations		-		1,702,980		901		1,703,881
Bonds & notes of governments & government agencies outside the U.S.		-		806,584		-		806,584
Other		-		51,604		-		51,604
Preferred stocks:		5,413		80,371		-		85,784
Common stocks:		6,594		-		4		6,598
Short-term securities		-		978,597		-		978,597
Total	$	12,007	$	8,691,085	$	905	$	8,703,997
	Level 1		Level 2		Level 3		Total
Forward currency contracts (*)		-	$	9,100		-	$	9,100

	Beginning value		Net			Net realized			Net unrealized		Net transfers out of			Ending value
Level 3 reconciliation	at 1/1/2009		sales			loss (†)			appreciation (†)		Level 3			at 12/31/2009
Investment securities	$	41,491	$	(8,476	)	$	(781	)	$	860	$	(32,189	)	$	905
Net unrealized appreciation during the period on Level 3 investment securities held at December 31, 2009 (dollars in thousands) (†):														$	211
(*) Forward currency contracts are not included in the investment portfolio.
(†) Net realized loss and unrealized appreciation are included in the related amounts on investments in the statement of operations.

GLOBAL BOND FUND
Level classification	Level 1		Level 2			Level 3		Total
Investment securities:
Bonds, notes & other debt instruments:
Euros	$	-	$	363,589		$	-	$	363,589
Japanese yen		-		79,677			-		79,677
Polish zloty		-		42,353			-		42,353
South Korean won		-		39,006			-		39,006
Australian dollars		-		32,734			-		32,734
Mexican pesos		-		27,986			-		27,986
Danish kroner		-		27,754			-		27,754
British pounds		-		24,607			-		24,607
Swedish kronor		-		16,243			-		16,243
U.S. dollars		-		560,076			309		560,385
Other currencies		-		60,546			-		60,546
Preferred stocks		168		8,263			-		8,431
Short-term securities		-		81,047			-		81,047
Total	$	168	$	1,363,881		$	309	$	1,364,358
	Level 1		Level 2			Level 3		Total
Forward currency contracts (*)		-	$	(1,924	)		-	$	(1,924	)

	Beginning		Net			Net					Net transfers			Ending
	value		purchases			realized			Net unrealized		out of			value
Level 3 reconciliation	at 1/1/2009		and sales			loss (†)			appreciation (†)		Level 3			at 12/31/2009
Investment securities	$	2,337	$	(1,143	)	$	(97	)	$	171	$	(959	)	$	309
Net unrealized appreciation during the period on Level 3 investment securities held at December 31, 2009 (dollars in thousands) (†):														$	72
(*) Forward currency contracts are not included in the investment portfolio.
(†) Net realized loss and unrealized appreciation are included in the related amounts on investments in the statement of operations.

HIGH-INCOME BOND FUND
Level classification	Level 1		Level 2		Level 3		Total
Investment securities:
Bonds, notes & other debt instruments
Corporate bonds & notes	$	-	$	1,459,188	$	1,507	$	1,460,695
Mortgage-backed obligations		-		19,054		-		19,054
Bonds & notes of governments outside the U.S.		-		5,236		-		5,236
Bonds & notes of U.S. government		-		4,332		-		4,332
Convertible securities		-		10,975		-		10,975
Preferred stocks		639		33,067		3,980		37,686
Common stocks		23,721		135		17		23,873
Rights & warrants		26		-		-		26
Short-term securities		-		122,656		-		122,656
Total	$	24,386	$	1,654,643	$	5,504	$	1,684,533
	Level 1		Level 2		Level 3		Total
Forward currency contracts (*)		-	$	1		-	$	1

	Beginning		Net			Net					Net transfers			Ending
	value		purchases			realized		Net unrealized			out of			value
Level 3 reconciliation	at 1/1/2009		and sales			gain (†)		depreciation (†)			Level 3			at 12/31/2009
Investment securities	$	26,064	$	(10,523	)	$	10,005	$	(3,322	)	$	(16,720	)	$	5,504
Net unrealized appreciation during the period on Level 3 investment securities held at December 31, 2009 (dollars in thousands) (†):														$	2,983
(*) Forward currency contracts are not included in the investment portfolio.
(†) Net realized gain and unrealized appreciation (depreciation) are included in the related amounts on investments in the statement of operations.

