Filed On 4/30/02 · SEC Files 2-86838, 811-03857 · Accession Number 729528-2-5
As Of Filer Filing As/For/On Docs:Pgs
4/30/02 American Funds Insurance Series 485BPOS 5/01/02 5:322
American Fund Insurance Series
Document/Exhibit Description Pages Size
1: 485BPOS Post-Effective Amendment 264± 1,135K
2: EX-99.A CHARTER Miscellaneous Exhibit 2± 9K
3: EX-99.D ADVSR CONTR Miscellaneous Exhibit 4± 22K
4: EX-99.G CUST AGREEMT Miscellaneous Exhibit 51± 204K
5: EX-99.J OTHER OPININ Miscellaneous Exhibit 1 5K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 33
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 33
AMERICAN FUNDS INSURANCE SERIES
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, CA 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
CHAD L. NORTON
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, CA 90071
(name and address of agent for service)
Copies to:
ROBERT E. CARLSON, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 S. Flower Street
Los Angeles, California 90071
(Counsel for the Registrant)
Approximate date of proposed public offering:
It is proposed that this filing become effective on May 1, 2002, pursuant to
paragraph (b) of rule 485.
The right choice for the long term/SM/
[LOGO OF AMERICAN FUNDS]
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American Funds
Insurance Series/SM/
Class 1 Shares
Prospectus
MAY 1, 2002
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.
The Series consists of 13 funds, each representing a separate fully managed di-
versified portfolio of securities. The 13 funds are:
Global Discovery Fund
Global Growth Fund
Global Small Capitalization Fund
Growth Fund
International Fund
New World Fund
Blue Chip Income and Growth Fund
Growth-Income Fund
Asset Allocation Fund
Bond Fund
High-Income Bond Fund (formerly High-Yield Bond Fund)
U.S. Government /AAA-Rated Securities Fund
Cash Management Fund
The Series offers two classes of fund shares: Class 1 shares and Class 2
shares. This prospectus offers only Class 1 shares and is for use with Con-
tracts that make Class 1 shares available. The Board of Trustees may establish
additional funds and classes in the future. The investment objective(s) and
policies of each fund are discussed below. More information on the funds is
contained in the Series' statement of additional information.
Shares of the Series are currently offered only to separate accounts of various
insurance companies to serve as the underlying investment for both variable an-
nuity and variable life insurance contracts ("Contracts"). All such shares may
be purchased or redeemed by the separate accounts without any sales or redemp-
tion charges at net asset value.
American Funds Insurance Series / Prospectus 1
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Global Discovery Fund
RISK/RETURN SUMMARY
The fund seeks to make your investment grow over time by investing primarily in
stocks of companies in the services and information area of the global economy.
Companies in the services and information area include, for example, those in-
volved in the fields of telecommunications, computer systems and software, the
Internet, broadcasting and publishing, health care, advertising, leisure, tour-
ism, financial services, distribution and transportation. Providing you with
current income is a secondary consideration. The fund is designed for investors
seeking greater capital appreciation through investments in stocks of issuers
based around the world. Investors in the fund should have a long-term perspec-
tive and be able to tolerate potentially wide price fluctuations. The fund's
investment adviser focuses primarily on companies with attributes that are as-
sociated with long-term growth, such as strong management, participation in a
growing market, and above average growth in earnings, revenues and/or cash
flow.
The prices of securities held by the fund may decline in response to certain
events, including: those involving the companies whose securities are owned in
the fund; conditions affecting the general economy; overall market changes;
global political, social, or economic instability; and currency and interest
rate fluctuations. The growth-oriented, equity-type securities generally pur-
chased by the fund may involve large price swings and potential for loss, par-
ticularly in the case of smaller capitalization stocks.
Investments in securities issued by entities based outside the U.S. may be sub-
ject to the risks described above to a greater extent and may also be affected
by differing securities regulations, higher transaction costs, and administra-
tive difficulties such as delays in clearing and settling portfolio transac-
tions.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
Investment Results
The fund began operations on July 5, 2001. Accordingly, results for a full cal-
endar year are not available. The fund's return for the three months ended
March 31, 2002 and the period from inception through March 31, 2002 was 1.18%
and -5.55%, respectively.
2 American Funds Insurance Series / Prospectus
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Global Growth Fund
RISK/RETURN SUMMARY
The fund seeks to make your investment grow over time by investing primarily in
common stocks of companies located around the world. The fund is designed for
investors seeking capital appreciation through stocks. Investors in the fund
should have a long-term perspective and be able to tolerate potentially wide
price fluctuations.
The prices of securities held by the fund may decline in response to certain
events, including: those directly involving companies whose securities are
owned in the fund; conditions affecting the general economy; overall market
changes; global political, social or economic instability; and currency and in-
terest rate fluctuations.
Investments in securities issued by entities based outside the U.S. may be sub-
ject to the risks described above to a greater extent and may also be affected
by differing securities regulations, higher transaction costs, and administra-
tive difficulties such as delays in clearing and settling portfolio transac-
tions.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
American Funds Insurance Series / Prospectus 3
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'98 29.03
'99 70.01
'00 -18.71
'01 -13.99
The fund's year-to-date return for the three months ended March 31, 2002
was 1.49%.
The fund's highest/lowest quarterly results during this time period were:
Highest 41.07% (quarter ended December 31, 1999)
Lowest -20.39% (quarter ended September 30, 2001)
For periods ended December 31, 2001:
[Download Table]
Average
Annual MSCI Lipper
Total World Global Fund
Return Fund Index/1/ Index/2/ CPI/3/
--------------------------------------------------------------------------------
One Year -13.99% -16.52% -15.76% 1.55%
................................................................................
