SEC File Nos.
811-66
2-10758
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 81 (X)
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20 (X)
AMERICAN BALANCED FUND, INC.
(Exact name of registrant as specified in charter)
P.O. Box 7650, Four Embarcadero Center, San Francisco, California 94120
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (415) 421-9360
Patrick F. Quan
Secretary
American Balanced Fund, Inc.
P.0. Box 7650, Four Embarcadero Center
San Francisco, California 94120
(Name and address of agent for service)
Copy to:
Cary I. Klafter, Esq.
Morrison & Foerster
345 California Street, 30th Floor
San Francisco, California 94104
The Registrant has filed a declaration
pursuant to Rule 24f-2. On
February 17, 1995, it filed its 24f-2
Notice for fiscal 1994.
Approximate date of proposed public offering:
[X] It is proposed that this filing will
become effective on March 1, 1995
pursuant to paragraph (b) of Rule 485.
AMERICAN BALANCED FUND, INC.
Cross Reference Sheet
<TABLE>
<CAPTION>
Item Number Captions in
of Part "A" Prospectus
of Form N-1A (Part "A")
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Finanical Information Financial Highlights;
Investment Results
4. General Description of Registrant Fund Organization
and Management;
Investment Objectives and
Policies; Certain
Securities and Investment
Techniques
5. Management of the Fund Financial Highlights;
Fund Organization and
Management
6. Capital Stock and Other Securities Investment Objectives
and Policies; Fund
Organization and
Management; Dividends,
Distributions and Taxes;
Retirement Plans
7. Purchase of Securities Being Offered Purchasing Shares; Fund
Organization and
Management; Shareholder
Services
8. Redemption or Repurchase Redeeming Shares
9. Legal Proceedings N/A
</TABLE>
<TABLE>
<CAPTION>
Item Number Captions in Statement
of Part "B" of Additional
of Form N-1A Information
(Part "B")
<S> <C> <C>
10. Cover Page Cover
11. Table of Contents Table of Contents
12. General Information and History None
13. Investment Objectives and Policies Description of Certain
Securities; Fundamental
Policies and Investment
Restrictions
14. Management of the Fund Fund Officers and
Directors
15. Control Persons and Principal Fund Officers and
Holders of Securities Directors; Fund
Organization and
Management (Part A)
16. Investment Advisory and Other Services Fund Officers and
Directors; Fund
Organization and
Management (Part "A");
General Information;
Management
17. Brokerage Allocation and Other Practices Execution of Portfolio
Transactions; Fund
Organization and
Management (Part "A")
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing Purchase of Shares;
of Securities Being Offered Shareholder Account
Services and Privileges;
Purchasing Shares (Part
"A"); General Information
20. Tax Status Dividends,
Distributions and Federal
Taxes
21. Underwriter Management; Fund
Organization and
Management (Part "A")
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Item in
Part "C"
<S> <C> <C>
24. Financial Statements and Exhibits
25. Persons Controlled by or under Common Control
with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of Investment Adviser
29. Principal Underwriter
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signature Page
</TABLE>
<PAGE>
PROSPECTUS
AMERICAN
BALANCED FUND(R)
AN OPPORTUNITY FOR CONSERVATION
OF CAPITAL, CURRENT INCOME, AND
LONG-TERM GROWTH OF CAPITAL AND
INCOME
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
March 1, 1995
AMERICAN BALANCED FUND, INC.
Four Embarcadero Center
Suite 1800
San Francisco, CA 94111
The investment objectives of the fund are: (1) conservation of capital, (2)
current income, and (3) long-term growth of capital and income. The fund
strives to accomplish these objectives by investing in a broadly diversified
portfolio of securities including stocks and bonds. The fund approaches the
management of its investments as if they constituted the complete investment
program of the prudent investor.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information for the fund dated
March 1, 1995, which contains the fund's financial statements, without charge
by writing to the Secretary of the fund at the above address or telephoning
800/421-0180. These requests will be honored within three business days of
receipt.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED, GUARANTEED,
OR ENDORSED BY, THE U.S. GOVERNMENT, ANY BANK, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, ENTITY OR PERSON.
THE PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
11-010-0395
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses.................. 3
Financial Highlights................. 4
Investment Objectives and Policies... 4
Certain Securities and Investment
Techniques.......................... 5
Investment Results................... 8
Dividends, Distributions and Taxes... 8
Fund Organization and Management..... 9
The American Funds Shareholder Guide. 12-20
Purchasing Shares.................. 12
Reducing Your Sales Charge......... 15
Shareholder Services............... 16
Redeeming Shares................... 18
Retirement Plans................... 20
</TABLE>
IMPORTANT PHONE NUMBERS
Shareholder Services......800/421-0180 ext. 1
Dealer Services......... 800/421-9900 ext. 11
American FundsLine(R)........... 800/325-3590
(24-hour information)
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY OF
EXPENSES
Average annual expenses
paid over a 10-year
period would be
approximately $14 per
year, assuming a $1,000
investment and a 5%
annual return.
This table is designed to help you understand the
costs of investing in the fund. These are
historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum sales charge on purchases
(as a percentage of offering price)................................... 5.75%/1/
</TABLE>
The fund has no sales charge on reinvested
dividends, deferred sales charge,/2/ redemption
fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES (as a percentage of
average net assets)
<TABLE>
<S> <C>
Management fees....................................................... 0.34%
12b-1 expenses........................................................ 0.21%/3/
Other expenses (including audit, legal, shareholder services, transfer
agent and custodian expenses)........................................ 0.13%
Total fund operating expenses......................................... 0.68%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following cumulative ex-
penses on a $1,000 investment, assuming a 5%
annual return./4/ $64 $78 $93 $137
</TABLE>
/1/ Sales charges are reduced for certain large
purchases. (See "The American Funds Shareholder
Guide: Purchasing Shares--Sales Charges.")
/2/ Any defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code
including a "401(k)" plan with 200 or more
eligible employees or any other purchaser
investing at least $1 million in shares of the
fund (or in combination with shares of other
funds in The American Funds Group other than the
money market funds) may purchase shares at net
asset value; however, a contingent deferred
sales charge of 1% applies on certain
redemptions within 12 months following such
purchases. (See "The American Funds Shareholder
Guide: Redeeming Shares--Contingent Deferred
Sales Charge.")
/3/ These expenses may not exceed 0.25% of the
fund's average net assets annually. (See "Fund
Organization and Management--Plan of
Distribution.") Due to these distribution
expenses, long-term shareholders may pay more
than the economic equivalent of the maximum
front-end sales charge permitted by the National
Association of Securities Dealers.
/4/ Use of this assumed 5% return is required by the
Securities and Exchange Commission; it is not an
illustration of past or future investment
results. THIS EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES;
ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN
THOSE SHOWN.
3
<PAGE>
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FINANCIAL The following information for the four years ended De-
HIGHLIGHTS cember 31, 1994 has been audited by Deloitte & Touche
(For a share llp, independent accountants, whose unqualified report
outstanding covering each of the most recent four years is included
throughout the in the statement of additional information, and for the
fiscal year) six years ended December 31, 1990 by KPMG Peat Marwick,
independent accountants. This information should be
read in conjunction with the financial statements and
accompanying notes which are included in the statement
of additional information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Year........... $12.57 $12.28 $12.05 $10.32 $11.41 $10.46 $10.13 $10.83 $11.65 $10.06
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. .57 .59 .61 .62 .63 .66 .59 .59 .67 .66
Net realized and
unrealized gain
(loss) on invest-
ments................. (.53) .76 .49 1.86 (.82) 1.54 .68 (.14) 1.17 2.07
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations.......... .04 1.35 1.10 2.48 (.19) 2.20 1.27 .45 1.84 2.73
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net
investment income..... (.56) (.60) (.60) (.62) (.63) (.67) (.62) (.67) (.64) (.64)
Distributions from net
realized gains........ (.05) (.46) (.27) (.13) (.27) (.58) (.32) (.48) (2.02) (.50)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.. (.61) (1.06) (.87) (.75) (.90) (1.25) (.94) (1.15) (2.66) (1.14)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $12.00 $12.57 $12.28 $12.05 $10.32 $11.41 $10.46 $10.13 $10.83 $11.65
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/1/......... .34% 11.27% 9.48% 24.69% (1.57)% 21.53% 12.87% 4.02% 16.87% 29.11%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, end of
year (in millions).... $2,082 $1,710 $1,067 $ 642 $ 370 $ 275 $ 218 $ 193 $ 167 $ 148
Ratio of expenses to
average net assets.... .68% .71% .74% .82% .84% .78% .76% .68% .67% .70%
Ratio of net income to
average net assets.... 4.76% 4.74% 5.19% 5.56% 5.95% 5.80% 5.54% 5.17% 5.71% 6.18%
Portfolio turnover
rate.................. 32% 28% 17% 25% 26% 37% 42% 42% 59% 63%
</TABLE>
--------
/1/ This was calculated without deducting a sales charge. The maximum sales
charge is 5.75% of the fund's offering price.
INVESTMENT The fund's investment objectives are: (1) conservation
OBJECTIVES of capital, (2) current income, and (3) long-term
AND POLICIES growth of capital and income. The fund approaches the
management of its investments as if they constituted
the complete investment program of the prudent invest-
or.
The fund aims to The fund invests in a broadly diversified portfolio of
provide you with securities, including common stocks, preferred stocks,
conservation of corporate bonds and U.S. Government securities. Assets
capital, current may also be held in cash or cash equivalents. (See the
income and long- statement of additional information for a description
term growth of of cash equivalents.) Additionally, the fund will in-
both capital and vest no more than 10% of its assets in securities of
income. issuers which are not included in the Standard & Poor's
500 Composite Index (a broad measure of the U.S. stock
market) and which are domiciled outside the U.S. The
fund's fixed-income investments will be investment
grade. For long-term debt obligations such as bonds,
this includes securities that are rated Baa or better
by Moody's Investors Service, Inc. or BBB or better by
Standard & Poor's Corporation, or that are not rated by
these rating services but determined to be of equiva-
lent quality by the fund's investment adviser, Capital
Research and Management Company. Securities rated Baa
or BBB are deemed to have speculative characteristics
by the rating agencies. The fund will maintain at least
25% of the value of its total assets in fixed-income
securities.
4
<PAGE>
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The fund's portfolio turnover rate will depend primar-
ily on market conditions. Short-term trading profits
are not the fund's objective and changes in its invest-
ments are generally accomplished gradually, though
short-term transactions may occasionally be made.
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tives cannot be changed without shareholder approval.
All other investment practices may be changed by the
fund's board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVES CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
CERTAIN RISKS OF INVESTING IN STOCKS AND BONDS Because the fund
SECURITIES AND invests in common stocks or securities convertible into
INVESTMENT common stocks, the fund is subject to stock market
TECHNIQUES risks. For example, the fund is subject to the possi-
bility that stock prices in general will decline over
short or even extended periods.
Investing in The fund also invests in fixed-income securities, in-
stocks and bonds cluding bonds, which have market values which tend to
involves certain vary inversely with the level of interest rates--when
risks. interest rates rise, their values will tend to decline
and vice versa. Although under normal market conditions
longer term securities yield more than shorter term se-
curities of similar quality, they are subject to
greater price fluctuations. These fluctuations in the
value of the fund's investments will be reflected in
its net asset value per share.
U.S. GOVERNMENT SECURITIES Securities guaranteed by the
U.S. Government include: (1) direct obligations of the
U.S. Treasury (such as Treasury bills, notes and bonds)
and (2) federal agency obligations guaranteed as to
principal and interest by the U.S. Treasury.
Certain securities issued by U.S. Government instrumen-
talities and certain federal agencies are neither di-
rect obligations of, nor guaranteed by, the Treasury.
However, they generally involve federal sponsorship in
one way or another: some are backed by specific types
of collateral; some are supported by the issuer's right
to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase
certain obligations of the issuer; and others are sup-
ported only by the credit of the issuing government
agency or instrumentality.