U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
Level classification	Level 1		Level 2		Level 3		Total
Investment securities:
Bonds, notes & other debt instruments
Mortgage-backed obligations		-	$	1,023,641	$	239	$	1,023,880
U.S. Treasury bonds & notes		-		1,016,693		-		1,016,693
Federal agency bonds & notes		-		268,113		-		268,113
Asset-backed obligations		-		41,372		1,283		42,655
Bonds & notes of government agencies outside the U.S.		-		10,036		-		10,036
Other		-		666		-		666
Short-term securities		-		327,280		-		327,280
Total		-	$	2,687,801	$	1,522	$	2,689,323

	Beginning		Net						Net transfers			Ending
	value		purchases			Net unrealized			out of			value
Level 3 reconciliation	at 1/1/2009		and sales			depreciation (*)			Level 3			at 12/31/2009
Investment securities	$	9,588	$	(582	)	$	(320	)	$	(7,164	)	$	1,522
Net unrealized depreciation during the period on Level 3 investment securities held at December 31, 2009 (dollars in thousands) (*):												$	(446	)
(*) Net unrealized depreciation is included in the related amounts on investments in the statement of operations.

CASH MANAGEMENT FUND

At December 31, 2009, all of the fund's investment securities were classified as Level 2.

7. 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. 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.

On a daily basis, the funds value forward currency contracts based on the applicable exchange rate and record unrealized appreciation or depreciation for open forward currency contracts in the statement of assets and liabilities. 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 or payables for closed forward currency contracts in each fund’s statement of assets and liabilities. Net realized gains or losses from closed forward currency contracts and net unrealized appreciation or depreciation from open forward currency contracts are recorded in each fund’s statement of operations.As of December 31, 2009, Asset Allocation Fund did not have any open forward currency contracts. As of December 31, 2009, New World 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 amount
						Unrealized  appreciation  (depreciation) at
	Settlement date	Receive		Deliver		December 31, 2009
New World Fund
Sales:
Polish zloty	1/6/2010	$	898	PLN2,500		$	26
Bond Fund
Sales:
Australian dollars	1/11/2010	$	22,871	$	A25,050	$	388
Australian dollars	1/21/2010	$	23,400	$	A25,325		695
Danish kroner	1/14/2010	$	24,423	DKr120,925			1,143
Euros	1/13/2010	$	10,825	€	6,880		450
Euros	1/14/2010	$	9,167	€	6,095		435
Euros	1/14/2010	$	3,384	€	2,250		161
Euros	1/15/2010	$	66,565	€	44,855		2,304
Euros	1/15/2010	$	26,160	€	17,630		902
Euros	1/21/2010	$	23,035	€	15,265		1,166
Euros	1/21/2010	$	11,638	€	7,715		585
Euros	1/27/2010	$	3,332	€	2,267		85
Euros	2/8/2010	$	16,948	€	11,235		853
Swedish kronor	1/14/2010	€	5,182	SKr53,590			(67	)
						$	9,100
Global Bond Fund
Purchases:
Euros	1/15/2010	€	5,299	$	8,000	$	(408	)
Euros	1/29/2010	€	2,257	$	3,250		(17	)
Euros	2/18/2010	€	2,720	$	4,000		(103	)
Japanese yen	1/12/2010	¥	1,053,065	$	11,902		(589	)
Japanese yen	1/13/2010	¥	66,308	$	749		(37	)
Japanese yen	1/14/2010	¥	1,510,950	$	17,447		(1,080	)
Japanese yen	1/28/2010	¥	1,827,640	$	20,000		(364	)
Japanese yen	1/28/2010	¥	680,000	$	7,671		(365	)
Japanese yen	1/29/2010	¥	1,300,000	$	14,815		(848	)
Japanese yen	2/8/2010	¥	364,913	$	4,137		(217	)
Singapore dollars	1/14/2010	$	S5,522	$	4,000		(73	)
Singapore dollars	2/18/2010	$	S5,557	$	4,000		(49	)
						$	(4,150	)
Sales:
Australian dollars	2/4/2010	$	2,435	$	A2,670	$	45
British pounds	1/7/2010	$	4,601	£	2,790		88
British pounds	2/9/2010	$	485	£	300		-
Euros	1/7/2010	$	3,780	€	2,545		134
Euros	1/11/2010	$	22,185	€	15,071		593
Euros	1/13/2010	£	4,286	€	4,750		127
Euros	1/13/2010	$	3,810	€	2,565		135
Euros	1/14/2010	$	2,880	€	1,915		137
Euros	1/15/2010	$	2,597	€	1,750		90
Euros	1/21/2010	$	3,899	€	2,585		196
Euros	1/21/2010	$	3,869	€	2,565		195
Euros	2/4/2010	$	13,407	€	9,155		292
Euros	2/8/2010	$	3,824	€	2,535		192
Euros	2/9/2010	$	1,722	€	1,200		3
Swedish kronor	1/14/2010	€	1,523	SKr15,750			(20	)
Swedish kronor	1/15/2010	$	1,164	SKr8,190			19
						$	2,226
Forward currency contracts - net						$	(1,924	)
High-Income Bond Fund
Sales:
British pounds	2/9/2010	$	808	£	500	$	(1	)
Euros	2/9/2010	$	1,076	€	750		2
						$	1
*Amount less than one thousand.