Lifetime/4/ 11.54% 5.33% 5.92% 2.12%
/1/ The Morgan Stanley Capital International World Index measures 23 major
stock markets throughout the world, including the U.S. This index is
unmanaged and does not reflect sales charges, commissions or expenses.
/2/ The Lipper Global Fund Index represents funds that invest at least 25% of
their portfolios in securities traded outside the U.S. The results of the
un-derlying funds in the index include the reinvestment of dividend and
capital gain distributions and brokerage commissions paid by the funds for
portfolio transactions, but do not reflect sales charges.
/3/ The Consumer Price Index is a measure of inflation and is computed from
data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
/4/ Lifetime results are as of April 30, 1997, the date the fund began invest-
ment operations.
4 American Funds Insurance Series / Prospectus
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Global Small Capitalization Fund
RISK/RETURN SUMMARY
The fund seeks to make your investment grow over time by investing primarily in
stocks of smaller companies located around the world that typically have market
capitalizations of $50 million to $1.5 billion. The fund is designed for in-
vestors seeking capital appreciation through stocks. Investors in the fund
should have a long-term perspective and be able to tolerate potentially wide
price fluctuations.
The prices of securities held by the fund may decline in response to certain
events, including: those directly involving companies whose securities are
owned in the fund; conditions affecting the general economy; overall market
changes; global political, social or economic instability; and currency and in-
terest rate fluctuations. The growth oriented, equity-type securities generally
purchased by the fund may involve large price swings and potential for loss,
particularly in the case of smaller capitalization stocks. In addition, smaller
capitalization stocks are often more difficult to value or dispose of, more
difficult to obtain information about, and more volatile than stocks of larger,
more established companies.
Investments in securities issued by entities based outside the U.S. may be sub-
ject to the risks described above to a greater extent and may also be affected
by differing securities regulations, higher transaction costs, and administra-
tive difficulties such as delays in clearing and settling portfolio transac-
tions.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
American Funds Insurance Series / Prospectus 5
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'99 91.78
'00 -16.33
'01 -12.63
The fund's year-to-date return for the three months ended March 31, 2002
was 6.60%.
The fund's highest/lowest quarterly results during this time period were:
Highest 28.97% (quarter ended December 31, 1999)
Lowest -28.17% (quarter ended September 30, 2001)
For periods ended December 31, 2001:
[Download Table]
Salomon
Smith
Average Barney
Annual World
Total Smallcap
Return Fund Index/1/ CPI/2/
--------------------------------------------------------------------------------
One Year -12.63% -4.14% 1.55%
................................................................................
Lifetime/3/ 10.41% -0.15% 2.31%
/1/ The Salomon Smith Barney World Smallcap Index tracks approximately 5,100
small-company stocks traded around the world with market capitalizations be-
tween $100 million and $1.5 billion. This index is unmanaged and does not
re-flect sales charges, commissions or expenses.
/2/ The Consumer Price Index is a measure of inflation and is computed from
data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
/3/ Lifetime results are as of April 30, 1998, the date the fund began invest-
ment operations.
6 American Funds Insurance Series / Prospectus
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Growth Fund
RISK/RETURN SUMMARY
The fund seeks to make your investment grow by investing primarily in common
stocks of companies that appear to offer superior opportunities for growth of
capital. The fund may also invest up to 15% of its assets in equity securities
of issuers domiciled outside the U.S. and Canada and not included in the Stan-
dard & Poor's 500 Composite Index. The fund is designed for investors seeking
capital appreciation through stocks. Investors in the fund should have a long-
term perspective and be able to tolerate potentially wide price fluctuations.
The prices of securities held by the fund may decline in response to certain
events, including: those directly involving companies whose securities are
owned in the fund; conditions affecting the general economy; overall market
changes; global political, social or economic instability; and currency and in-
terest rate fluctuations.
Investments in securities issued by entities based outside the U.S. may be sub-
ject to the risks described above to a greater extent and may also be affected
by differing securities regulations, higher transaction costs, and administra-
tive difficulties such as delays in clearing and settling portfolio transac-
tions.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
American Funds Insurance Series / Prospectus 7
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'92 10.78
'93 16.33
'94 0.50
'95 33.27
'96 13.36
'97 30.10
'98 35.56
'99 57.61
'00 4.72
'01 -17.93
The fund's year-to-date return for the three months ended March 31, 2002
was 0.04%.
The fund's highest/lowest quarterly results during this time period were:
Highest 30.77% (quarter ended December 31, 1999)
Lowest -27.12% (quarter ended September 30, 2001)
For periods ended December 31, 2001:
[Download Table]
Average
Annual Lipper Capital
Total S&P 500 Appreciation Lipper Growth
Return Fund Index/1/ Fund Index/2/ Fund Index/3/ CPI/4/
--------------------------------------------------------------------------------
One Year -17.93% -11.83% -15.92% -17.98% 1.55%
................................................................................
Five Years 19.03% 10.69% 7.96% 8.52% 2.18%
................................................................................
Ten Years 16.67% 12.91% 10.42% 10.78% 2.51%
................................................................................
Lifetime/5/ 16.56% 14.92% 11.85% 12.43% 3.12%
/1/ The Standard & Poor's 500 Composite Index is a market capitalization-
weighted measurement of changes in stock market conditions based on the
average weighted performance of 500 widely held common stocks. This index
is unmanaged and does not reflect sales charges, commissions or expenses.
/2/ The Lipper Capital Appreciation Fund Index represents funds that seek
growth of capital but do not necessarily emphasize investments in rapidly
growing, high P/E companies. The results of the underlying funds in the
index include the reinvestment of dividend and capital gain distributions
and brokerage commissions paid by the funds for portfolio transactions, but
do not reflect sales charges.