WHEN-ISSUED SECURITIES, FIRM COMMITMENT AGREEMENTS AND
"ROLL" TRANSACTIONS The fund may purchase securities on
a delayed delivery or "when-issued" basis and enter
into firm commitment agreements (transactions whereby
the payment obligation and interest rate are fixed at
the time of the transaction but the settlement is de-
layed). The fund as purchaser assumes the risk of any
decline in value of the security beginning on the date
of the agreement or purchase. The fund
5
<PAGE>
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also may enter into "roll" transactions, which are the
sale of GNMA certificates or other securities together
with a commitment (for which the fund typically re-
ceives a fee) to purchase similar, but not identical
securities at a later date. As the fund's aggregate
commitments under these transactions increase, the op-
portunity for leverage similarly may increase; however,
it is not the intent of the fund to engage in these
transactions for leveraging purposes.
The fund will segregate liquid assets such as cash,
U.S. Government securities or other appropriate high-
grade debt obligations in an amount sufficient to meet
its payment obligations in these transactions. Although
these transactions will not be entered into for
leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its hold-
ings of cash and securities that do not fluctuate in
value (such as short-term money market instruments),
the fund temporarily will be in a leveraged position
(i.e., it will have an amount greater than its net as-
sets 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 were it not in such
a position. The fund will not borrow money to settle
these transactions and, therefore, will liquidate other
portfolio securities in advance of settlement if neces-
sary to generate additional cash to meet its obliga-
tions thereunder.
PRIVATE PLACEMENTS Private placements may be either
purchased from another institutional investor that
originally acquired the securities in a private place-
ment or directly from the issuers of the securities.
Generally, securities acquired in private placements
are subject to contractual restrictions on resale and
may not be resold except pursuant to a registration
statement under the Securities Act of 1933 or in reli-
ance upon an exemption from the registration require-
ments under the Act, for example, private placements
sold pursuant to Rule 144A. Accordingly, any such obli-
gation will be deemed illiquid unless it has been spe-
cifically determined to be liquid under procedures
adopted by the fund's board of directors, and the fund
may incur certain additional costs in disposing of such
securities.
In determining whether these securities are liquid,
factors such as the frequency and volume of trading and
the commitment of dealers to make markets will be con-
sidered. Additionally, the liquidity of any particular
security will depend on such factors as the availabil-
ity of "qualified" institutional investors and the ex-
tent of investor interest in the security, which can
change from time to time.
RISKS OF INVESTING IN VARIOUS COUNTRIES The fund will
invest no more than 10% of its assets in securities of
issuers which are not included in the Standard & Poor's
500 Composite Index (a broad measure of the U.S. stock
market) and which are domiciled outside the U.S. Non-
U.S. companies may not be subject to uniform account-
ing, auditing and
6
<PAGE>
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financial reporting standards and practices or regula-
tory requirements comparable to those applicable to
U.S. companies. There may also be less public informa-
tion available about non-U.S. companies. Additionally,
specific local political and economic factors must be
evaluated in making these investments including trade
balances and imbalances, and related economic policies;
expropriation or confiscatory taxation; limitations on
the removal of funds or other assets; political or so-
cial instability; the diverse structure and liquidity
of the various securities markets; and nationalization
policies of governments around the world. However, in-
vesting outside the U.S. can also reduce certain risks
due to greater diversification opportunities. The fund
currently intends to limit these investments to those
that are U.S. dollar denominated.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into
segments which are managed by individual counselors.
Each counselor decides how the segment will be invested
(within the limits provided by the fund's objectives
and policies and by Capital Research and Management
Company's investment committee). In addition, Capital
Research and Management Company's research
professionals make investment decisions with respect to
a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed
below.
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
YEARS OF EXPERIENCE AS WITH CAPITAL
PORTFOLIO COUNSELOR (AND RESEARCH AND
PORTFOLIO COUNSELORS PRIMARY TITLE(S) RESEARCH PROFESSIONAL, MANAGEMENT
FOR IF APPLICABLE) FOR COMPANY OR
AMERICAN BALANCED AMERICAN BALANCED ITS
FUND, INC. FUND, INC. (APPROXIMATE) AFFILIATES TOTAL YEARS
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Abner D. Goldstine Senior Vice President 20 years 28 years 43 years
of the fund. Senior
Vice President and
Director, Capital
Research and
Management Company
- -------------------------------------------------------------------------------------------------------
George A. Miller Director of the fund. 29 years* 20 years 34 years
Senior Vice President
and Director, Capital
Research and Manage-
ment Company
- -------------------------------------------------------------------------------------------------------
Robert G. O'Donnell President of the fund. 9 years (plus 14 years as a 20 years 23 years
Senior Vice President research professional prior
and Director, Capital to becoming a portfolio
Research and Manage- counselor for the fund)**
ment Company
- -------------------------------------------------------------------------------------------------------
Eric S. Richter Vice President, In- Less than 1 year 3 years 10 years
vestment Management
Group, Capital Re-
search and Management
Company
- -------------------------------------------------------------------------------------------------------
</TABLE>
CAPITAL RESEARCH AND MANAGEMENT COMPANY HAS BEEN THE FUND'S INVESTMENT
ADVISER SINCE JULY 26, 1975.
* PRIOR TO JULY 26, 1975, MR. MILLER WAS A PORTFOLIO COUNSELOR WITH AMERICAN
EXPRESS INVESTMENT MANAGEMENT COMPANY, THE FUND'S PRIOR INVESTMENT
ADVISER.
** PRIOR TO JULY 26, 1975, MR. O'DONNELL WAS A RESEARCH PROFESSIONAL WITH
AMERICAN EXPRESS INVESTMENT MANAGEMENT COMPANY, THE FUND'S PRIOR
INVESTMENT ADVISER.
7
<PAGE>
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INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a
averaged a total yield and/or total return basis for various periods,
return of +12.06% with or without sales charges. Results calculated with-
a year (assuming out a sales charge will be higher. Total returns assume
the maximum sales the reinvestment of all dividends and capital gain dis-
charge was paid) tributions.
under Capital
Research and As of December 31, 1994, the fund's yield for the past
Management 30-day period was 4.62%, and total return over the past
Company's 12 months and average annual total returns over the
management past five- and ten-year periods were -5.45%, +7.17% and
(July 26, 1975 +11.78%, respectively. These results were calculated in
through December accordance with Securities and Exchange Commission
31, 1994). rules which require that the maximum sales charge be
deducted. Of course, past results are not an indication
of future results. Further information regarding the
fund's investment results is contained in the fund's
annual report which may be obtained without charge by
writing to the Secretary of the fund at the address in-
dicated on the cover of this prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS Dividends are usually paid
DISTRIBUTIONS in February, May, August and December. Capital gains,
AND TAXES if any, are usually distributed in December. When a
dividend or capital gain is distributed, the net asset
Income value per share is reduced by the amount of the pay-
distributions are ment.
usually made in
February, May, FEDERAL TAXES The fund intends to operate as a "regu-
August and lated investment company" under the Internal Revenue
December. Code. In any fiscal year in which the fund so qualifies
and distributes to shareholders all of its net invest-
ment income and net capital gains, the fund itself is
relieved of federal income tax.
All dividends and capital gains are taxable whether
they are reinvested or received in cash--unless you are
exempt from taxation or entitled to tax deferral. Early
each year, you will be notified as to the amount and
federal tax status of all dividends and capital gains
paid dur-ing the prior year. Such dividends and capital
gains may also be subject to state or local taxes.
IF YOU HAVE NOT FURNISHED A CERTIFIED CORRECT TAXPAYER
IDENTIFICATION NUMBER (GENERALLY YOUR SOCIAL SECURITY
NUMBER) AND HAVE NOT CERTIFIED THAT WITHHOLDING DOES
NOT APPLY, OR IF THE INTERNAL REVENUE SERVICE HAS NOTI-
FIED THE FUND THAT THE TAXPAYER IDENTIFICATION NUMBER
LISTED ON YOUR ACCOUNT IS INCORRECT ACCORDING TO THEIR
RECORDS OR THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING,
FEDERAL LAW GENERALLY REQUIRES THE FUND TO WITHHOLD 31%
FROM ANY DIVIDENDS AND/OR REDEMPTIONS (INCLUDING EX-
CHANGE REDEMPTIONS). Amounts withheld are applied to
your federal tax liability; a refund may be obtained
from the Service if withholding results in overpayment
of taxes. Federal law also requires the fund to with-
hold 30% or the applicable tax treaty rate from divi-
dends paid to certain nonresident alien, non-U.S. part-
nership and non-U.S. corporation shareholder accounts.
8
<PAGE>
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This is a brief summary of some of the tax laws that
affect your investment in the fund. Please see the
statement of additional information and your tax ad-
viser for further information.
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, diversified management investment company, was or-
AND ganized as a Delaware corporation in 1932 and reorga-
MANAGEMENT nized as a Maryland corporation in 1990. The fund's
board supervises fund operations and performs duties
required by applicable state and federal law. Members
The fund is a of the board who are not employed by Capital Research
member of The and Management Company or its affiliates are paid cer-
American Funds tain fees for services rendered to the fund as de-
Group, which is scribed in the statement of additional information.
managed by one of They may elect to defer all or a portion of these fees
the largest and through a deferred compensation plan in effect for the
most experienced fund. Shareholders have one vote per share owned and,
investment at the request of the holders of at least 10% of the
advisers. shares, the fund will hold a meeting at which any mem-
ber of the board could be removed by a majority vote.
There will not usually be a shareholder meeting in any
year except, for example, when the election of the
board is required to be acted upon by shareholders un-
der the Investment Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los Ange-
les, CA 90071, and at 135 South State College Boule-
vard, Brea, CA 92621. (See "The American Funds Share-
holder Guide: Purchasing Shares--Investment Minimums
and Fund Numbers" for a listing of funds in The Ameri-
can Funds Group.) Capital Research and Management Com-
pany manages the investment portfolio and business af-
fairs of the fund and receives a fee at the annual rate
of 0.42% on the first $500 million of the fund's net
assets, 0.324% on net assets over $500 million to $1
billion, 0.30% on net assets over $1 billion to $1.5
billion, 0.282% on net assets over $1.5 billion to $2.5
billion, 0.27% on net assets over $2.5 billion to $4
billion, and 0.264% on net assets over $4 billion.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.,
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by
9
<PAGE>
- -------------------------------------------------------------------------------
the Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.)
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. In the over-the-counter mar-
ket, purchases and sales are transacted directly with
principal market-makers except in those circumstances
where it appears better prices and executions are
available elsewhere.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or of other
funds served by Capital Research and Management
Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors, Inc. is lo-
cated at 333 South Hope Street, Los Angeles, CA 90071,
135 South State College Boulevard, Brea, CA 92621, 800
IH-10 West, San Antonio, TX 78230, 8332 Woodfield
Crossing Boulevard, Indianapolis, IN 46240, and 5300
Robin Hood Road, Norfolk, VA 23513. Telephone conversa-
tions with American Funds Distributors may be recorded
or monitored for verification, recordkeeping and qual-
ity assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of distribu-
tion or "12b-1 Plan" under which it may finance activi-
ties primarily intended to sell shares, provided the
categories of expenses are approved in advance by the
board and the expenses paid under the plan were in-
curred within the last 12 months and accrued while the
plan was in effect. Expenditures by the fund under the
plan may not exceed 0.25% of its average net assets an-
nually (all of which may be for service fees). See
"Purchasing Shares-- Sales Charges" below.
10
<PAGE>
- --------------------------------------------------------------------------------
TRANSFER AGENT American Funds Service Company, a wholly
owned subsidiary of Capital Research and Management
Company, is the transfer agent and performs shareholder
service functions. It was paid a fee of $1,384,000 for
the fiscal year ended December 31, 1994. Telephone con-
versations with American Funds Service Company may be
recorded or monitored for verification, recordkeeping
and quality assurance purposes.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
--------------------------------------------------------
SERVICE
AREA ADDRESS AREAS SERVED
--------------------------------------------------------
WEST P.O. Box 2205 AK, AZ, CA, HI,
Brea, CA 92622-2205 ID, MT, NV, OR,
Fax: 714/671-7080 UT, WA and
outside the U.S.