8. Subsequent events

As of February 9, 2010, the date the financial statements were available to be issued, no subsequent events or transactions had occurred on any of the funds that would have materially impacted the financial statements as presented.

Financial highlights(1)

			Income (loss) from investment operations(2)									Dividends and distributions
Period ended	Net asset value, beginning of period		Net investment income (loss)			Net gains (losses) 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
12/31/09	$	7.45	$	.05		$	3.78		$	3.83			$	(.08	)	$	-		$	(.08	)	$	11.20		51.49	%	$	31		.61	%		.61	%		.59	%
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
Class 2
12/31/09		7.43		.03			3.74			3.77				(.05	)		-			(.05	)		11.15		50.91			192		.86			.86			.36
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
Global Growth Fund
Class 1
12/31/09	$	13.96	$	.26		$	5.67		$	5.93			$	(.28	)	$	-		$	(.28	)	$	19.61		42.58	%	$	1,037		.56	%		.56	%		1.59	%
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
Class 2
12/31/09		13.88		.22			5.64			5.86				(.24	)		-			(.24	)		19.50		42.30			4,100		.82			.82			1.36
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
Global Small Capitalization Fund
Class 1
12/31/09	$	11.18	$	.09		$	6.80		$	6.89			$	(.07	)	$	-		$	(.07	)	$	18.00		61.63	%	$	604		.76	%		.76	%		.61	%
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
Class 2
12/31/09		11.03		.05			6.70			6.75				(.04	)		-			(.04	)		17.74		61.30			2,678		1.01			1.01			.36
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
Growth Fund
Class 1
12/31/09	$	33.51	$	.35		$	12.94		$	13.29			$	(.35	)	$	-		$	(.35	)	$	46.45		39.74	%	$	6,565		.35	%		.35	%		.91	%
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
Class 2
12/31/09		33.27		.25			12.84			13.09				(.26	)		-			(.26	)		46.10		39.41			18,201		.60			.60			.66
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
Class 3
12/31/09		33.54		.28			12.95			13.23				(.28	)		-			(.28	)		46.49		39.51			230		.53			.53			.72
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
International Fund
Class 1
12/31/09	$	12.22	$	.24		$	5.04		$	5.28			$	(.25	)	$	(.08	)	$	(.33	)	$	17.17		43.50	%	$	2,851		.54	%		.54	%		1.70	%
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
Class 2
12/31/09		12.19		.21			5.01			5.22				(.22	)		(.08	)		(.30	)		17.11		43.07			6,411		.79			.79			1.48
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
Class 3
12/31/09		12.23		.22			5.04			5.26				(.23	)		(.08	)		(.31	)		17.18		43.25			68		.72			.72			1.54
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
New World Fund
Class 1
12/31/09	$	13.57	$	.34		$	6.42		$	6.76			$	(.29	)	$	-		$	(.29	)	$	20.04		49.95	%	$	500		.82	%		.82	%		2.02	%
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
Class 2
12/31/09		13.47		.29			6.38			6.67				(.25	)		-			(.25	)		19.89		49.65			1,492		1.07			1.07			1.78
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
Blue Chip Income and Growth Fund
Class 1
12/31/09	$	6.67	$	.16		$	1.71		$	1.87			$	(.17	)	$	-		$	(.17	)	$	8.37		28.18	%	$	408		.44	%		.44	%		2.26	%
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
Class 2
12/31/09		6.62		.14			1.70			1.84				(.15	)		-			(.15	)		8.31		27.97			3,344		.69			.69			2.06
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
Global Growth and Income Fund
Class 1
12/31/09	$	6.68	$	.20		$	2.47		$	2.67			$	(.21	)	$	-		$	(.21	)	$	9.14		40.11	%	$	160		.63	%		.63	%		2.63	%
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(4)		10.00		.14			.91			1.05				(.07	)		-			(.07	)		10.98		10.49			45		.72	(5)		.65	(5)		2.10	(5)
Class 2
12/31/09		6.67		.18			2.46			2.64				(.19	)		-			(.19	)		9.12		39.72			1,951		.88			.88			2.42
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(4)		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
12/31/09	$	24.25	$	.49		$	7.13		$	7.62			$	(.50	)	$	-		$	(.50	)	$	31.37		31.54	%	$	8,142		.29	%		.29	%		1.83	%
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
Class 2
12/31/09		24.11		.42			7.09			7.51				(.44	)		-			(.44	)		31.18		31.24			16,220		.54			.54			1.60
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
Class 3
12/31/09		24.27		.45			7.12			7.57				(.45	)		-			(.45	)		31.39		31.30			225		.47			.47			1.68
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
International Growth and Income Fund