/3/ The Lipper Growth Fund Index is an equally weighted performance index with
30 of the largest growth funds (representing about 50% of all growth fund
as-sets). These funds normally invest in companies with long-term earnings
that are expected to grow significantly faster than the earnings of the
stocks represented in the major unmanaged indexes. The results of the
underlying funds in the index include the reinvestment of dividend and
capital gain dis-tributions and brokerage commissions paid by the funds for
portfolio transac-tions, but do not reflect sales charges or taxes.
/4/ The Consumer Price Index is a measure of inflation and is computed from
data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
/5/ Lifetime results are as of February 8, 1984, the date the fund began invest-
ment operations.
8 American Funds Insurance Series / Prospectus
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International Fund
RISK/RETURN SUMMARY
The fund seeks to make your investment grow over time by investing primarily in
common stocks of companies located outside the United States. The fund is de-
signed for investors seeking capital appreciation through stocks. Investors in
the fund should have a long-term perspective and be able to tolerate poten-
tially wide price fluctuations.
The prices of securities held by the fund may decline in response to certain
events, including: those directly involving companies whose securities are
owned in the fund; conditions affecting the general economy; overall market
changes; global political, social or economic instability; and currency and in-
terest rate fluctuations.
Investments in securities issued by entities based outside the U.S. may be sub-
ject to the risks described above to a greater extent and may also be affected
by differing securities regulations, higher transaction costs, and administra-
tive difficulties such as delays in clearing and settling portfolio transac-
tions. The growth oriented, equity-type securities generally purchased by the
fund may involve large price swings and potential for loss, particularly in the
case of smaller capitalization stocks.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
American Funds Insurance Series / Prospectus 9
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'92 -0.84
'93 34.34
'94 1.93
'95 12.68
'96 17.53
'97 9.06
'98 21.22
'99 76.42
'00 -21.85
'01 -19.73
The fund's year-to-date return for the three months ended March 31, 2002
was 4.41%.
The fund's highest/lowest quarterly results during this time period were:
Highest 42.45% (quarter ended December 31, 1999)
Lowest -17.62% (quarter ended September 30, 2001)
For periods ended December 31, 2001:
[Download Table]
Average
Annual MSCI Lipper
Total EAFE International
Return Fund Index/1/ Fund Index/2/ CPI/3/
--------------------------------------------------------------------------------
One Year -19.73% -21.21% -19.33% 1.55%
................................................................................
Five Years 7.91% 1.17% 2.76% 2.18%
................................................................................
Ten Years 10.16% 4.76% 6.67% 2.51%
................................................................................
Lifetime/4/ 9.25% 4.79% 6.26% 2.74%
/1/ The Morgan Stanley Capital International EAFE (Europe, Australasia, Far
East) Index measures all major stock markets outside North America. This in-
dex is unmanaged and does not reflect sales charges, commissions or
expenses.
/2/ The Lipper International Fund Index represents funds that invest in securi-
ties with primary trading markets outside the U.S. The results of the under-
lying funds in the index include the reinvestment of dividend and capital
gain distributions and brokerage commissions paid by the funds for
portfolio transactions, but do not reflect sales charges.
/3/ The Consumer Price Index is a measure of inflation and is computed from data
supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
/4/ Lifetime results are as of May 1, 1990, the date the fund began investment
operations.
10 American Funds Insurance Series / Prospectus
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New World Fund
RISK/RETURN SUMMARY
The fund seeks to make your investment grow over time by investing primarily in
stocks of companies with significant exposure to countries with developing
economies and/or markets. The fund is designed for investors seeking capital
appreciation. Investors in the fund should have a long-term perspective and be
able to tolerate potentially wide price fluctuations.
The fund may invest in equity securities of any company, regardless of where it
is based, if the fund's investment adviser determines that a significant por-
tion of a company's assets or revenues (generally 20% or more) is attributable
to developing countries. Under normal market conditions, the fund will invest
at least 35% of its assets in equity and debt securities of issuers primarily
based in "qualified" countries that have developing economies and/or markets.
In addition, the fund may invest up to 25% of its assets in debt securities of
issuers, including issuers of lower rated bonds and government securities that
are primarily based in qualified countries or that have a significant portion
of their assets or revenues attributable to developing countries.
In determining whether a country is qualified, the fund will consider such fac-
tors as the country's per capita gross domestic product, the percentage of the
country's economy that is industrialized, market capital as a percentage of
gross domestic product, the overall regulatory environment, the presence of
government regulation limiting or banning foreign ownership, and restrictions
on repatriation of initial capital, dividends, interest, and/or capital gains.
The fund's investment adviser will maintain an eligible list of qualified coun-
tries and securities in which the fund may invest. Qualified developing coun-
tries in which the fund may invest currently include, but are not limited to,
Argentina, Brazil, Chile, China, Colombia, Croatia, Czech Republic, Egypt, Hun-
gary, India, Israel, Jordan, Malaysia, Mexico, Morocco, Panama, Peru, Philip-
pines, Poland, Russia, South Africa, South Korea, Thailand, Turkey, and Venezu-
ela.
The prices of securities held by the fund may decline in response to certain
events, including: those directly involving the companies whose securities are
owned in the fund; conditions affecting the general economy; overall market
changes; global political, social or economic instability; and currency and in-
terest rate fluctuations. The growth-oriented, equity-type securities generally
purchased by the fund may involve large price swings and potential for loss,
particularly in the case of smaller capitalization stocks. Smaller capitaliza-
tion stocks are often more difficult to value or dispose of, more difficult to
obtain information about, and more volatile than stocks of larger, more estab-
lished companies.