--------------------------------------------------------
CENTRAL- P.O. Box 659522 AR, CO, IA, KS,
WEST San Antonio, TX 78265-9522 LA, MN, MO, ND,
Fax: 210/530-4050 NE, NM, OK, SD,
TX, and WY
--------------------------------------------------------
CENTRAL- P.O. Box 6007 AL, IL, IN, KY,
EAST Indianapolis, IN 46206-6007 MI, MS, OH, TN
Fax: 317/735-6620 and WI
--------------------------------------------------------
EAST P.O. Box 2280 CT, DE, FL, GA,
Norfolk, VA 23501-2280 MA, MD, ME, NC,
Fax: 804/670-4773 NH, NJ, NY, PA,
RI, SC, VA, VT,
WV and
Washington, D.C.
--------------------------------------------------------
ALL SHAREHOLDERS MAY CALL AMERICAN FUNDS SERVICE
COMPANY AT 800/421-0180 FOR SERVICE.
--------------------------------------------------------
[MAP OF THE UNITED STATES]
--------------------------------------------------------
West (light grey); Central-West (white); Central-East
(dark grey), East (green)
11
<PAGE>
THE AMERICAN FUNDS SHAREHOLDER GUIDE
---------------------------------------------------------
PURCHASING SHARES METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
---------------------------------------------------------
Your investment See "Investment $50 minimum (except
dealer can help Minimums and Fund where a lower
you establish your Numbers" for minimum is noted
account--and help initial under "Investment
you add to it investment Minimums and Fund
whenever you like. minimums. Numbers").
---------------------------------------------------------
By Visit any Mail directly to
contacting investment dealer your investment
your who is registered dealer's address
investment in the state printed on your
dealer where the account statement.
purchase is made
and who has a
sales agreement
with American
Funds
Distributors.
---------------------------------------------------------
By mail Make your check Fill out the account
payable to the additions form at the
fund and mail to bottom of a recent
the address account statement,
indicated on the make your check
account payable to the fund,
application. write your account
Please indicate number on your check,
an investment and mail the check
dealer on the and form in the
account envelope provided
application. with your account
statement.
---------------------------------------------------------
By wire Call 800/421-0180 Your bank should wire
to obtain your your additional
account investments in the
number(s), if same manner as
necessary. Please described under
indicate an "Initial Investment."
investment dealer
on the account.
Instruct your
bank to wire
funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco,CA
94106
(ABA #121000248)
For credit to the
account of:
American Funds
Service Company
a/c #4600-076178
(fund name)
(your fund acct.
no.)
---------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO REJECT ANY PURCHASE ORDER.
---------------------------------------------------------
SHARE PRICE Shares are purchased at the next offering
price after the order is received by the fund or
American Funds Service Company. In the case of orders
sent directly to the fund or American Funds Service
Company, an investment dealer MUST be indicated. This
price is the net asset value plus a sales charge, if
applicable. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The net asset value per share is determined as of the
close of trading (currently 4:00 p.m., New York time) on
each day the New York Stock Exchange is open. The
current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share. The net asset value
per share of the money market funds normally will remain
constant at $1.00 based on the funds' current practice
of valuing their shares on the basis of the penny-
rounding method in accordance with rules of the
Securities and Exchange Commission.
SHARE CERTIFICATES Shares are credited to your account
and certificates are not issued unless specifically
requested. This eliminates the costly problem of lost or
destroyed certificates.
12
<PAGE>
- -------------------------------------------------------------------------------
If you would like certificates issued, please request
them by writing to American Funds Service Company.
There is usually no charge for issuing certificates in
reasonable denominations. CERTIFICATES ARE NOT
AVAILABLE FOR THE MONEY MARKET FUNDS.
INVESTMENT MINIMUMS AND FUND NUMBERS Here are the
minimum initial investments required by the funds in
The American Funds Group along with fund numbers for
use with our automated phone line, American
FundsLine(R) (see description below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
- ---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R)............................ $1,000 02
American Balanced Fund(R)................ 500 11
American Mutual Fund(R).................. 250 03
Capital Income Builder(R)................ 1,000 12
Capital World Growth and Income
Fund(SM)............................... 1,000 33
EuroPacific Growth Fund(R)............... 250 16
Fundamental Investors(SM)................ 250 10
The Growth Fund of America(R)............ 1,000 05
The Income Fund of America(R)............ 1,000 06
The Investment Company of America(R)..... 250 04
The New Economy Fund(R).................. 1,000 14
New Perspective Fund(R).................. 250 07
SMALLCAP World Fund(SM).................. 1,000 35
Washington Mutual Investors Fund(SM)..... 250 01
</TABLE>
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
- ---- ---------- ------
<S> <C> <C>
BOND FUNDS
American High-Income Municipal Bond
Fund(SM)............................... $1,000 40
American High-Income Trust(R)............ 1,000 21
The Bond Fund of America(SM)............. 1,000 08
Capital World Bond Fund(R)............... 1,000 31
Intermediate Bond Fund of America(R)..... 1,000 23
Limited Term Tax-Exempt Bond Fund of
America(SM)............................ 1,000 43
The Tax-Exempt Bond Fund of America(SM).. 1,000 19
The Tax-Exempt Fund of California(R)*.... 1,000 20
The Tax-Exempt Fund of Maryland(R)*...... 1,000 24
The Tax-Exempt Fund of Virginia(R)*...... 1,000 25
U.S. Government Securities Fund(SM)...... 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of America(R).. 2,500 09
The Tax-Exempt Money Fund of America(SM). 2,500 39
The U.S. Treasury Money Fund of
America(SM)............................ 2,500 49
</TABLE>
--------
* Available only in certain states.
For retirement plan investments, the minimum is $250,
except that the money market funds have a minimum of
$1,000 for individual retirement accounts (IRAs).
Minimums are reduced to $50 for purchases through
"Automatic Investment Plans" (except for the money
market funds) or to $25 for purchases by retirement
plans through payroll deductions and may be reduced or
waived for shareholders of other funds in The American
Funds Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS
RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
SALES CHARGES The sales charges you pay when purchasing
the stock, stock/bond, and bond funds of The American
Funds Group are set forth below. The money market funds
of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for
a listing of the funds.)
13
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE NET AMOUNT OFFERING OFFERING
AT THE OFFERING PRICE INVESTED PRICE PRICE
--------------------- ---------- -------- -------------
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $50,000...... 6.10% 5.75% 5.00%
$50,000 but less than
$100,000.............. 4.71 4.50 3.75
BOND FUNDS
Less than $25,000...... 4.99 4.75 4.00
$25,000 but less than
$50,000............... 4.71 4.50 3.75
$50,000 but less than
$100,000.............. 4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000. 3.63 3.50 2.75
$250,000 but less than $500,000. 2.56 2.50 2.00
$500,000 but less than $1,000,000. 2.04 2.00 1.60
$1,000,000 or more..... none none (see below)
</TABLE>
Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1
million or more, for purchases by any defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees (paid pursuant to the
fund's plan of distribution), and for purchases made at
net asset value by certain retirement plans of
organizations with collective retirement plan assets of
$100 million or more as set forth in the statement of
additional information (paid by American Funds
Distributors).
American Funds Distributors, at its expense (from a
designated percentage of its income), will provide
additional promotional incentives to dealers. Currently
these incentives are limited to the top one hundred
dealers who have sold shares of the fund or other funds
in The American Funds Group. These incentive payments
will be based on a pro rata share of a qualifying
dealer's sales.
Any defined contribution plan qualified under Section
401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or
any other purchaser investing at least $1 million in
shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the
money market funds) may purchase shares at net asset
value; however, a contingent deferred sales charge of
1% is imposed on certain redemptions within one year of
the purchase. (See "Redeeming Shares--Contingent
Deferred Sales Charge.")
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for providing certain services. (See "Fund
Organization and Management--
14
<PAGE>
- -------------------------------------------------------------------------------
Plan of Distribution.") These services include
processing purchase and redemption transactions,
establishing shareholder accounts and providing certain
information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES The stock, stock/bond and
bond funds may sell shares at net asset value to: (1)
current or retired directors, trustees, officers and
advisory board members of the funds managed by Capital
Research and Management Company, employees of
Washington Management Corporation, employees and
partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such
persons; (2) current or retired registered
representatives or full-time employees and their
spouses and minor children of dealers having sales
agreements with American Funds Distributors and plans
for such persons; (3) companies exchanging securities
with the fund through a merger, acquisition or exchange
offer; (4) trustees or other fiduciaries purchasing
shares for certain retirement plans of organizations
with retirement plan assets of $100 million or more;
(5) insurance company separate accounts; (6) accounts
managed by subsidiaries of The Capital Group Companies,
Inc.; and (7) The Capital Group Companies, Inc., its
affiliated companies and Washington Management
Corporation. Shares are offered at net asset value to
these persons and organizations due to anticipated
economies in sales effort and expense.
REDUCING AGGREGATION Sales charge discounts are available for
YOUR SALES certain aggregated investments. Qualifying investments
CHARGE include those by you, your spouse and your children
under the age of 21, if all parties are purchasing
You and your shares for their own account(s), which may include
immediate family purchases through employee benefit plan(s) such as an
may combine IRA, individual-type 403(b) plan or single-participant
investments to Keogh-type plan or by a business solely controlled by
reduce your costs. these individuals (for example, the individuals own the
entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these
individuals. Individual purchases by a trustee(s) or
other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or
fiduciary account, including an employee benefit plan
other than those described above or (2) made for two or
more employee benefit plans of a single employer or of
affiliated employers as defined in the Investment
Company Act of 1940, again excluding employee benefit
plans described above, or (3) for a diversified common
trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating
fund shares. Purchases made for nominee or street name
accounts (securities held in the name of an investment
dealer or another nominee such as a bank trust
department instead of the customer) may not be
aggregated with those made for other accounts and may
not be aggregated with other nominee or street name
accounts unless otherwise qualified as described above.
15
<PAGE>
- -------------------------------------------------------------------------------
CONCURRENT PURCHASES To qualify for a reduced sales
charge, you may combine concurrent purchases of two or
more funds in The American Funds Group, except direct
purchases of the money market funds. (Shares of the
money market funds purchased through an exchange,
reinvestment or cross-reinvestment from a fund having a
sales charge do qualify.) For example, if you
concurrently invest $25,000 in one fund and $25,000 in
another, the sales charge would be reduced to reflect a
$50,000 purchase.
RIGHT OF ACCUMULATION The sales charge for your invest-
ment may also be reduced by taking into account the
current value of your existing holdings in The American
Funds Group. Direct purchases of the money market funds
are excluded. (See account application.)
STATEMENT OF INTENTION You may reduce sales charges on
all investments by meeting the terms of a statement of
intention, a non-binding commitment to invest a certain
amount in fund shares subject to a commission within a
13-month period. Five percent of the statement amount
will be held in escrow to cover additional sales
charges which may be due if your total investments over
the statement period are insufficient to qualify for a
sales charge reduction. (See account application.)
YOU MUST LET YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY KNOW IF YOU QUALIFY FOR A REDUCTION IN
YOUR SALES CHARGE USING ONE OR ANY COMBINATION OF THE
METHODS DESCRIBED ABOVE.
SHAREHOLDER AUTOMATIC INVESTMENT PLAN You may make regular monthly
SERVICES or quarterly investments through automatic charges to
your bank account. Once a plan is established, your ac-
The fund offers count will normally be charged by the 10th day of the
you a valuable month during which an investment is made (or by the
array of services 15th day of the month in the case of any retirement
designed to plan for which Capital Guardian Trust Company--another
increase the affiliate of The Capital Group Companies, Inc.--acts as
convenience and trustee or custodian).
flexibility of
your investment-- AUTOMATIC REINVESTMENT Dividends and capital gain dis-
services you can tributions are reinvested in additional shares at no
use to alter your sales charge unless you indicate otherwise on the
investment program account application. You also may elect to have divi-
as your needs and dends and/or capital gain distributions paid in cash by
circumstances informing the fund, American Funds Service Company or
change. your investment dealer.
CROSS-REINVESTMENT You may cross-reinvest dividends or
dividends and capital gain distributions paid by one fund
into another fund in The American Funds Group, subject to
conditions outlined in the statement of ad-ditional
information. Generally, to use this service the value of
your account in the paying fund must equal at least
$5,000.