Class 1
12/31/09	$	10.92	$	.36		$	4.04		$	4.40			$	(.19	)	$	(.21	)	$	(.40	)	$	14.92		40.38	%	$	28		.74	%		.74	%		2.74	%
12/31/08(6)		10.00		.01			.92			.93				(.01	)		-			(.01	)		10.92		9.28			12		.09			.08			.14
Class 2
12/31/09		10.92		.26			4.10			4.36				(.17	)		(.21	)		(.38	)		14.90		40.04			99		.99			.99			1.89
12/31/08(6)		10.00		.01			.92			.93				(.01	)		-			(.01	)		10.92		9.27			4		.11			.11			.05
Asset Allocation Fund
Class 1
12/31/09	$	12.16	$	.35		$	2.59		$	2.94			$	(.35	)	$	-		$	(.35	)	$	14.75		24.27	%	$	4,151		.32	%		.32	%		2.65	%
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
Class 2
12/31/09		12.08		.32			2.56			2.88				(.31	)		-			(.31	)		14.65		23.98			5,537		.58			.58			2.45
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
Class 3
12/31/09		12.17		.33			2.57			2.90				(.32	)		-			(.32	)		14.75		23.95			44		.51			.51			2.53
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
Bond Fund
Class 1
12/31/09	$	9.45	$	.42		$	.80		$	1.22			$	(.34	)	$	-		$	(.34	)	$	10.33		12.83	%	$	3,775		.39	%		.39	%		4.19	%
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
Class 2
12/31/09		9.36		.40			.79			1.19				(.32	)		-			(.32	)		10.23		12.61			4,635		.64			.64			4.00
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
Global Bond Fund
Class 1
12/31/09	$	10.68	$	.45		$	.62		$	1.07			$	(.18	)	$	-		$	(.18	)	$	11.57		10.04	%	$	162		.59	%		.59	%		4.06	%
12/31/08		10.83		.48			(.09	)		.39				(.54	)		-	(7)		(.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(8)		10.00		.10			.15			.25				(.07	)		-			(.07	)		10.18		2.52			12		.15			.13			1.00
Class 2
12/31/09		10.66		.42			.61			1.03				(.16	)		-			(.16	)		11.53		9.69			1,203		.84			.84			3.79
12/31/08		10.81		.44			(.07	)		.37				(.52	)		-	(7)		(.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(9)		10.00		.06			.18			.24				(.07	)		-			(.07	)		10.17		1.99			15		.13			.12			.60
High-Income Bond Fund
Class 1
12/31/09	$	8.05	$	.75		$	2.41		$	3.16			$	(.72	)		-		$	(.72	)	$	10.49		39.45	%	$	635		.48	%		.48	%		7.86	%
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
Class 2
12/31/09		7.99		.71			2.39			3.10				(.70	)		-			(.70	)		10.39		38.94			1,063		.74			.74			7.62
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
Class 3
12/31/09		8.07		.73			2.42			3.15				(.71	)		-			(.71	)		10.51		39.14			24		.67			.67			7.69
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
U.S. Government/AAA-Rated Securities Fund
Class 1
12/31/09	$	12.29	$	.37		$	(.03	)	$	.34			$	(.34	)	$	(.11	)	$	(.45	)	$	12.18		2.79	%	$	999		.41	%		.41	%		2.99	%
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
Class 2
12/31/09		12.20		.34			(.03	)		.31				(.32	)		(.11	)		(.43	)		12.08		2.50			1,561		.66			.66			2.79
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
Class 3
12/31/09		12.30		.36			(.04	)		.32				(.32	)		(.11	)		(.43	)		12.19		2.58			27		.59			.59			2.91
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
Cash Management Fund
Class 1
12/31/09	$	11.44	$	(.01	)	$	-	(7)	$	(.01	)		$	(.03	)	$	-	(7)	$	(.03	)	$	11.40		(.10	)%	$	105		.33	%		.33	%		(.08	)%
12/31/08		11.40		.24			-	(7)		.24				(.20	)		-			(.20	)		11.44		2.15			158		.32			.29			2.07
12/31/07		11.62		.57			-	(7)		.57				(.79	)		-			(.79	)		11.40		4.95			112		.33			.30			4.88
12/31/06		11.31		.54			-	(7)		.54				(.23	)		-			(.23	)		11.62		4.81			98		.33			.30			4.74
12/31/05		11.09		.33			-	(7)		.33				(.11	)		-			(.11	)		11.31		2.97			75		.33			.30			2.91
Class 2
12/31/09		11.38		(.04	)		-	(7)		(.04	)			(.02	)		-	(7)		(.02	)		11.32		(.33	)		664		.58			.58			(.33	)
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			-	(7)		.54				(.75	)		-			(.75	)		11.35		4.73			452		.58			.55			4.61
12/31/06		11.26		.51			-	(7)		.51				(.21	)		-			(.21	)		11.56		4.59			282		.58			.55			4.52
12/31/05		11.05		.30			-	(7)		.30				(.09	)		-			(.09	)		11.26		2.68			153		.58			.55			2.71
Class 3
12/31/09		11.44		(.03	)		(.01	)		(.04	)			(.02	)		-	(7)		(.02	)		11.38		(.31	)		17		.51			.51			(.27	)
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			-	(7)		.55				(.75	)		-			(.75	)		11.40		4.83			20		.51			.48			4.70
12/31/06		11.29		.52			-	(7)		.52				(.21	)		-			(.21	)		11.60		4.64			18		.51			.48			4.53
12/31/05		11.07		.30			-	(7)		.30				(.08	)		-			(.08	)		11.29		2.74			16		.51			.48			2.70