Investing in countries with developing economies and/or markets generally in-
volves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, developing countries may have
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a com-
pany 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 suscepti-
ble to local and global changes. Securities markets in these countries are also
relatively small and have substantially lower trading volumes. As a result, se-
curities issued in these countries may be more volatile and potentially less
liquid than securities issued in countries with more developed economies or
markets.
The values of most debt securities held by the fund may be affected by changing
interest rates and by changes in effective maturities and credit ratings of
these securities. For example, the values of debt securities in the fund's
portfolio generally will decline when interest rates rise and increase when in-
terest 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 securi-
ties 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 securities generally have higher
rates of interest and may be subject to greater price fluctuations than higher
quality or shorter maturity securities. The fund's investment adviser attempts
to reduce these risks through diversification of the portfolio and with ongoing
credit analysis of each issuer, as well as by monitoring economic and legisla-
tive developments.
American Funds Insurance Series / Prospectus 11
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'00 -12.43
'01 -3.99
The fund's year-to-date return for the three months ended March 31, 2002
was 7.94%.
The fund's highest/lowest quarterly results during this time period were:
Highest 14.15% (quarter ended December 31, 2001)
Lowest -15.96% (quarter ended September 30, 2001)
For periods ended December 31, 2001:
[Download Table]
MSCI
Average All
Annual Country
Total World Free
Return Fund Index/1/ CPI/2/
--------------------------------------------------------------------------------
One Year -3.99% -15.91% 1.55%
................................................................................
Lifetime/3/ -0.16% -6.82% 2.44%
/1/ The Morgan Stanley Capital International All Country World Free Index is a
blend of the MSCI World and Emerging Markets Free indexes weighted by
market capitalization. The MSCI World Index measures 23 developed country
stock mar-kets, while the MSCI Emerging Markets Free Index measures 26
developing coun-try stock markets. This index is unmanaged and does not
reflect sales charges, commissions or expenses.
/2/ The Consumer Price Index is a measure of inflation and is computed from
data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
/3/ Lifetime results are as of June 17, 1999, the date the fund began invest-
ment operations.
12 American Funds Insurance Series / Prospectus
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Blue Chip Income and Growth Fund
RISK/RETURN SUMMARY
The fund seeks to produce income exceeding the average yield on U.S. stocks
generally (as represented by the average yield on the Standard & Poor's 500
Composite Index) and to provide an opportunity for growth of principal consis-
tent with sound common stock investing. The fund invests primarily in common
stocks of larger, more established companies based in the U.S., with market
capitalizations of $4 billion and above. The fund may also invest up to 10% of
its assets in common stocks of larger, non-U.S. companies, so long as they are
listed or traded in the U.S. The fund will invest, under normal market condi-
tions, at least 90% of its assets in equity securities.
The fund is designed for investors seeking both income and capital apprecia-
tion. The prices of securities held by the fund may decline in response to cer-
tain events, including: those directly involving the companies whose securities
are owned in the fund; conditions affecting the general economy; overall market
changes; global political, social or economic instability; and currency and in-
terest rate fluctuations.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
Investment Results
The fund began operations on July 5, 2001. Accordingly, results for a full cal-
endar year are not available. The fund's return for the three months ended
March 31, 2002 and the period from inception through March 31, 2002 was 2.23%
and -3.12% respectively.
American Funds Insurance Series / Prospectus 13
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Growth-Income Fund
RISK/RETURN SUMMARY
The fund seeks to make your investment grow and provide you with income over
time by investing primarily in common stocks or other securities which demon-
strate the potential for appreciation and/or dividends. The fund may invest a
portion of its assets in securities of issuers domiciled outside the U.S. and
not included in the Standard & Poor's 500 Composite Index. The fund is designed
for investors seeking both capital appreciation and income.
The prices of securities may decline in response to certain events, including:
those directly involving companies whose securities are owned in the fund; con-
ditions affecting the general economy; overall market changes; global politi-
cal, social or economic instability; and currency and interest rate fluctua-
tions.
Investments in securities issued by entities based outside the U.S. may be sub-
ject to the risks described above to a greater extent and may also be affected
by differing securities regulations, higher transaction costs, and administra-
tive difficulties such as delays in clearing and settling portfolio transac-
tions.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
14 American Funds Insurance Series / Prospectus
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'92 7.93
'93 12.30
'94 2.08
'95 32.99
'96 18.72
'97 25.83
'98 18.37
'99 11.48
'00 8.24
'01 2.78
The fund's year-to-date return for the three months ended March 31, 2002
was 2.43%.
The fund's highest/lowest quarterly results during this time period were:
Highest 18.92% (quarter ended December 31, 1998)
Lowest -12.36% (quarter ended September 30, 2001)
For periods ended December 31, 2001:
[Download Table]
Average
Annual Lipper Growth
Total S&P 500 and Income
Return Fund Index/1/ Fund Index/2/ CPI/3/
--------------------------------------------------------------------------------
One Year 2.78% -11.83% -7.42% 1.55%
................................................................................
Five Years 13.06% 10.69% 8.42% 2.18%
................................................................................
Ten Years 13.69% 12.91% 11.49% 2.51%
................................................................................
Lifetime/4/ 14.66% 14.92% 12.74% 3.12%
/1/ The Standard & Poor's 500 Composite Index is a market capitalization-
weighted measurement of changes in stock market conditions based on the
average weighted performance of 500 widely held common stocks. This index
is unmanaged and does not reflect sales charges, commissions or expenses.
/2/ The Lipper Growth and Income Fund Index represents 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 dividend and capital gain distributions and brokerage
commissions paid by the funds for portfolio transactions, but do not
reflect sales charges.
/3/ The Consumer Price Index is a measure of inflation and is computed from
data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
/4/ Lifetime results are as of February 8, 1984, the date the fund began invest-
ment operations.