EXCHANGE PRIVILEGE You may exchange shares into other
funds in The American Funds Group. Exchange purchases
are subject to the minimum investment requirements of
the fund purchased and no sales
16
<PAGE>
- -------------------------------------------------------------------------------
charge generally applies. However, exchanges of shares
from the money market funds are subject to applicable
sales charges on the fund being purchased, unless the
money market fund shares were acquired by an exchange
from a fund having a sales charge, or by reinvestment
or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds
Service Company (see "Redeeming Shares"), by contacting
your investment dealer, by using American FundsLine(R)
(see "Shareholder Services--American FundsLine(R)" be-
low), or by telephoning 800/421-0180 toll-free,
telexing 3778108 (answerback CGAFSBR), faxing (see
"Transfer Agent" above for the appropriate fax numbers)
or telegraphing American Funds Service Company. (See
"Telephone Redemptions and Exchanges" below.) Shares
held in corporate-type retirement plans for which Capi-
tal Guardian Trust Company serves as trustee may not be
exchanged by telephone, telex, fax or telegraph. Ex-
change redemptions and purchases are processed simulta-
neously at the share prices next determined after the
exchange order is received. (See "Purchasing Shares--
Share Price.") THESE TRANSACTIONS HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES You may automatically exchange
shares (in amounts of $50 or more) among any of the
funds in The American Funds Group on any day (or pre-
ceding business day if the day falls on a non-business
day) of each month you designate. You must either meet
the minimum initial investment requirement for the re-
ceiving fund OR the originating fund's balance must be
at least $5,000 and the receiving fund's minimum must
be met within one year.
AUTOMATIC WITHDRAWALS You may make automatic
withdrawals of $50 or more as follows: five or more
times per year if you have an account of $10,000 or
more, or four or fewer times per year if you have an
account of $5,000 or more. Withdrawals are made on or
about the 15th day of each month you designate, and
checks will be sent within seven days. (See "Other
Important Things to Remember.") Additional investments
in a withdrawal account must not be less than one
year's scheduled withdrawals or $1,200, whichever is
greater. However, additional investments in a
withdrawal account may be inadvisable due to sales
charges and tax liabilities.
THESE SERVICES ARE AVAILABLE ONLY IN STATES WHERE THE
FUND TO BE PURCHASED MAY BE LEGALLY OFFERED AND MAY BE
TERMINATED OR MODIFIED AT ANY TIME UPON 60 DAYS'
WRITTEN NOTICE.
ACCOUNT STATEMENTS Your account is opened in accordance
with your registration instructions. Transactions in
the account, such as additional investments and
dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service
Company.
17
<PAGE>
- -------------------------------------------------------------------------------
AMERICAN FUNDSLINE(R) You may check your share balance,
the price of your shares, or your most recent account
transaction, redeem shares (up to $10,000 per fund, per
account each day), or exchange shares around the clock
with American FundsLine(R). To use this service, call
800/325-3590 from a TouchTone(TM) telephone.
Redemptions and exchanges through American FundsLine(R)
are subject to the conditions noted above and in
"Redeeming Shares--Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of
funds in The American Funds Group under "Purchasing
Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of
your Social Security number or other tax identification
number associated with your account) and account
number.
--------------------------------------------------------
REDEEMING By writing to Send a letter of instruction
SHARES American specifying the name of the fund, the
Funds Service number of shares or dollar amount to
You may take money Company (at be sold, your name and account
out of your the number. You should also enclose any
account whenever appropriate share certificates you wish to
you please. address redeem. For redemptions over $50,000
indicated and for certain redemptions of
under "Fund $50,000 or less (see below), your
Organization signature must be guaranteed by a
and bank, savings association, credit
Management-- union, or member firm of a domestic
Transfer stock exchange or the National
Agent") Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. You should verify with
the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required for redemption of shares
held in corporate, partnership or
fiduciary accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By contacting If you redeem shares through your
your investment dealer, you may be charged
investment for this service. SHARES HELD FOR YOU
dealer IN YOUR INVESTMENT DEALER'S STREET
NAME MUST BE REDEEMED THROUGH THE
DEALER.
--------------------------------------------------------
You may have You may use this option, provided the
a redemption account is registered in the name of
check sent to an individual(s), a UGMA/UTMA
you by using custodian, or a non-retirement plan
American trust. These redemptions may not
FundsLine(R) exceed $10,000 per day, per fund
or by account and the check must be made
telephoning, payable to the shareholder(s) of
telexing, record and be sent to the address of
faxing, or record provided the address has been
telegraphing used with the account for at least 10
American days. See "Transfer Agent" and
Funds Service "Exchange Privilege" above for the
Company appropriate telephone, fax, or telex
(subject to number.
the
conditions
noted in this
section and
in "Telephone
Redemptions
and
Exchanges"
below)
--------------------------------------------------------
In the case Upon request (use the account
of the money application for the money market
market funds, funds) you may establish telephone
you may have redemption privileges (which will
redemptions enable you to have a redemption sent
wired to your to your bank account) and/or check
bank by writing privileges. If you request
telephoning check writing privileges, you will be
American provided with checks that you may use
Funds Service to draw against your account. These
Company checks may be made payable to anyone
($1,000 or you designate and must be signed by
more) or by the authorized number of registered
writing a shareholders exactly as indicated on
check ($250 your checking account signature card.
or more)
--------------------------------------------------------
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY
REDEMPTION OF $50,000 OR LESS PROVIDED THE REDEMPTION
CHECK IS MADE PAYABLE TO THE REGISTERED SHAREHOLDER(S)
AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE
ADDRESS HAS BEEN USED WITH THE ACCOUNT FOR AT LEAST 10
DAYS.
18
<PAGE>
- -------------------------------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
TELEPHONE REDEMPTIONS AND EXCHANGES By using the
telephone (including American FundsLine(R)), telex, fax
or telegraph redemption and/or exchange options, you
agree to hold the fund, American Funds Service Company,
any of its affiliates or mutual funds managed by such
affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including
attorney fees) which may be incurred in connection with
the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these
options. However, you may elect to opt out of these
options by writing American Funds Service Company (you
may reinstate them at any time also by writing American
Funds Service Company). If American Funds Service
Company does not employ reasonable procedures to
confirm that the instructions received from any person
with appropriate account information are genuine, the
fund may be liable for losses due to unauthorized or
fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of
technical difficulties, market conditions, or a natural
disaster, redemption and exchange requests may be made
in writing only.
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions
within the first year on investments of $1 million or
more and on any investment made with no initial sales
charge by any defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The
charge is 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this charge.
The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions from
qualified retirement plans and other employee benefit
plans; for distributions from 403(b) plans or IRAs due
to death, disability or attainment of age 59 1/2; for
tax-free returns of excess contributions to IRAs; for
redemptions through certain automatic withdrawals not
exceeding 10% of the amount that would otherwise be
subject to the charge; and for redemptions in
connection with loans made by qualified retirement
plans.
REINSTATEMENT PRIVILEGE You may reinvest proceeds from
a redemption or a dividend or capital gain distribution
without sales charge (any contingent deferred sales
charge paid will be credited to your account) in any
fund in The American Funds Group. Send a written
19
<PAGE>
- -------------------------------------------------------------------------------
request and a check to American Funds Service Company
within 90 days after the date of the redemption or
distribution. Reinvestment will be at the next
calculated net asset value after receipt. The tax
status of a gain realized on a redemption will not be
affected by exercise of the reinstatement privilege,
but a loss may be nullified if you reinvest in the same
fund within 30 days. If you redeem your shares within
90 days after purchase and the sales charge on the
purchase of other shares is waived under the
reinstatement privilege, the sales charge you
previously paid for the shares may not be taken into
account when you calculate your gain or loss on that
redemption.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because each stock,
stock/bond and bond fund's net asset value fluctuates,
reflecting the market value of the fund's portfolio,
the amount a shareholder receives for shares redeemed
may be more or less than the amount paid for them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
A fund may, with 60 days' written notice, close your
account if, due to a redemption, the account has a
value of less than the minimum required initial
investment. (For example, a fund may close an account
if a redemption is made shortly after a minimum initial
investment is made.)
RETIREMENT You may invest in the funds through various retirement
PLANS plans including the following plans for which Capital
Guardian Trust Company acts as trustee or custodian:
IRAs, Simplified Employee Pension plans, 403(b) plans
and Keogh- and corporate-type business retirement
plans. For further information about any of the plans,
agreements, applications and annual fees, contact
American Funds Distributors or your investment dealer.
To determine which retirement plan is appropriate for
you, please consult your tax adviser. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS INVESTMENTS FOR RETIREMENT PLANS.
FOR MORE INFORMATION, PLEASE REFER TO THE ACCOUNT
APPLICATION OR THE STATEMENT OF ADDITIONAL INFORMATION.
IF YOU HAVE ANY QUESTIONS ABOUT ANY OF THE SHAREHOLDER
SERVICES DESCRIBED HEREIN OR YOUR ACCOUNT, PLEASE
CONTACT YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
20
<PAGE>
PROSPECTUS
for Eligible Retirement Plans
AMERICAN
BALANCED FUND(R)
AN OPPORTUNITY FOR CONSERVATION OF CAPITAL,
CURRENT INCOME, AND LONG-TERM GROWTH OF
CAPITAL AND INCOME
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
MARCH 1, 1995
AMERICAN BALANCED FUND, INC.
Four Embarcadero Center
Suite 1800
San Francisco, CA 94111
The investment objectives of the fund are: (1) conservation of capital, (2)
current income, and (3) long-term growth of capital and income. The fund
strives to accomplish these objectives by investing in a broadly diversified
portfolio of securities including stocks and bonds. The fund approaches the
management of its investments as if they constituted the complete investment
program of the prudent investor.
This prospectus relates only to shares of the fund offered without a sales
charge to eligible retirement plans. For a prospectus regarding shares of the
fund to be acquired otherwise, contact the Secretary of the fund at the
address indicated above.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information for the fund dated
March 1, 1995, which contains the fund's financial statements, without charge
by writing to the Secretary of the fund at the above address or telephoning
800/421-0180. These requests will be honored within three business days of
receipt.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED, GUARANTEED,
OR ENDORSED BY, THE U.S. GOVERNMENT, ANY BANK, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, ENTITY OR PERSON.
THE PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
RP 11-010-0395
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY OF
EXPENSES
Average annual expenses
paid over a 10-year
period would be
approximately $9 per
year, assuming a $1,000
investment and a 5%
annual return.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses......... 2
Financial Highlights........ 3
Investment Objectives and
Policies................... 3
Certain Securities and
Investment Techniques...... 4
Investment Results.......... 7
Dividends, Distributions
and Taxes.................. 7
Fund Organization and
Management................. 8
Purchasing Shares........... 10
Shareholder Services........ 11
Redeeming Shares............ 11
</TABLE>
This table is designed to help you understand the costs of investing in the
fund. These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Certain retirement plans may purchase shares of the fund with no sales
charge./1/ The fund also has no sales charge on reinvested dividends, deferred
sales charge, redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<S> <C>
Management fees....................................................... 0.34%
12b-1 expenses........................................................ 0.21%/2/
Other expenses (including audit, legal, shareholder services, transfer
agent and custodian expenses)........................................ 0.13%
Total fund operating expenses......................................... 0.68%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following cumulative ex-
penses on a $1,000 investment, assuming a 5%
annual return./3/ $7 $22 $38 $85
</TABLE>
/1/ Retirement plans of organizations with $100 million or more in collective
retirement plan assets may purchase shares of the fund with no sales charge.
In addition, any defined contribution plan qualified under Section 401(a) of
the Internal Revenue Code including a "401(k)" plan with 200 or more
eligible employees or any other plan that invests at least $1 million in
shares of the fund (or in combination with shares of other funds in The
American Funds Group other than the money market funds) may purchase shares
at net asset value; however, a contingent deferred sales charge of 1%
applies on certain redemptions within 12 months following such purchases.
(See "Redeeming Shares--Contingent Deferred Sales Charge.")