	Year Ended December 31
Portfolio turnover rate for all classes of shares	2009			2008			2007			2006			2005
Global Discovery Fund		60	%		46	%		50	%		31	%		53	%
Global Growth Fund		43			38			38			31			26
Global Small Capitalization Fund		55			47			49			50			47
Growth Fund		37			26			40			35			29
International Fund		46			52			41			29			40
New World Fund		25			32			34			32			26
Blue Chip Income and Growth Fund		22			24			27			21			33
Global Growth and Income Fund		47			36			36			8	(4)		-
Growth-Income Fund		24			31			24			25			20
International Growth and Income Fund		21			-	(6)		-			-			-
Asset Allocation Fund		41			36			29			38			23
Bond Fund		125			63			57			57			46
Global Bond Fund		86			118			85			7	(8)		-
High-Income Bond Fund		47			29			32			35			35
U.S. Government/AAA-Rated Securities Fund		100			108			91			76			86
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 May 1, 2006, commencement of operations.

(5)Annualized.

(6)From November 18, 2008, commencement of operations.

(7)Amount less than $.01.

(8)From October 4, 2006, commencement of operations.

(9)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 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, 2009, 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, 2009, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Los Angeles, California

February 9, 2010

..

American Funds Insurance Series

Part C

Other Information

Item 28.  Exhibits for Registration Statement (1940 Act No. 811-03857 and 1933 Act No. 002-86838)

  (a) Declaration of Trust – Declaration of Trust dated 9/9/83 – previously filed (see Post-Effective (“P/E”) Amendment No. 24 filed 3/31/97); Certificate of Amendment of Declaration of Trust dated 10/19/88 - previously filed (see P/E Amendment No. 24 filed 3/31/97);  Redesignation of an Existing Series of Shares of Beneficial Interest without Par Value dated 3/19/02 – previously filed (see P/E Amendment No. 33 filed 4/30/02);  Establishment and Designation of Additional Class of Shares of Beneficial Interest Without Par Value dated 9/16/02 – previously filed (see P/E Amendment No. 35 filed 10/30/03);  Establishment and Designation of Additional Series of Shares of Beneficial Interest Without Par Value dated 3/14/06 – previously filed (see P/E Amendment No. 40 filed 4/28/06);  Establishment and Designation of Additional Series of Shares of Beneficial Interest Without Par Value dated 9/19/06 – previously filed (see P/E Amendment No. 44 filed 10/2/06); and Establishment and Designation of Additional Series of Shares of Beneficial Interest Without Par Value dated 6/18/08 – previously filed (see P/E Amendment No. 47 filed 7/14/08)

  (b) By-Laws - By-Laws as amended 8/5/09

  (c) Instruments Defining Rights of Security Holders - none

  (d) Investment Advisory Contracts – Amended and Restated Investment Advisory and Service Agreement dated 1/1/10

  (e) Underwriting Contracts – Form of Fund Participation Agreement - previously filed (see P/E Amendment No. 23 filed1/15/97); Principal Underwriting Agreement dated 7/12/89 – previously filed (see P/E Amendment No. 24 filed 3/31/97);  Amendment to Principal Underwriting Agreement dated 2/7/92 – previously filed (see P/E Amendment No. 24 filed 3/31/97);  Fund Participation Agreement dated 9/30/02 – previously filed (see P/E Amendment No. 35 filed 10/30/03)