American Funds Insurance Series / Prospectus 15
--------------------------------------------------------------------------------
Asset Allocation Fund
RISK/RETURN SUMMARY
The fund seeks to provide you with high total return (including income and cap-
ital gains) consistent with preservation of capital over the long term by in-
vesting in a diversified portfolio of common stocks and other equity securi-
ties, bonds and other intermediate and long-term debt securities, and money
market instruments (debt securities maturing in one year or less). The fund may
also invest up to 10% of its assets in equity securities of issuers domiciled
outside the U.S. and not included in the Standard & Poor's 500 Composite Index,
and up to 5% of its assets in debt securities of non-U.S. issuers. In addition,
the fund may invest up to 25% of its assets in lower quality debt securities
(rated Ba and BB or below by Moody's Investors Services, Inc. or Standard &
Poor's Corporation or unrated but determined to be of equivalent quality). Un-
der 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 mar-
ket instruments. The fund is designed for investors seeking above average total
return.
The prices of securities may decline in response to certain events, including:
those directly involving companies whose securities are owned in the fund; con-
ditions affecting the general economy; overall market changes; global politi-
cal, social or economic instability; and currency and interest rate fluctua-
tions.
Investments in securities issued by entities based outside the U.S. may be sub-
ject to the risks described above to a greater extent and may also be affected
by differing securities regulations, higher transaction costs, and administra-
tive difficulties such as delays in clearing and settling portfolio transac-
tions.
The values of most debt securities held by the fund may be affected by changing
interest rates and by changes in effective maturities and credit ratings of
these securities. For example, the values of debt securities in the fund's
portfolio generally will decline when interest rates rise and increase when in-
terest 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 securi-
ties 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 securities generally have higher
rates of interest and may be subject to greater price fluctuations than higher
quality or shorter maturity securities. The fund's investment adviser attempts
to reduce these risks through diversification of the portfolio and with ongoing
credit analysis of each issuer, as well as by monitoring economic and legisla-
tive developments. Money market instruments held by the fund may be affected by
unfavorable political, economic, or governmental developments that could affect
the repayment of principal or the payment of interest.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
16 American Funds Insurance Series / Prospectus
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'92 8.50
'93 10.42
'94 -0.28
'95 29.56
'96 15.78
'97 20.49
'98 13.13
'99 7.25
'00 4.62
'01 0.77
The fund's year-to-date return for the three months ended March 31, 2002
was 3.01%.
The fund's highest/lowest quarterly results during this time period were:
Highest 11.56% (quarter ended December 31, 1998)
Lowest -9.15% (quarter ended September 30, 1998)
For periods ended December 31, 2001:
[Download Table]
Average Salomon
Annual Smith
Total S&P 500 Barney BIG
Return Fund Index/1/ Index/2/ CPI/3/
--------------------------------------------------------------------------------
One Year 0.77% -11.83% 8.52% 1.55%
................................................................................
Five Years 9.04% 10.69% 7.44% 2.18%
................................................................................
Ten Years 10.69% 12.91% 7.28% 2.51%
................................................................................
Lifetime/4/ 10.42% 12.76% 8.07% 2.87%
/1/ The Standard & Poor's 500 Composite Index is a market capitalization-
weighted measurement of changes in stock market conditions based on the
average weighted performance of 500 widely held common stocks. This index is
un-managed and does not reflect sales charges, commissions or expenses .
/2/ The Salomon Smith Barney Broad Investment-Grade (BIG) Bond Index represents
a market capitalization-weighted index that includes Treasury, government-
sponsored, mortgage, and investment grade fixed-rate corporate bonds (BBB-
/Baa3) with a maturity of one year or longer. This index is unmanaged and
does not reflect sales charges, commissions or expenses. This index is in-
cluded as a comparison because the fund generally invests at least 20% of
its assets in bonds, including intermediate and long-term debt securities.
It may increase its exposure to debt securities to as much as 50% of assets.
/3/ The Consumer Price Index is a measure of inflation and is computed from data
supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
/4/ Lifetime results are as of August 1, 1989, the date the fund began invest-
ment operations.
American Funds Insurance Series / Prospectus 17
--------------------------------------------------------------------------------
Bond Fund
RISK/RETURN SUMMARY
The fund seeks to maximize your level of current income and preserve your capi-
tal. Normally, the fund invests at least 80% of its assets in bonds. The fund
may invest up to 35% of its assets in bonds rated Ba and BB or below by Moody's
Investors Service, Inc. or Standard & Poor's Corporation or unrated but deter-
mined to be of equivalent quality. The fund may invest in bonds of issuers dom-
iciled outside the U.S. The fund may also invest up to 20% of its assets in
preferred stocks, including convertible and non-convertible preferred stocks.
The fund is designed for investors seeking income and more price stability than
stocks, and capital preservation over the long term.
The values of and the income generated by most debt securities held by the fund
may be affected by changing interest rates and by changes in effective maturi-
ties and credit ratings of these securities. For example, the values of debt
securities in the fund's portfolio generally will decline when interest rates
rise and increase when interest rates fall. In addition, falling interest rates
may cause an issuer to redeem or "call" a security before its stated maturity,
which may result in the fund having to reinvest the proceeds in lower yielding
securities. Debt securities are also subject to credit risk, which is the pos-
sibility 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 securities
generally have higher rates of interest and may be subject to greater price
fluctuations than higher quality or shorter maturity securities. The fund's in-
vestment adviser attempts to reduce these risks through diversification of the
portfolio and with ongoing credit analysis of each issuer, as well as by moni-
toring economic and legislative developments.