/2/ These expenses may not exceed 0.25% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/3/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
2
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information for the four years ended De-
HIGHLIGHTS cember 31, 1994 has been audited by Deloitte & Touche
(For a share llp, independent accountants, whose unqualified report
outstanding covering each of the most recent four years is included
throughout the in the statement of additional information, and for the
fiscal year) six years ended December 31, 1990 by KPMG Peat Marwick,
independent accountants. This information should be
read in conjunction with the financial statements and
accompanying notes which are included in the statement
of additional information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Year........... $12.57 $12.28 $12.05 $10.32 $11.41 $10.46 $10.13 $10.83 $11.65 $10.06
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. .57 .59 .61 .62 .63 .66 .59 .59 .67 .66
Net realized and
unrealized gain
(loss) on invest-
ments................. (.53) .76 .49 1.86 (.82) 1.54 .68 (.14) 1.17 2.07
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations.......... .04 1.35 1.10 2.48 (.19) 2.20 1.27 .45 1.84 2.73
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net
investment income..... (.56) (.60) (.60) (.62) (.63) (.67) (.62) (.67) (.64) (.64)
Distributions from net
realized gains........ (.05) (.46) (.27) (.13) (.27) (.58) (.32) (.48) (2.02) (.50)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.. (.61) (1.06) (.87) (.75) (.90) (1.25) (.94) (1.15) (2.66) (1.14)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $12.00 $12.57 $12.28 $12.05 $10.32 $11.41 $10.46 $10.13 $10.83 $11.65
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/1/......... .34% 11.27% 9.48% 24.69% (1.57)% 21.53% 12.87% 4.02% 16.87% 29.11%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, end of
year (in millions).... $2,082 $1,710 $1,067 $ 642 $ 370 $ 275 $ 218 $ 193 $ 167 $ 148
Ratio of expenses to
average net assets.... .68% .71% .74% .82% .84% .78% .76% .68% .67% .70%
Ratio of net income to
average net assets.... 4.76% 4.74% 5.19% 5.56% 5.95% 5.80% 5.54% 5.17% 5.71% 6.18%
Portfolio turnover
rate.................. 32% 28% 17% 25% 26% 37% 42% 42% 59% 63%
</TABLE>
--------
/1/ Calculated with no sales charge.
INVESTMENT The fund's investment objectives are: (1) conservation
OBJECTIVES of capital, (2) current income, and (3) long-term
AND POLICIES growth of capital and income. The fund approaches the
management of its investments as if they constituted
the complete investment program of the prudent invest-
or.
The fund aims to The fund invests in a broadly diversified portfolio of
provide you with securities, including common stocks, preferred stocks,
conservation of corporate bonds and U.S. Government securities. Assets
capital, current may also be held in cash or cash equivalents. (See the
income and long- statement of additional information for a description
term growth of of cash equivalents.) Additionally, the fund will
both capital and invest no more than 10% of its assets in securities of
income. issuers which are not included in the Standard & Poor's
500 Composite Index (a broad measure of the U.S. stock
market) and which are domiciled outside the U.S. The
fund's fixed-income investments will be investment
grade. For long-term debt obligations such as bonds,
this includes securities that are rated Baa or better
by Moody's Investors Service, Inc. or BBB or better by
Standard & Poor's Corporation, or that are not rated by
these rating services but determined to be of
equivalent quality by the fund's investment adviser,
Capital Research and
3
<PAGE>
- -------------------------------------------------------------------------------
Management Company. Securities rated Baa or BBB are
deemed to have speculative characteristics by the rat-
ing agencies. The fund will maintain at least 25% of
the value of its total assets in fixed-income securi-
ties.
The fund's portfolio turnover rate will depend primar-
ily on market conditions. Short-term trading profits
are not the fund's objective and changes in its invest-
ments are generally accomplished gradually, though
short-term transactions may occasionally be made.
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tives cannot be changed without shareholder approval.
All other investment practices may be changed by the
fund's board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVES CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
CERTAIN RISKS OF INVESTING IN STOCKS AND BONDS Because the fund
SECURITIES AND invests in common stocks or securities convertible into
INVESTMENT common stocks, the fund is subject to stock market
TECHNIQUES risks. For example, the fund is subject to the possi-
bility that stock prices in general will decline over
short or even extended periods.
Investing in The fund also invests in fixed-income securities, in-
stocks and bonds cluding bonds, which have market values which tend to
involves certain vary inversely with the level of interest rates--when
risks. interest rates rise, their values will tend to decline
and vice versa. Although under normal market conditions
longer term securities yield more than shorter term se-
curities of similar quality, they are subject to
greater price fluctuations. These fluctuations in the
value of the fund's investments will be reflected in
its net asset value per share.
U.S. GOVERNMENT SECURITIES Securities guaranteed by the
U.S. Government include: (1) direct obligations of the
U.S. Treasury (such as Treasury bills, notes and bonds)
and (2) federal agency obligations guaranteed as to
principal and interest by the U.S. Treasury.
Certain securities issued by U.S. Government instrumen-
talities and certain federal agencies are neither di-
rect obligations of, nor guaranteed by, the Treasury.
However, they generally involve federal sponsorship in
one way or another: some are backed by specific types
of collateral; some are supported by the issuer's right
to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase
certain obligations of the issuer; and others are sup-
ported only by the credit of the issuing government
agency or instrumentality.
4
<PAGE>
- -------------------------------------------------------------------------------
WHEN-ISSUED SECURITIES, FIRM COMMITMENT AGREEMENTS AND
"ROLL" TRANSACTIONS The fund may purchase securities on
a delayed delivery or "when-issued" basis and enter
into firm commitment agreements (transactions whereby
the payment obligation and interest rate are fixed at
the time of the transaction but the settlement is de-
layed). The fund as purchaser assumes the risk of any
decline in value of the security beginning on the date
of the agreement or purchase. The fund also may enter
into "roll" transactions, which are the sale of GNMA
certificates or other securities together with a com-
mitment (for which the fund typically receives a fee)
to purchase similar, but not identical securities at a
later date. As the fund's aggregate commitments under
these transactions increase, the opportunity for lever-
age similarly may increase; however, it is not the in-
tent of the fund to engage in these transactions for
leveraging purposes.
The fund will segregate liquid assets such as cash,
U.S. Government securities or other appropriate high-
grade debt obligations in an amount sufficient to meet
its payment obligations in these transactions. Although
these transactions will not be entered into for
leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its hold-
ings of cash and securities that do not fluctuate in
value (such as short-term money market instruments),
the fund temporarily will be in a leveraged position
(i.e., it will have an amount greater than its net as-
sets 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 were it not in such
a position. The fund will not borrow money to settle
these transactions and, therefore, will liquidate other
portfolio securities in advance of settlement if neces-
sary to generate additional cash to meet its obliga-
tions thereunder.
PRIVATE PLACEMENTS Private placements may be either
purchased from another institutional investor that
originally acquired the securities in a private place-
ment or directly from the issuers of the securities.
Generally, securities acquired in private placements
are subject to contractual restrictions on resale and
may not be resold except pursuant to a registration
statement under the Securities Act of 1933 or in reli-
ance upon an exemption from the registration require-
ments under that Act, for example, private placements
sold pursuant to Rule 144A. Accordingly, any such obli-
gation will be deemed illiquid unless it has been spe-
cifically determined to be liquid under procedures
adopted by the fund's board of directors, and the fund
may incur certain additional costs in disposing of such
securities.
In determining whether these securities are liquid,
factors such as the frequency and volume of trading and
the commitment of dealers to make markets will be con-
sidered. Additionally, the liquidity of any particular
security will depend on such factors as the availabil-
ity of "qualified"
5
<PAGE>
- -------------------------------------------------------------------------------
institutional investors and the extent of investor in-
terest in the security, which can change from time to
time.
RISKS OF INVESTING IN VARIOUS COUNTRIES The fund will
invest no more than 10% of its assets in securities of
issuers which are not included in the Standard & Poor's
500 Composite Index (a broad measure of the U.S. stock
market) and which are domiciled outside the U.S. Non-
U.S. companies may not be subject to uniform account-
ing, auditing and financial reporting standards and
practices or regulatory requirements comparable to
those applicable to U.S. companies. There may also be
less public information available about non-U.S. compa-
nies. Additionally, specific local political and eco-
nomic factors must be evaluated in making these invest-
ments including trade balances and imbalances, and re-
lated economic policies; expropriation or confiscatory
taxation; limitations on the removal of funds or other
assets; political or social instability; the diverse
structure and liquidity of the various securities mar-
kets; and nationalization policies of governments
around the world. However, investing outside the U.S.
can also reduce certain risks due to greater diversifi-
cation opportunities. The fund currently intends to
limit these investments to those that are U.S. dollar
denominated.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into
segments which are managed by individual counselors.
Each counselor decides how the segment will be invested
(within the limits provided by the fund's objectives
and policies and by Capital Research and Management
Company's investment committee). In addition, Capital
Research and Management Company's research
professionals make investment decisions with respect to
a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed
on next page.
6
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
YEARS OF EXPERIENCE AS WITH CAPITAL
PORTFOLIO COUNSELOR (AND RESEARCH AND
PORTFOLIO COUNSELORS PRIMARY TITLE(S) RESEARCH PROFESSIONAL, MANAGEMENT
FOR IF APPLICABLE) FOR COMPANY OR
AMERICAN BALANCED AMERICAN BALANCED ITS
FUND, INC. FUND, INC. (APPROXIMATE) AFFILIATES TOTAL YEARS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Abner D. Goldstine Senior Vice President 20 years 28 years 43 years
of the fund. Senior
Vice President and
Director, Capital
Research and
Management Company
- ----------------------------------------------------------------------------------------------------------
George A. Miller Director of the fund. 29 years* 20 years 34 years
Senior Vice President
and Director, Capital
Research and Manage-
ment Company
- ----------------------------------------------------------------------------------------------------------
Robert G. O'Donnell President of the fund. 9 years (plus 14 years as a 20 years 23 years
Senior Vice President research professional prior
and Director, Capital to becoming a portfolio
Research and Manage- counselor for the fund)**
ment Company
- ----------------------------------------------------------------------------------------------------------
Eric S. Richter Vice President, Less than 1 year 3 years 10 years
Investment Management
Group, Capital
Research and
Management Company
</TABLE>
- -------------------------------------------------------------------------------
CAPITAL RESEARCH AND MANAGEMENT COMPANY HAS BEEN THE FUND'S INVESTMENT
ADVISER SINCE JULY 26, 1975.
* PRIOR TO JULY 26, 1975, MR. MILLER WAS A PORTFOLIO COUNSELOR WITH AMERICAN
EXPRESS INVESTMENT MANAGEMENT COMPANY, THE FUND'S PRIOR INVESTMENT
ADVISER.
** PRIOR TO JULY 26, 1975, MR. O'DONNELL WAS A RESEARCH PROFESSIONAL WITH
AMERICAN EXPRESS INVESTMENT MANAGEMENT COMPANY, THE FUND'S PRIOR
INVESTMENT ADVISER.
INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a
averaged a total yield and/or total return basis for various periods,
return (at no with or without sales charges. Results calculated with-
sales charge) of out a sales charge will be higher. Total returns assume
+12.40% a year the reinvestment of all dividends and capital gain dis-
under Capital tributions.
Research and
Management As of December 31, 1994, the fund's yield for the past
Company's 30-day period was 4.90%, and total return over the past
management 12 months and average annual total returns over the
(July 26, 1975 past five- and ten-year periods were +0.34%, +8.45% and
through December +12.44%, respectively. These results were calculated in
31, 1994). accordance with Securities and Exchange Commission re-
quirements at no sales charge. Of course, past results
are not an indication of future results. Further infor-
mation regarding the fund's investment results is con-
tained in the fund's annual report which may be ob-
tained without charge by writing to the Secretary of
the fund at the address indicated on the cover of this
prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS Dividends are usually paid
DISTRIBUTIONS in February, May, August and December. Capital gains,
AND TAXES if any, are usually distributed in December. When a
dividend or capital gain is distributed, the net asset
Income value per share is reduced by the amount of the pay-
distributions are ment.
usually made in
February, May, The terms of your plan will govern how your plan may
August and receive distributions from the fund. Generally, peri-
December. odic distributions from the fund to your plan are rein-
vested in additional fund shares, although your plan
7
<PAGE>
- -------------------------------------------------------------------------------
may permit fund distributions from net investment in-
come to be received by you in cash while reinvesting
capital gain distributions in additional shares or all
fund distributions to be received in cash. Unless you
select another option, all distributions will be rein-
vested in additional fund shares.