  (f) Bonus or Profit Sharing Contracts – Form of Deferred Compensation Plan effective 8/7/09

  (g) Custodian Agreements – Form of Global Custody Agreement dated 12/14/06 – previously filed (see P/E Amendment No. 45 filed 5/1/07)

  (h) Other Material Contracts – Amended and Restated Shareholders Services Agreement effective 3/1/10

  (i) Legal Opinion – Legal Opinion – previously filed (see P/E Amendment No. 24 filed 3/31/97; and P/E Amendment No. 36 filed 1/15/04)

  (j) Other Opinions – Consent of Independent Registered Public Accounting Firm

  (k) Omitted Financial Statements - none

  (l) Initial Capital Agreements – Investment Letter from Investment Adviser relating to initial shares dated December 1983 – previously filed (see P/E Amendment No. 24 filed 3/31/97);  Mixed and Shared Funding Order - previously filed (see P/E Amendment No. 36 filed 1/15/04)

  (m) Rule 12b-1 Plan – Class 2 Plan of Distribution - previously filed (see P/E Amendment No. 24 filed 3/31/97); Class 3 Plan of Distribution - previously filed (see P/E Amendment No. 35 filed 10/30/03)

  (n) Rule 18f-3 – Form of Multiple Class Plan dated 4/1/97 - previously filed (see P/E Amendment No. 23 filed 1/15/97); Amended and Restated Multiple Class Plan dated 9/16/02 – previously filed (see P/E Amendment No. 35 dated 10/30/03)

  (o) Reserved

  (p) Code of Ethics – Code of Ethics for The Capital Group Companies dated March 2010; and Code of Ethics for the Registrant dated December 2005

Item 29.Persons Controlled by or Under Common Control with the Fund

None.

Item 30.Indemnification

The Registrant is a joint-insured under Investment Adviser/Mutual Fund Errors and Omissions Policies, which insure its officers and trustees against certain liabilities. However, in no event will Registrant maintain insurance to indemnify any such person for any act for which Registrant itself is not permitted to indemnify the individual.

Article V of the Registrant's Declaration of Trust and Article VI of the Registrant's By-Laws as well as the indemnification agreements that the Registrant has entered into with each of its trustees who is not an "interested person" of the Registrant (as defined under the Investment Company Act of 1940, as amended), provide in effect that the Registrant will indemnify its officers and trustees against any liability or expenses actually and reasonably incurred by such person in any proceeding arising out of or in connection with his or her service to the Registrant, to the fullest extent permitted by applicable law, subject to certain conditions.  In accordance with Section 17(h) and 17(i) of the Investment Company Act of 1940, as amended, and their respective terms, these provisions do not protect any person against any liability to the Registrant or its shareholders to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Registrant will comply with the indemnification requirements contained in the Investment Company Act of 1940, as amended, and Release Nos. 7221 (June 9, 1972) and 11330 (September 4, 1980).