Investments in securities issued by entities based outside the U.S. may be sub-
ject to the risks described above to a greater extent and may also be affected
by differing securities regulations, higher transaction costs, and administra-
tive difficulties such as delays in clearing and settling portfolio transac-
tions. In addition, although all securities in the fund's portfolio may be ad-
versely affected by currency fluctuations or global political, social or eco-
nomic instability, investments outside the U.S. may be affected to a greater
extent.
The prices and yields of non-convertible preferred stocks generally move with
changes in interest rates and the issuer's credit quality, similar to debt se-
curities. The value of convertible preferred stocks varies in response to many
factors, including the value of the underlying equity, general market and eco-
nomic conditions, and convertible market valuations, as well as changes in in-
terest rates, credit spreads, and the credit quality of the issuer.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
18 American Funds Insurance Series / Prospectus
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'96 5.84
'97 10.13
'98 4.37
'99 2.81
'00 5.22
'01 8.48
The fund's year-to-date return for the three months ended March 31, 2002
was 0.10%.
The fund's highest/lowest quarterly results during this time period were:
Highest 4.51% (quarter ended June 30, 1997)
Lowest -2.10% (quarter ended March 31, 1996)
For periods ended December 31, 2001:
[Download Table]
Average Salomon
Annual Smith
Total Barney BIG
Return Fund Index/1/ CPI/2/
--------------------------------------------------------------------------------
One year 8.48% 8.52% 1.55%
................................................................................
Five years 6.17% 7.44% 2.18%
................................................................................
Lifetime/3/ 6.12% 6.80% 2.38%
/1/ The Salomon Smith Barney Broad Investment-Grade (BIG) Bond Index represents
a market capitalization-weighted index that includes Treasury, government-
sponsored, mortgage, and investment grade fixed-rate corporate bonds (BBB-
/Baa3) with a maturity of one year or longer. This index is unmanaged and
does not reflect sales charges, commissions or expenses.
/2/ The Consumer Price Index is a measure of inflation and is computed from
data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
/3/ Lifetime results are as of January 2, 1996, the date the fund began invest-
ment operations.
American Funds Insurance Series / Prospectus 19
--------------------------------------------------------------------------------
High-Income Bond Fund*
RISK/RETURN SUMMARY
The fund seeks to provide you with a high level of current income and second-
arily capital appreciation by investing primarily in lower quality debt securi-
ties (rated Ba and BB or below by Moody's Investors Service, Inc. or Standard &
Poor's Corporation or unrated but determined to be of equivalent quality), in-
cluding those of non-U.S. issuers. The fund may also invest in equity securi-
ties and securities that have both equity and debt characteristics that provide
an opportunity for capital appreciation. The fund is designed for investors
seeking a high level of current income and who are able to tolerate greater
credit risk and price fluctuations than funds investing in higher quality
bonds.
The values of and the income generated by most debt securities held by the fund
may be affected by changing interest rates and by changes in effective maturi-
ties and credit ratings of these securities. For example, the values of debt
securities in the fund's portfolio generally will decline when interest rates
rise and increase when interest rates fall. In addition, falling interest rates
may cause an issuer to redeem or "call" a security before its stated maturity,
which may result in the fund having to reinvest the proceeds in lower yielding
securities. Debt securities are also subject to credit risk, which is the pos-
sibility 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 securities
generally have higher rates of interest and may be subject to greater price
fluctuations than higher quality or shorter maturity securities.
The prices of and the income generated by securities held by the fund may de-
cline in response to certain events, including: those directly involving the
companies whose securities are owned in the fund; conditions affecting the gen-
eral economy; overall market changes; global political, social or economic in-
stability; and currency and interest rate fluctuations. Investments in securi-
ties issued by entities based outside the U.S. may be subject to the risks de-
scribed above to a greater extent and may be affected by differing securities
regulations, higher transaction costs, and administrative difficulties such as
delays in clearing and settling portfolio transactions. The fund's investment
adviser attempts to reduce these risks through diversification of the portfolio
and with ongoing credit analysis of each issuer, as well as by monitoring eco-
nomic and legislative developments.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
-----
*Formerly known as High-Yield Bond Fund.
20 American Funds Insurance Series / Prospectus
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'92 12.47
'93 16.43
'94 -6.54
'95 21.77
'96 13.21
'97 12.41
'98 0.45
'99 5.80
'00 -3.06
'01 8.02
The fund's year-to-date return for the three months ended March 31, 2002
was -0.34%.
The fund's highest/lowest quarterly results during this time period were:
Highest 7.57% (quarter ended June 30, 1995)
Lowest -8.42% (quarter ended September 30, 1998)
For periods ended December 31, 2001:
[Download Table]
Average Salomon
Annual Salomon Smith Smith
Total Barney Barney BIG
Return Fund High Yield Index/1/ Index/2/ CPI/3/
--------------------------------------------------------------------------------
One Year 8.02% 19.33% 8.52% 1.55%
................................................................................
Five Years 4.58% 9.62% 7.44% 2.18%
................................................................................
Ten Years 7.75% 11.75% 7.28% 2.51%
................................................................................
Lifetime/4/ 10.63% 11.60% 9.60% 3.12%
/1/ The Salomon Smith Barney Long-Term High-Yield Bond Index represents bonds
that have a remaining maturity of at least ten years, a minimum amount out-
standing of $100 million and a speculative-grade rating by both Moody's In-
vestors Service, Inc. and Standard & Poor's Corporation. This index is
unmanaged and does not reflect sales charges, commissions or expenses.
/2/ The Salomon Smith Barney Broad Investment-Grade Bond (BIG) Index represents
a market capitalization-weighted index that includes Treasury, government-
sponsored, mortgage, and investment grade fixed-rate corporate bonds (BBB-
/Baa3) with a maturity of one year or longer. This index is unmanaged and
does not reflect sales charges, commissions or expenses.