FEDERAL TAXES The fund intends to operate as a "regu-
lated investment company" under the Internal Revenue
Code. In any fiscal year in which the fund so qualifies
and distributes to shareholders all of its net invest-
ment income and net capital gains, the fund itself is
relieved of federal income tax. The tax treatment of
redemptions from a retirement plan may differ from re-
demptions from an ordinary shareholder account.
PLEASE SEE THE STATEMENT OF ADDITIONAL INFORMATION AND
YOUR TAX ADVISER FOR FURTHER INFORMATION.
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, diversified management investment company, was or-
AND ganized as a Delaware corporation in 1932 and reorga-
MANAGEMENT nized as a Maryland corporation in 1990. The fund's
board supervises fund operations and performs duties
required by applicable state and federal law. Members
The fund is a of the board who are not employed by Capital Research
member of The and Management Company or its affiliates are paid cer-
American Funds tain fees for services rendered to the fund as de-
Group, which is scribed in the statement of additional information.
managed by one of They may elect to defer all or a portion of these fees
the largest and through a deferred compensation plan in effect for the
most experienced fund. Shareholders have one vote per share owned and,
investment at the request of the holders of at least 10% of the
advisers. shares, the fund will hold a meeting at which any mem-
ber of the board could be removed by a majority vote.
There will not usually be a shareholder meeting in any
year except, for example, when the election of the
board is required to be acted upon by shareholders un-
der the Investment Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los Ange-
les, CA 90071, and at 135 South State College Boule-
vard, Brea, CA 92621. Capital Research and Management
Company manages the investment portfolio and business
affairs of the fund and receives a fee at the annual
rate of 0.42% on the first $500 million of the fund's
net assets, 0.324% on net assets over $500 million to
$1 billion, 0.30% on net assets over $1 billion to $1.5
billion, 0.282% on net assets over $1.5 billion to $2.5
billion, 0.27% on net assets over $2.5 billion to $4
billion, and 0.264% on net assets over $4 billion.
8
<PAGE>
- -------------------------------------------------------------------------------
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.,
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.)
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. In the over-the-counter mar-
ket, purchases and sales are transacted directly with
principal market-makers except in those circumstances
where it appears better prices and executions are
available elsewhere.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or of other
funds served by Capital Research and Management
Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors, Inc. is
located at 333 South Hope Street, Los Angeles, CA
90071, 135 South State College Boulevard, Brea, CA
92621, 800 IH-10 West, San Antonio, TX 78230, 8332
Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513. Telephone
conversations with American Funds Distributors may be
recorded or monitored for verification, recordkeeping
and quality assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of distribu-
tion or "12b-1 Plan" under which it may finance activi-
ties primarily intended to sell shares, provided the
categories of expenses are approved in advance by the
board and the expenses paid under the plan were in-
curred within the last 12 months and accrued while the
plan was in effect. Expenditures by the fund under the
plan may not exceed 0.25% of its average net assets an-
nually (all of which may be for service fees).
9
<PAGE>
- -------------------------------------------------------------------------------
TRANSFER AGENT American Funds Service Company, 800/421-
0180, a wholly owned subsidiary of Capital Research and
Management Company, is the transfer agent and performs
shareholder service functions. American Funds Service
Company is located at 333 South Hope Street, Los Ange-
les, CA 90071, 135 South State College Boulevard, Brea,
CA 92621, 8000 IH-10 West, San Antonio, TX 78230, 8332
Woodfield Crossing Boulevard, Indianapolis, IN 46240
and 5300 Robin Hood Road, Norfolk, VA 23513. It was
paid a fee of $1,384,000 for the fiscal year ended De-
cember 31, 1994. Telephone conversations with American
Funds Service Company may be recorded or monitored for
verification, recordkeeping and quality assurance pur-
poses.
PURCHASING SHARES ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
RETIREMENT PLAN. FOR MORE INFORMATION ABOUT HOW TO
PURCHASE SHARES OF THE FUND THROUGH YOUR PLAN OR
LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE
CONSULT WITH YOUR EMPLOYER. Shares are sold to eligible
retirement plans at the net asset value per share next
determined after receipt of an order by the fund or
American Funds Service Company. Orders must be received
before the close of regular trading on the New York
Stock Exchange in order to receive that day's net asset
value. Plans of organizations with collective
retirement plan assets of $100 million or more may
purchase shares at net asset value. In addition, any
defined contribution plan qualified under Section
401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or
any other plan that invests at least $1 million in
shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the
money market funds) may purchase shares at net asset
value; however, a contingent deferred sales charge of
1% is imposed on certain redemptions within one year of
such purchase. (See "Redeeming Shares--Contingent
Deferred Sales Charge.") Plans may also qualify to
purchase shares at net asset value by completing a
statement of intention to purchase $1 million in fund
shares subject to a commission over a maximum of 13
consecutive months. Certain redemptions of such shares
may also be subject to a contingent deferred sales
charge as described above. (See the statement of
additional information.)
American Funds Distributors, at its expense (from a
designated percentage of its income), will provide
additional promotional incentives to dealers. Currently
these incentives are limited to the top one hundred
dealers who have sold shares of the fund or other funds
in The American Funds Group. Such incentive payments
will be based on a pro rata share of a qualifying
dealer's sales.
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for
10
<PAGE>
- -------------------------------------------------------------------------------
providing certain services. (See "Fund Organization and
Management--Plan of Distribution.") These services
include processing purchase and redemption
transactions, establishing shareholder accounts and
providing certain information and assistance with
respect to the fund.
Shares of the fund are offered to other shareholders
pursuant to another prospectus at public offering
prices that may include an initial sales charge.
SHARE PRICE Shares are offered to eligible retirement
plans at the net asset value after the order is
received by the fund or American Funds Service Company.
In the case of orders sent directly to the fund or
American Funds Service Company, an investment dealer
must be
indicated. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The fund's net asset value per share is determined as
of the close of trading (currently 4:00 p.m., New York
time) on each day the New York Stock Exchange is open.
The current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share.
SHAREHOLDER Subject to any restrictions contained in your plan, you
SERVICES can exchange your shares for shares of other funds in
The American Funds Group which are offered through the
plan at net asset value. In addition, again depending
on your plan, you may be able to exchange shares
automatically or cross-reinvest dividends in shares of
other funds. Contact your plan administrator/trustee
regarding how to use these services. Also, see the
fund's statement of additional information for a
description of these and other services that may be
available through your plan. These services are
available only in states where the fund to be purchased
may be legally offered and may be terminated or
modified at any time upon 60 days' written notice.
REDEEMING SHARES Subject to any restrictions imposed by your plan, you
can sell your shares through the plan any day the New
York Stock Exchange is open. For more information about
how to sell shares of the fund through your retirement
plan, including any charges that may be imposed by the
plan, please consult with your employer.
11
<PAGE>
- -------------------------------------------------------------------------------
By Your plan administrator/trustee must
contacting send a letter of instruction
your plan specifying the name of the fund, the
administrator/ number of shares or dollar amount to
trustee be sold, and, if applicable, your
name and account number. For your
protection, if you redeem more than
$50,000, the signatures of the
registered owners or their legal
representatives must be guaranteed by
a bank, savings association, credit
union, or member firm of a domestic
stock exchange or the National
Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. Your plan
administrator/trustee should verify
with the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required to redeem shares from
certain accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By Shares may also be redeemed through
contacting an investment dealer; however, you or
an your plan may be charged for this
investment service. SHARES HELD FOR YOU IN AN
dealer INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND ALL
REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions
within the first year on investments of $1 million or
more and on any investment made with no initial sales
charge by any defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including
"401(k)" plans with 200 or more eligible employees. The
charge is 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this charge.
The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions from
qualified retirement plans and other employee benefit
plans; and for redemptions in connection with loans
made by qualified retirement plans.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares-- Share Price." Because the fund's
net asset value fluctuates, reflecting the market value
of the portfolio, the amount you receive for shares
redeemed may be more or less than the amount paid for
them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take
12
<PAGE>
- -------------------------------------------------------------------------------
up to 15 calendar days from the purchase date). Except
for delays relating to clearance of checks for share
purchases or in extraordinary circumstances (and as
permissible under the Investment Company Act of 1940),
redemption proceeds will be paid on or before the
seventh day following receipt of a proper redemption
request.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
13
<PAGE>
THIS PROSPECTUS RELATES ONLY TO SHARES OF THE FUND
OFFERED WITHOUT A SALES CHARGE TO ELIGIBLE RETIREMENT
PLANS. FOR A PROSPECTUS REGARDING SHARES OF THE FUND TO
BE ACQUIRED OTHERWISE, CONTACT THE SECRETARY OF THE
FUND AT THE ADDRESS INDICATED ON THE FRONT.
AMERICAN BALANCED FUND, INC.
Part B
Statement of Additional Information
MARCH 1, 1995
This document is not a prospectus but should be read in conjunction with the
current Prospectus of American Balanced Fund, Inc. (the fund or AMBAL) dated
March 1, 1995. The Prospectus may be obtained from your investment dealer or
financial planner or by writing to the fund at the following address:
American Balanced Fund, Inc.
Attention: Secretary
Four Embarcadero Center
P.O. Box 7650
San Francisco, CA 94120
Telephone: (415) 421-9360
The fund has two forms of prospectuses. Each reference to the prospectus in
this Statement of Additional Information includes both of the fund's
prospectuses. Shareholders who purchase shares at net asset value through
eligible retirement plans should note that not all of the services or features
described below may be available to them, and they should contact their
employer for details.
Table of Contents
Item Page No.
DESCRIPTION OF CERTAIN SECURITIES 1
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS 3
FUND OFFICERS AND DIRECTORS 5
MANAGEMENT 9
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 11
PURCHASE OF SHARES 13
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES 15
EXECUTION OF PORTFOLIO TRANSACTIONS 16
GENERAL INFORMATION 16
INVESTMENT RESULTS 17
FINANCIAL STATEMENTS ATTACHED
DESCRIPTION OF CERTAIN SECURITIES
BOND RATINGS - The fund may invest in debt securities which are rated in
the top four quality categories by any national rating service (or determined
to be equivalent by Capital Research and Management Company) including bonds
rated at least BBB by Standard & Poor's Corporation or Baa by Moody's Investors
Service, Inc. (see below). Although the fund is not normally required to
dispose of a security in the event that its rating is reduced below the current
minimum rating required for its purchase (or it is not rated and its quality
becomes equivalent to such a security), if, as a result of a downgrade or
otherwise, the fund holds more than 5% of its net assets in these securities
(also known as "high-yield, high-risk securities"), the fund will dispose of
the excess as expeditiously as possible.
Standard & Poor's Corporation: "AAA", "AA", "A" and "BBB" are the four
highest bond rating categories, and are described as follows:
"Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in a small degree."
"Debt rate 'A' has a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions, than debt in higher categories."
"Debt rate 'BBB' is regarded as having capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and pay principal than for debt in
higher rated categories."
Moody's Investors Service, Inc.: "Aaa", "Aa", "A" and "Baa" are the four
highest bond rating categories, and are described as follows:
"Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as 'gilt
edge.' Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues."
"Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities, or fluctuation of protective elements may be
of greater amplitude, or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities."
"Bonds rated A are judged to be of upper medium grade obligations. These
bonds possess many favorable investment attributes. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
"Bonds rated Baa are judged to be of medium grade obligations. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable over
any great length of time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative characteristics as well."
CASH EQUIVALENTS - These securities include (1) commercial paper (short-term
notes up to 9 months in maturity issued by corporations or governmental
bodies), (2) commercial bank obligations (E.G., certificates of deposit,
bankers' acceptances (time drafts on a commercial bank where the bank accepts
an irrevocable obligation to pay at maturity) and documented discount notes
(corporate promissory discount notes accompanied by a commercial bank guarantee
to pay at maturity)), (3) savings association and savings bank obligations
(E.G., certificates of deposit issued by savings banks or savings
associations), (4) securities of the U.S. Government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less, and (5)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
The fund has adopted certain fundamental policies and investment restrictions
which cannot be changed without shareholder approval. (Approval requires the
affirmative vote of 67% or more of the voting securities present at a meeting
of shareholders, provided more than 50% of such securities are represented at
the meeting or the vote of more than 50% of the outstanding voting securities,
whichever is less.)
1. To invest in a diversified list of securities, including common stocks,
preferred stocks, and bonds, to the extent considered advisable by management.