Item 31.Business and Other Connections of the Investment Adviser

None.

Item 32.Principal Underwriters

Not applicable.

Item 33.Location of Accounts and Records

Accounts, books and other records required by Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as amended, are maintained and kept in the offices of the Series and the Registrant’s investment adviser, Capital Research and Management Company, 333 South Hope Street, Los Angeles, CA 90071.  Certain accounting records are maintained and kept in the offices of the Investment Adviser's accounting department, 6455 Irvine Center Drive, Irvine, California 92618; and/or 5300 Robin Hood Road, Norfolk, VA  23513.

Records covering portfolio transactions are also maintained and kept by the custodian, State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111.

Item 34.Management Services

None.

Item 35.Undertakings

None.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under to Rule 485(b) under the Securities Act of 1933 and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Los Angeles, and State of California, on the 29th day of April, 2010.

American Funds Insurance Series

By: /s/ James K. Dunton                                                      

James K. Dunton, Vice Chairman

Pursuant to the requirements of the Securities Act of 1933, this amendment to registration statement has been signed below on April 29, 2010, by the following persons in the capacities indicated.

	Signature	Title
(1)	Principal Executive Officer:
	/s/ Michael J. Downer	Executive Vice President
	Michael J. Downer
(2)	Principal Financial Officer and
	Principal Accounting Officer:
	/s/ Gregory F. Niland	Treasurer
	Gregory F. Niland
(3)	Trustees:
	Lee A. Ault III*	Trustee
	William H. Baribault*	Trustee
	/s/ James K. Dunton	Vice Chairman and Trustee
	James K. Dunton
	James G. Ellis*	Trustee
	Martin Fenton*	Chairman (Independent and Non-Executive)
	Leonard R. Fuller*	Trustee
	W. Scott Hedrick*	Trustee
	R. Clark Hooper*	Trustee
	Merit E. Janow*	Trustee
	Laurel B. Mitchell*	Trustee
	/s/ Donald D. O'Neal	President and Trustee
	Donald D. O'Neal
	Frank M. Sanchez*	Trustee
	Margaret Spellings*	Trustee
	Steadman Upham*	Trustee
	*By: /s/ Steven I. Koszalka
	(Steven I. Koszalka, pursuant to a power of attorney filed herewith)

Counsel represents that this amendment does not contain disclosures that would make the amendment ineligible for effectiveness under the provisions of rule 485(b).

/s/ Michael J. Triessl

Michael J. Triessl

POWER OF ATTORNEY

I, Lee A. Ault III, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series, Inc. (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Chad L. Norton Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard M. Susan Gupton Gregory F. Niland Ari M. Vinocor

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Los Angeles, CA, this 1st day of January, 2010.

    (City, State)

/s/ Lee A. Ault III

Lee A. Ault III, Board member

POWER OF ATTORNEY

I, William H. Baribault, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series, Inc. (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Chad L. Norton Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard M. Susan Gupton Gregory F. Niland Ari M. Vinocor

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Pasadena, CA, this 1st day of January, 2010.

  (City, State)

/s/ William H. Baribault

William H. Baribault, Board member

POWER OF ATTORNEY

I, James G. Ellis, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   AMCAP Fund (File No. 002-26516, File No. 811-01435)

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   American Mutual Fund (File No. 002-10607, File No. 811-00572)

-   The Bond Fund of America (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   The Investment Company of America (File No. 002-10811, File No. 811-00116)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland Carmelo Spinella Ari M. Vinocor

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Los Angeles, CA, this 5th day of March, 2010.

    (City, State)

/s/ James G. Ellis                                           

James G. Ellis, Board member

POWER OF ATTORNEY

I, Martin Fenton, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   AMCAP Fund (File No. 002-26516, File No. 811-01435)

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   American Mutual Fund (File No. 002-10607, File No. 811-00572)

-   The Bond Fund of America (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   The Investment Company of America (File No. 002-10811, File No. 811-00116)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland Carmelo Spinella Ari M. Vinocor

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Los Angeles, CA, this 5th day of March, 2010.