/3/ The Consumer Price Index is a measure of inflation and is computed from data
supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
/4/ Lifetime results are as of February 8, 1984, the date the fund began invest-
ment operations.
American Funds Insurance Series / Prospectus 21
--------------------------------------------------------------------------------
U.S. Government/AAA-Rated Securities Fund
RISK/RETURN SUMMARY
The fund seeks to provide you with a high level of current income, as well as
preserve your investment. Normally, the fund will invest at least 80% of its
assets in securities that are guaranteed or sponsored by the U.S. government
and securities that are rated Aaa or AAA by Moodys Investors Service, Inc. or
Standard & Poor's Corporation or unrated but determined to be of equivalent
quality. The fund will invest at least 65% of its assets in securities that are
guaranteed by the "full faith and credit" pledge of the U.S. government. The
fund may also invest a significant portion of its assets in securities backed
by pools of mortgages (also called "mortgage-backed securities"). The fund is
designed for investors seeking income and more price stability than stocks and
lower quality debt securities, and capital preservation over the long term.
The values of most debt securities held by the fund may be affected by changing
interest rates and prepayment risks. For example, as with other debt securi-
ties, the value of U.S. government securities generally will decline when in-
terest rates rise and increase when interest rates fall. In addition, falling
interest rates may cause an issuer to redeem or "call" a security before its
stated maturity, which may result in the fund having to reinvest the proceeds
in lower yielding securities. Longer maturity securities generally have higher
rates of interest but may be subject to greater price fluctuations than higher
quality or shorter maturity securities.
A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. Accordingly, the current market prices for
such securities will fluctuate with changes in interest rates. Many types of
debt securities, including mortgage-related securities, are subject to
prepayment risk. For example, when interest rates fall, homeowners are more
likely to refinance their home mortgages and "prepay" their principal earlier
than expected. The fund must then reinvest the prepaid principal in new
securities when interest rates on new mortgage investments are falling, thus
reducing the fund's income.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person.
22 American Funds Insurance Series / Prospectus
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'92 7.60
'93 11.18
'94 -4.34
'95 15.38
'96 3.11
'97 8.45
'98 8.19
'99 -0.53
'00 11.69
'01 7.24
The fund's year-to-date return for the three months ended March 31, 2002
was 0.25%.
The fund's highest/lowest quarterly results during this time period were:
Highest 5.59% (quarter ended September 30, 1992)
Lowest -3.76% (quarter ended March 31, 1994)
For periods ended December 31, 2001:
[Download Table]
Salomon
Treasury/
Average Government-
Annual Sponsored
Total Mortgage
Return Fund Index/1/ CPI/2/
--------------------------------------------------------------------------------
One Year 7.24% 7.69% 1.55%
................................................................................
Five Years 6.93% 7.45% 2.18%
................................................................................
Ten Years 6.65% 7.17% 2.51%
................................................................................
Lifetime/3/ 7.85% 8.64% 3.05%
/1/ The Salomon Smith Barney Treasury/Government-Sponsored Mortgage Index repre-
sents fixed-rate Treasury, government-sponsored, and mortgage issues with a
maturity of one year or longer. This index is unmanaged and does not
reflect sales charges, commissions or expenses.
/2/ The Consumer Price Index is a measure of inflation and is computed from data
supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
/3/ Lifetime results are as of December 2, 1985, the date the fund began invest-
ment operations.
23 American Funds Insurance Series / Prospectus
--------------------------------------------------------------------------------
Cash Management Fund
RISK/RETURN SUMMARY
The fund seeks to provide you an opportunity to earn income on your cash re-
serves while preserving the value of your investment and maintaining liquidity
by investing in a diversified selection of high quality money market instru-
ments. The prices of money market instruments may be affected by unfavorable
political, economic, or governmental developments that could affect the repay-
ment of principal or the payment of interest.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the fund is not
a bank deposit and is not insured or guaranteed by the Federal Deposit Insur-
ance Corporation or any other government agency, entity or person. It is not
guaranteed to maintain a stable value of $1 per share.
24 American Funds Insurance Series / Prospectus
Investment Results
The following information provides an indication of the risks associated with
investing in the fund by showing changes in the fund's investment results from
year to year and how the fund's average annual returns for various periods com-
pare with those of a broad measure of market performance. Past results are not
an indication of future results.
[GRAPH APPEARS HERE]
Here are the fund's results calculated on a calendar year basis. (If insurance
separate account fees were included, results would have been lower.)
'92 3.22
'93 2.67
'94 3.87
'95 5.55
'96 5.09
'97 5.16
'98 5.15
'99 4.83
'00 6.04
'01 3.66
The fund's year-to-date return for the three months ended March 31, 2002
was 0.26%.
The fund's highest/lowest quarterly results during this time period were:
Highest 1.57% (quarter ended December 31, 2000)
Lowest 0.53% (quarter ended December 31, 2001)
For periods ended December 31, 2001:
[Download Table]
Average
Annual
Total
Return Fund
--------------------------------------------------------------------------------
One Year 3.66%
................................................................................
Five Years 4.96%
................................................................................
Ten Years 4.52%
................................................................................
Lifetime/1/ 5.72%
/1/ Lifetime results are as of February 8, 1984, the date the fund began invest-
ment operations.
American Funds Insurance Series / Prospectus 25
Cash Position
The funds may also hold cash or money market instruments. The sizes of the
funds' cash position will vary and will depend on various factors, including
market conditions and purchases and redemptions of fund shares. A larger cash
position could detract from the achievement of a fund's objective in a period
of rising market prices; conversely, it would reduce a fund's magnitude of loss
in the event of a general market downturn and provide liquidity to make addi-
tional investments or to meet redemptions.