2. To allocate its investments among different industries as well as among
individual companies. The amount invested in an industry will vary from time
to time in accordance with the judgment of management, but 25% or more of the
value of the fund's total assets shall not be invested in securities of issuers
in any one industry (other than securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities).
3. Not to invest in companies for the purpose of exercising control or
management.
4. Not to invest more than 5% of the value of its total assets in the
securities of any one issuer (except the U.S. Government).
5. Not to acquire more than 10% of the outstanding voting securities, or 10%
of all of the securities, of any one issuer.
6. Not to borrow more than 5% of the gross assets of the fund taken at cost or
at value, whichever is lower, and to borrow only from banks and as a temporary
measure for extraordinary or emergency purposes. The fund shall not mortgage,
pledge, hypothecate, or in any other manner transfer as security for any
indebtedness, any of its assets.
7. Not to underwrite the sale, or participate in any underwriting or selling
group in connection with the public distribution, of any security. The fund
may invest not more than 10% of its net assets in, and subsequently distribute,
as permitted by law, securities and other assets for which there is no ready
market.
8. Not to purchase securities on margin (except that it may obtain such
short-term credits as may be necessary for the clearance of purchases or sales
of securities).
9. Not to engage in the purchase or sale of real estate. Investments in real
estate investment trusts which may invest only in mortgages or other security
interests are not deemed purchases of real estate.
10. Not to purchase or sell commodities or commodity contracts.
11. Not to participate on a joint or a joint and several basis in any trading
account in securities. (The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of the
Investment Adviser to save brokerage costs or average prices among them is not
deemed to result in a securities trading account.)
12. Not to make loans of money or securities to any person or firm; provided,
however, that the acquisition for investment of bonds, debentures, notes or
other evidences of indebtedness of any corporation or government shall not be
construed to be the making of a loan.
13. Not to effect short sales of securities.
14. Not to purchase from or sell securities to the Investment Adviser or the
Principal Underwriter or their officers or directors, the fund's officers or
directors, and any companies of which they are affiliates, except in connection
with (i) an exercise of rights concerning securities owned by the fund, (ii)
the reorganization, recapitalization, consolidation or merger of a company
whose securities are owned by the fund, (iii) a transaction in fund shares, or
(iv) a permitted transaction with other investment companies advised by the
Investment Adviser.
15. Not to knowingly invest in securities of other managed investment
companies, or, in any event, invest in securities of managed registered
investment companies, except in connection with a merger, consolidation,
acquisition of assets or other reorganization approved by the fund's
shareholders.
16. Not to invest more than 75% of the value of the fund's net assets in
common stocks, such percentage including the value of that portion of
convertible securities attributable to the conversion feature.
17. Not to purchase or retain the securities issued by a corporation any of
whose officers, directors or shareholders is an officer or director of the fund
or the Investment Adviser if, after such purchase, one or more of such officers
and directors owning beneficially more than 1/2 of 1% of the securities of such
corporation together own beneficially more than 5% of such securities.
18. Not to write, purchase or sell options.
For purposes of Investment Restriction #7, rule 144A and other restricted
securities are treated as not readily marketable by the fund, with the
exception of rule 144A securities that have been determined to be liquid
pursuant to procedures adopted by the fund's Board of Directors.
Notwithstanding Investment Restriction #15, the fund may invest in securities
of other managed investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
Directors pursuant to an exemptive order granted by the Securities and Exchange
Commission.
Although not fundamental policies, the fund has further agreed that it will
not invest more than 5% of the value of the fund's net assets in warrants,
valued at the lower of cost or market, with no more than 2% being unlisted on
the New York or American Stock Exchanges (warrants acquired by the fund in
units or attached to securities may be deemed to be without value); or invest
in oil, gas or other mineral leases.
FUND OFFICERS AND DIRECTORS
Directors and Director Compensation
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL COMPENSATION TOTAL NUMBER
REGISTRANT PAST 5 YEARS (POSITIONS WITHIN THE COMPENSATION FROM ALL FUNDS OF FUND
ORGANIZATIONS LISTED MAY HAVE (INCLUDING MANAGED BY CAPITAL BOARDS ON
CHANGED DURING THIS PERIOD) VOLUNTARILY DEFERRED RESEARCH AND WHICH
COMPENSATION/1/) FROM MANAGEMENT COMPANY/2/ DIRECTOR
FUND DURING FISCAL SERVES
YEAR ENDED 12/31/94
<S> <C> <C> <C> <C> <C>
Robert A. Fox Director President and Chief Executive
P.O. Box 457 Officer, Foster Farms Inc. $8,300/3/ $70,100 5
1000 Davis Street Former President, Revlon
Livingston, CA 95334 International; Chairman and Chief
Age: 57 Executive Officer, Clarke Hooper
America (advertising).
Roberta L. Hazard Director Rear Admiral, United States
1419 Audmar Drive Navy (Retired). 7,700 39,400 3
McLean, VA 22101
Age: 57
++ Richard H. M. Holmes Director Retired; former Vice President,
580 Laurent Road Capital Research and 8,000 57,400 4
Hillsborough, CA 94010 Management Company (retired
Age: 69 1986).
Leonade D. Jones Director Treasurer, The Washington Post
1150-15th Street, N.W. Company. 8,900 40,000 3
Washington, D.C. 20071
Age: 47
John G. McDonald Director The IBJ Professor of Finance,
Graduate School of Business Graduate School of Business, 8,900/3/ 124,600 7
Stanford University Stanford University.
Stanford, CA 94305
Age: 57
***+ George A. Miller Director Senior Vice President and
Age: 59 Director, Capital Research and none/4/ none/4/ 1
Management Company.
Theodore D. Nierenberg Director Private investor; former
15 Middle Patent Road Arm President, Dansk International 8,900 40,000 3
onk, NY 10504 Designs, Ltd.
Age: 71
***+ James W. Ratzlaff Director Vice Chairman of the Board,
Age: 58 Capital Research and none/4/ none/4/ 8
Management Company; Senior
Partner, The Capital Group
Partners L.P.
Henry E. Riggs Director President and Professor of
Kingston Hall 201 Engineering, Harvey Mudd 8,300/3/ 66,600 5
Harvey Mudd College College.
Claremont, CA 91711
Age: 60
+ Walter P. Stern Chairman of Chairman, Capital Group
630 Fifth Avenue the Board International, Inc.; Vice none/4/ none/4/ 8
New York, NY 10111 Chairman, Capital Research
Age: 66 International; Director, The
Capital Group Companies, Inc.;
Chairman, Capital International,
Inc.; Director, Temple-Inland Inc.
(forest products).
Patricia K. Woolf Director Private investor; Lecturer,
506 Quaker Road Department of Molecular 9,200 63,673 5
Princeton, NJ 08540 Biology, Princeton University.
Age: 60
Robert L. Cody Director Retired; former Vice Chairman of
8545 Carmel Valley Road Emeritus the Board, Capital Research and 3,600 3,600 1
Carmel, CA 93923 Management Company (retired
Age: 79 1986).
</TABLE>
+ "Interested persons" within the meaning of the Investment Company Act of 1940
(the 1940 Act) on the basis of their affiliation with the Investment Adviser.
++ Not considered an "interested person" of the fund within the meaning of the
1940 Act; but he does not participate on the Contracts or Nominating Committees
due to his former affiliation with the Investment Adviser.
*** P.O. Box 7650, San Francisco, CA 94120
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the Fund in 1993. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more
funds in The American Funds Group as designated by the Director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, American Balanced Fund, Inc., American
High-Income Municipal Bond Fund, Inc., American High-Income Trust, American
Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management Trust of
America, Capital Income Builder, Inc., Capital World Growth and Income Fund,
Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. American Variable Insurance
Series is another fund managed by Capital Research and Management Company that
serves as the underling investment vehicle for certain variable insurance
contracts.
/3/ Since the plan's adoption, the total amounts of deferred compensation
accrued by the fund (plus earnings thereon) for participating Directors are as
follows: Robert A. Fox ($8,539), John G. McDonald ($9,206) and Henry E. Riggs
($8,574). Amounts deferred and accumulated earnings thereon are not funded and
are general unsecured liabilities of the fund until paid to the Director.
/4/ George A. Miller, James W. Ratzlaff and Walter P. Stern are affiliated with
the Investment Adviser and, accordingly, receive no remuneration from the fund.
OFFICERS
(with their principal occupations for the past five years)#
WALTER P. STERN, Chairman of the Board.
Fund officers whose other positions are not described above are:
ROBERT G. O'DONNELL***, President. Senior Vice President and Director,
Capital Research and Management Company.
ABNER D. GOLDSTINE****, Senior Vice President. Senior Vice President and
Director, Capital Research and Management Company.
PAUL G. HAAGA, JR.*, Senior Vice President; Senior Vice President and
Director, Capital Research and Management Company; Director, American Funds
Service Company.
STEVEN N. KEARSLEY**, Vice President. Vice President and Treasurer, Capital
Research and Management Company; Director, American Funds Service Company.
PATRICK F. QUAN***, Secretary. Vice President, Fund Business Management
Group, Capital Research and Management Company.
MARY C. CREMIN**, Treasurer. Senior Vice President, Fund Business Management
Group, Capital Research and Management Company.
R. MARCIA GOULD**, Assistant Treasurer; Vice President, Fund Business
Management Group, Capital Research and Management Company.
_________________
# Positions within the organizations listed may have changed during this
period.
* Address is 333 South Hope Street, Los Angeles, CA 90071.
** Address is 135 South State College Boulevard, Brea, CA 92621.
*** P.O. Box 7650, San Francisco, CA 94120
**** 11100 Santa Monica Boulevard, Los Angeles, CA 90025.
All of the directors and officers are also officers and/or directors and/or
trustees of one or more of the other funds for which Capital Research and
Management Company serves as Investment Adviser. No compensation is paid by
the fund to any officer or director who is a director, officer or employee of
the Investment Adviser or affiliated companies. The fund pays fees of $5,000
per annum to directors who are not affiliated with the Investment Adviser, plus
$1,000 for each Board of Directors meeting attended ($350 if the meeting is
held concurrently with the meeting of two other funds), plus $300 for each
meeting attended as a member of a committee of the Board of Directors.
Directors Emeritus receive from the fund $2,000 per year, plus $400 per Board
meeting attended. The directors may elect, on a voluntary basis, to defer all
or a portion of their fees through a deferred compensation plan in effect for
the fund. The fund also reimburses certain expenses of the directors and the
Directors Emeritus who are not affiliated with the Investment Adviser. As of
December 31, 1994 the officers and directors of the fund and their families, as
a group, owned beneficially or of record less than 1% of the outstanding
shares.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have a number of years of investment experience. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world.
The Investment Adviser believes that it is able to attract and retain quality
personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for approximately $100 billion of
stocks, bonds and money market instruments and serves over five million
investors of all types. These investors include privately owned businesses and
large corporations as well as schools, colleges, foundations and other
non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and
Service Agreement (the Agreement) between the fund and the Investment Adviser,
dated July 1, 1993, may be renewed from year to year, provided that any such
renewal has been specifically approved at least annually by (i) the Board of
Directors of the fund, or by the vote of a majority (as defined in the 1940
Act) of the outstanding voting securities of the fund, and (ii) the vote of a
majority of directors who are not parties to the Agreement or interested
persons (as defined in said Act) of any such party, cast in person, at a
meeting called for the purpose of voting on such approval. Renewal of the
Agreement was approved by the unanimous vote of the Board of Directors of the
fund on October 12, 1994 through November 30, 1995. The Agreement also
provides that either party has the right to terminate it without penalty, upon
60 days' written notice to the other party, and that the Advisory Agreement
automatically terminates in the event of its assignment (as defined in said
Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, and provides suitable office space, necessary small office equipment
and utilities, and provides general purpose accounting forms, supplies, and
postage used at the offices of the fund relating to the services furnished by
the Investment Adviser. The fund pays all expenses not specifically assumed by
the Investment Adviser, including, but not limited to, custodian, stock
transfer and dividend disbursing fees and expenses; costs of the designing,
printing and mailing of reports, prospectuses, proxy statements, and notices to
its shareholders; taxes; expenses of the issuance and redemption of shares of
the fund (including stock certificates, registration and qualification fees and
expenses); expenses pursuant to the fund's Plan of Distribution (described
below); legal and auditing expenses; compensation, fees, and expenses paid to
directors unaffiliated with the Investment Adviser; association dues; and costs
of stationery and forms prepared exclusively for the fund.