    (City, State)

/s/ Martin Fenton

Martin Fenton, Board member

POWER OF ATTORNEY

I, Leonard R. Fuller, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   AMCAP Fund (File No. 002-26516, File No. 811-01435)

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   American Mutual Fund (File No. 002-10607, File No. 811-00572)

-   The Bond Fund of America (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   The Investment Company of America (File No. 002-10811, File No. 811-00116)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard Karl C. Grauman M. Susan Gupton Gregory F. Niland Carmelo Spinella Ari M. Vinocor

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Los Angeles, CA, this 5th day of March, 2010.

    (City, State)

/s/ Leonard R. Fuller

Leonard R. Fuller, Board member

POWER OF ATTORNEY

I, W. Scott Hedrick, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series, Inc. (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Chad L. Norton Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard M. Susan Gupton Gregory F. Niland Ari M. Vinocor

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Santa Barbara, CA, this 1st day of January, 2010.

       (City, State)

/s/ W. Scott Hedrick

W. Scott Hedrick, Board member

POWER OF ATTORNEY

I, R. Clark Hooper, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series, Inc. (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

-   Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-   Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

-   Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   The New Economy Fund  (File No. 002-83848, File No. 811-03735)

-   Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Chad L. Norton Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard M. Susan Gupton Gregory F. Niland Jeffrey P. Regal Ari M. Vinocor Neal F. Wellons

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Bryn Mawr, PA, this 1st day of January, 2010.

   (City, State)

/s/ R. Clark Hooper

R. Clark Hooper, Board member

POWER OF ATTORNEY

I, Merit E. Janow, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series, Inc. (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

-   Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-   Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

-   Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   The New Economy Fund  (File No. 002-83848, File No. 811-03735)

-   Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Chad L. Norton Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard M. Susan Gupton Gregory F. Niland Jeffrey P. Regal Ari M. Vinocor Neal F. Wellons

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at New York, NY, this 1st day of January, 2010.

  (City, State)

/s/ Merit E. Janow

Merit E. Janow, Board member

POWER OF ATTORNEY

I, Laurel B. Mitchell, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series, Inc. (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Chad L. Norton Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard M. Susan Gupton Gregory F. Niland Ari M. Vinocor  

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at San Marino, CA, this 1st day of January, 2010.

   (City, State)

/s/ Laurel B. Mitchell

Laurel B. Mitchell, Board member

POWER OF ATTORNEY

I, Frank M. Sanchez, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series, Inc. (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Chad L. Norton Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard M. Susan Gupton Gregory F. Niland Ari M. Vinocor

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Los Angeles, CA, this 1st day of January, 2010.

     (City, State)

/s/ Frank M. Sanchez

Frank M. Sanchez, Board member

POWER OF ATTORNEY

I, Margaret Spellings, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   American Funds Target Date Retirement Series, Inc. (File No. 333-138648, File No. 811-21981)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

-   Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Chad L. Norton Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard M. Susan Gupton Gregory F. Niland Ari M. Vinocor  

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Los Angeles, CA, this 1st day of January, 2010.

    (City, State)

/s/ Margaret Spellings

Margaret Spellings, Board member

POWER OF ATTORNEY

I, Steadman Upham, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-   The American Funds Income Series – U.S. Government Securities Fund (File No. 002-98199, File No. 811-04318)

-   American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-   American Funds Money Market Fund (File No. 333-157162, File No. 811-22277)

-   American Funds Target Date Retirement Series, Inc. (File No. 333-138648, File No. 811-21981)

-   American Funds Short-Term Tax-Exempt Bond Fund (File No. 033-26431, File No. 811-05750)

-   The American Funds Tax-Exempt Series II – The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-   American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

-   American High-Income Trust (File No. 033-17917, File No. 811-05364)

-   The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

-   Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-   Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

-   Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

-   Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-   Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-   The New Economy Fund  (File No. 002-83848, File No. 811-03735)

-   Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

-   The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti Chad L. Norton Patrick F. Quan Kimberly S. Verdick Steven I. Koszalka Julie E. Lawton Tanya Schneider Raymond F. Sullivan, Jr. Courtney R. Taylor Brian D. Bullard M. Susan Gupton Gregory F. Niland Jeffrey P. Regal Ari M. Vinocor Neal F. Wellons

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission.  I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Tulsa, OK, this 1st day of January, 2010.

(City, State)

/s/ Steadman Upham

Steadman Upham, Board member