Portfolio Turnover
Portfolio changes will be made without regard to the length of time particular
investments may have been held. The funds do not anticipate their portfolio
turnover to exceed 100% annually. A fund's portfolio turnover rate would equal
100% if each security in the fund's portfolio was replaced once per year. High
portfolio turnover involves correspondingly greater transaction costs in the
form of dealer spreads or brokerage commissions, and may result in the realiza-
tion of net capital gains, which are taxable when distributed to shareholders.
Debt securities are generally traded on a net basis and usually neither broker-
age commissions nor transfer taxes are involved, although the dealer may re-
ceive a markup. See the "Financial Highlights" for the funds' portfolio turn-
over for each of the last five years.
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 those in The American Funds Group. Capital Re-
search Management Company, a wholly owned subsidiary of The Capital Group Com-
panies, Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071.
Capital Research Management Company manages the investment portfolios and busi-
ness affairs of the Series.
The total management fee paid by each fund, as a percentage of average net
assets, for the fiscal year ended December 31, 2001 amounted to the following:
Global Discovery Fund* -- .28%; Global Growth Fund -- .66%; Global
Small Capitalization Fund -- .80%; Growth Fund -- .37%; International Fund --
.55%; New World Fund -- .85%; Blue Chip Income and Growth Fund* -- .25%;
Growth-Income Fund -- .33%; Asset Allocation Fund -- .43%; Bond Fund --.48%;
High-Income Bond Fund -- .50%; U.S. Government/AAA-Rated Securities Fund --
.46%; and Cash Management Fund -- .45%.
*The management fees for these funds are for the period July 5, 2001 through
December 31, 2001 and not representative of a full year of operations.
Portfolio Management
The Series relies on the professional judgment of its investment adviser, Capi-
tal Research and Management Company, to make decisions about the funds' portfo-
lio investments. The basic investment philosophy of the investment adviser is
to seek reasonably priced securities that represent above average long-term in-
vestment opportunities. This is accomplished not only through fundamental anal-
ysis, but also by meeting with company executives and employees, suppliers,
customers and competitors in order to gain in-depth knowledge of a company's
true value. Securities may be sold when the investment adviser believes they no
longer represent good long-term value.
Multiple Portfolio Counselor System
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this system, the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary portfolio counsel-
ors for each of the funds are listed on the next two pages.
26 American Funds Insurance Series / Prospectus
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Approximate Years
of Experience as
an Investment
Professional
..................
Years of Experience With Capital
as Portfolio Counselor Research and
Portfolio Counselors Primary Title with (and Research Professional, Management
for the Series/Title Investment Adviser if applicable) Company or Total
(if applicable) (or affiliate) (approximate) Affiliates Years
----------------------------------------------------------------------------------------------------
James K. Dunton Senior Vice President and Growth-Income Fund -- 18 40 40
Chairman of the Board Director, Capital Research years (since the fund began
and Principal and Management Company operations)
Executive Officer Blue Chip Income and Growth
Fund -- 1 year (since the
fund began operations)
----------------------------------------------------------------------------------------------------
Donald D. O'Neal Senior Vice President, Global Growth Fund -- 5 17 17
President and Trustee Capital Research and years (since the fund began
Management Company operations) Growth Fund --
11 years (plus 4 years
prior experience as a
research professional for
the fund)
----------------------------------------------------------------------------------------------------
Abner D. Goldstine Senior Vice President and Bond Fund -- 6 years (since 35 50
Senior Vice President Director, Capital Research the fund began operations)
and Management Company High-Income Bond Fund -- 4
years
----------------------------------------------------------------------------------------------------
Alan N. Berro Senior Vice President, Growth-Income Fund -- 6 11 16
Vice President Capital Research Company years (plus 4 years prior
experience as a research
professional for the fund)
Asset Allocation Fund -- 2
years
Blue Chip Income and Growth
Fund --
1 year (since the fund
began operations)
----------------------------------------------------------------------------------------------------
Claudia P. Huntington Senior Vice President, Growth-Income Fund -- 8 27 29
Vice President Capital Research and years (plus 5 years prior
Management Company experience as a research
professional for the fund)
Global Discovery Fund -- 1
year (since the fund began
operations)
----------------------------------------------------------------------------------------------------
Robert W. Lovelace President and Director, Global Growth Fund -- 5 17 17
Vice President Capital Research Company years (since the fund began
operations)
International Fund -- 8
years
New World Fund -- 3 years
(since the fund began
operations)
----------------------------------------------------------------------------------------------------
John H. Smet Senior Vice President, Bond Fund -- 6 years (since 19 20
Vice President Capital Research and the fund began operations)
Management Company U.S. Government Fund -- 10
years
----------------------------------------------------------------------------------------------------
Susan M. Tolson Senior Vice President, High-Income Bond Fund -- 7 12 14
Vice President Capital Research Company years (plus 2 years prior
experience as a research
professional for the fund)
Asset Allocation Fund -- 2
years
----------------------------------------------------------------------------------------------------
Timothy D. Armour Chairman and Principal Asset Allocation Fund -- 6 19 19
Executive Officer, Capital years
Research Company Global Discovery Fund --
1 year (since the fund
began operations)
----------------------------------------------------------------------------------------------------
David C. Barclay Senior Vice President and High-Income Bond Fund -- 9 14 21
Director, Capital Research years
and Management Company New World Fund -- 3 years
(since the fund began
operations)
Bond Fund -- 4 years
----------------------------------------------------------------------------------------------------
Martial Chaillet Senior Vice President, Global Growth Fund -- 5 30 30
Capital Research Company years (since the fund began
operations)
International Fund -- 9
years
----------------------------------------------------------------------------------------------------
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