The Agreement provides for an advisory fee reduction to the extent that the
fund's annual ordinary operating expenses exceed 1-1/2% of the first $30
million of the average net assets of the fund and 1% of the average net assets
in excess thereof. Expenses which are not subject to this limitation are
interest, taxes, and extraordinary expenses. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses.
During the years ended December 31, 1994, 1993 and 1992, the Investment
Adviser received from the fund advisory fees of $6,234,000, $4,947,000 and
$3,204,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the Principal
Underwriter) is the principal underwriter of the fund's shares. The fund has
adopted a Plan of Distribution (the Plan), pursuant to rule 12b-1 (see
"Principal Underwriter" in the Prospectus). The Principal Underwriter receives
amounts payable pursuant to the Plan (described below) and commissions
consisting of that portion of the sales charge remaining after the discounts
which it allows to investment dealers. Commissions retained by the Principal
Underwriter on sales of fund shares during the year ended December 31, 1994
amounted to $1,598,000 after allowance of $8,038,000 to dealers. During the
years ended December 31, 1993 and 1992, the Principal Underwriter retained
$2,279,000 and $1,885,000, after allowance of $11,810,000 and $9,820,000 to
dealers, respectively.
As required by rule 12b-1, the Plan (together with the Principal Underwriting
Agreement) has been approved by the Board of Directors, and separately by a
majority of the directors who are not interested persons of the fund and who
have no direct or indirect financial interest in the operation of the Plan or
the Principal Underwriting Agreement, and the Plan has been approved by the
vote of a majority of the outstanding voting securities of the fund. The
officers and directors who are "interested" persons of the fund may be
considered to have a direct or indirect financial interest in the operation of
the Plan due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of directors who
are not "interested persons" of the fund are committed to the discretion of the
directors who are not interested persons during the existence of the Plan. The
Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
Under the Plan the fund may expend up to 0.25% of its net assets annually to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of Directors has approved the category of
expenses for which payment is being made. These include service fees for
qualified dealers and dealer commissions and wholesaler compensation on sales
of shares exceeding $1 million (including purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees). Only expenses incurred
during the preceding 12 months and accrued while the Plan is in effect may be
paid by the fund. During the year ended December 31, 1994, the fund paid or
accrued $3,935,000 for compensation to dealers under the Plan.
The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit commercial banks from engaging in the business of
underwriting, selling or distributing securities, but permit banks to make
shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries of affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer with adverse financial consequences as a result of
any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements, and has elected the tax status
of a "regulated investment company," under the provisions of Subchapter M of
the Internal Revenue Code of 1986 (the Code). Under Subchapter M, if the fund
distributes within specified times at least 90% of its investment company
taxable income, it will be taxed only on that portion of such investment
company taxable income that it retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, and
gains from the sale or other disposition of stock, securities, currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
gains or sale or other disposition of stock or securities held less than three
months; and (c) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's assets is
represented by cash, cash items, U.S. Government securities, securities of
other regulated investment companies, and other securities (but such other
securities must be limited, in respect of any one issuer, to an amount not
greater than 5% 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), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gains (both long-term and
short-term) for the one-year period ending on October 31 (as though the
one-year period ending on October 31 were the regulated investment company's
taxable year), and (iii) the sum of any untaxed, undistributed net investment
income and net capital gains of the regulated investment company for prior
periods. The term "distributed amount" generally means the sum of (i) amounts
actually distributed by the fund from its current year's ordinary income and
capital gain net income and (ii) any amount on which the fund pays income tax
for the year. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
The fund also intends to continue distributing to shareholders all of the
excess of net long-term capital gain over net short-term capital loss on sales
of securities. If the net asset value of shares of the fund should, by reason
of a distribution of realized capital gains, be reduced below a shareholder's
cost, such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month are treated as paid and are thereby
taxable as of December 31, provided that the fund pays the dividend no later
than the end of January of the following year.
Corporate shareholders of the fund may be eligible for the dividends-received
deduction on the dividends (excluding the net capital gains dividends) paid by
the fund to the extent that the fund's income is derived from dividends (which,
if received directly, would qualify for such deduction) received from domestic
corporations. In order to qualify for the dividends-received deduction, a
corporate shareholder must hold the fund shares paying the dividends upon which
the deduction is based for at least 46 days.
If a shareholder exchanges or otherwise disposes of shares of the fund within
90 days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously
incurred acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent shares are re-acquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of.
The fund may be required to pay withholding and other taxes imposed by foreign
countries generally at rates from 10% to 40% which would reduce the fund's
investment income. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. Not more than 50% of the total
assets of the fund is expected to consist of securities of foreign issuers.
Therefore, the fund will not be eligible to elect to "pass through" foreign tax
credits to shareholders and, to the extent the fund does pay foreign
withholding or other foreign taxes on investments in foreign securities,
shareholders will not be able to deduct their pro rata share of such taxes in
computing their taxable income and will not be able to take their share of such
taxes as a credit against their U.S. income taxes.
Under the Code, distributions of net investment income by the fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation or foreign
partnership (a foreign shareholder) will be subject to U.S. withholding tax (at
a rate of 30% or lower treaty rate). Withholding will not apply if a dividend
paid by the fund to a foreign shareholder is "effectively connected" with a
U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens or domestic corporations will apply.
Distributions of net long-term capital gains not effectively connected with a
U.S. trade or business are not subject to tax withholding, but in the case of a
foreign shareholder who is a nonresident alien individual, such distributions
ordinarily will be subject to U.S. income tax at a rate of 30% if the
individual is physically present in the U.S. for more than 182 days during the
taxable year.
As of the date of this statement of additional information, the maximum
federal individual stated tax rate applicable to ordinary income is 39.6%
(effective tax rates may be higher for some individuals due to phase out of
exemptions and elimination of deductions); the maximum individual tax rate
applicable to net capital gains is 28%; and the maximum corporate tax
applicable to ordinary income and net capital gains is 35% (except that
corporations which have taxable income in excess of $100,000 for a taxable year
will be required to pay an additional amount of tax of up to $11,750 and
corporations which have taxable income in excess of $15,000,000 for a taxable
year will be required to pay an additional amount of tax of up to $100,000).
Naturally, the amount of tax payable by a shareholder with respect to either
distributions from the fund or disposition of fund shares will be affected by a
combination of tax law rules covering, E.G., deductions, credits, deferrals,
exemptions, sources of income and other matters. Under the Code, an individual
is entitled to establish an IRA each year (prior to the tax return filing
deadline for the year) whereby earnings on investments are tax-deferred. In
addition, in some cases, the IRA contribution itself may be deductible.
The foregoing is limited to a summary of federal taxation and should not be
viewed as a comprehensive discussion of all provisions of the Code relevant to
investors. Dividends and capital gain distributions may also be subject to
state or local taxes. Investors are urged to consult their tax advisers with
specific reference to their own tax situations.
PURCHASE OF SHARES
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. The dealer is responsible for promptly transmitting purchase
orders to the Principal Underwriter. Orders received by the investment dealer,
the Transfer Agent, or the fund after the time of determination of the net
asset value will be entered at the next calculated offering price. Prices
which appear in the newspaper are not always indicative of prices at which you
will be purchasing and redeeming shares of the fund, since such prices
generally reflect the previous day's closing price whereas purchases and
redemptions are made at the next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The net
asset value per share is determined as follows:
1. Stocks, and convertible bonds and debentures, traded on the New York Stock
Exchange are valued at the last sale price on such exchange on the day of
valuation, or if there is no sale on the day of valuation, at the last-reported
bid price. Non-convertible bonds and debentures, and other long-term debt
securities normally are valued at prices obtained for the day of valuation from
a bond pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, an
over-the-counter or exchange quotation may be used. U.S. Treasury bills, and
other short-term obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, certificates of deposit issued by banks,
corporate short-term notes and other short-term investments with original or
remaining maturities in excess of 60 days are valued at the mean of
representative quoted bid and asked prices for such securities or, if such
prices are not available, for securities of comparable maturity, quality and
type. Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to the fund if acquired within 60 days of maturity
or, if already held by the fund on the 60th day, based on the value determined
on the 61st day. Other securities are valued on the basis of last sale or bid
prices in what is, in the opinion of the Investment Adviser, the broadest and
most representative market, which may be either a securities exchange or the
over-the-counter market. Where quotations are not readily available,
securities are valued at fair value as determined in good faith by the Board of
Directors. The fair value of all other assets is added to the value of
securities to arrive at the total assets;
2. There are deducted from total assets, thus determined, the liabilities,
including proper accruals of taxes and other expense items; and
3. The value of the net assets so obtained is then divided by the total number
of shares outstanding, and the result, rounded to the nearer cent, is the net
asset value per share.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $50,000 or more made within a
13-month period pursuant to the terms of a written statement of intention (the
Statement) in the form provided by the Principal Underwriter and signed by the
purchaser. The Statement is not a binding obligation to purchase the indicated
amount. When a shareholder signs a Statement in order to qualify for a reduced
sales charge, shares equal to 5% of the dollar amount specified in the
Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If the difference is not paid within 20 days after written request by
the Principal Underwriter or the securities dealer, the appropriate number of
shares held in escrow will be redeemed to pay such difference. If the proceeds
from this redemption are inadequate, the purchaser will be liable to the
Principal Underwriter for the balance still outstanding. The Statement may be
revised upward at any time during the 13-month period, and such a revision will
be treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
In the case of purchase orders by the trustees of certain retirement plans by
payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The investment made the first
month of the 13-month period will be multiplied by 13 and then multiplied by
1.5. On the first investment and all other investments made pursuant to the
Statement, a sales charge will be assessed according to the sales charge
breakpoint thus determined. There will be no retroactive adjustments in sales
charges on investments previously made during the 13-month period.
DEALER COMMISSIONS - The following commissions will be paid to dealers who
initiate and are responsible for purchases of $1 million or more and for
purchases made at net asset value by certain retirement plans of organizations
with collective retirement plan assets of $100 million or more: 1.00% on
amounts of $1 million to $2 million, 0.80% on amounts over $2 million to $3
million, 0.50% on amounts over $3 million to $50 million, 0.25% on amounts over
$50 million to $100 million, and 0.15% on amounts over $100 million. The level
of dealer commissions will be determined based on sales made over a 12-month
period commencing from the date of the first sale at net asset value. See "The
American Funds Shareholder Guide" in the fund's prospectus for more
information.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the 10th day of the month (or on or about the
15th day of the month in the case of accounts for retirement plans where
Capital Guardian Trust Company serves as custodian or trustee). Bank accounts
will be charged on the day or a few days before investments are credited,
depending on the bank's capabilities, and shareholders will receive a
confirmation statement showing the current transaction. Participation in the
plan will begin within 30 days after receipt of the account application. If
the shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or the closing of the account, the plan may be terminated
and the related investment reversed. The shareholder may change the amount of
the investment or discontinue the plan at any time by writing to the Transfer
Agent.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the receiving fund) subject to the following conditions:
(i) the aggregate value of the shareholder's account(s) in the paying fund(s)
must equal or exceed $5,000 (this condition is waived if the value of the
account in the receiving fund equals or exceeds that fund's minimum initial
investment requirement), (ii) as long as the value of the account in the
receiving fund is below that fund's minimum initial investment requirement,
dividends and capital gain distributions paid by the receiving fund must be
automatically reinvested in the receiving fund, and (iii) if this privilege is
discontinued with respect to a particular receiving fund, the value of the
account in that fund must equal or exceed the fund's minimum initial investment
requirement or the fund shall have the right, if the shareholder fails to
increase the value of the account to such minimum within 90 days after being
notified of the deficiency, automatically to redeem the account and send the
proceeds to the shareholder. These cross-reinvestments of dividends and
capital gain distributions will be at net asset value (without sales charge).
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other of the funds served by the Investment Adviser, or for trusts
or other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund will not pay a mark-up for
research in principal transactions.
The fund is required to disclose information regarding investments in the
securities of broker-dealers which have certain relationships with the fund.
During the last fiscal year, BankAmerica Corp., Beneficial Corp., Ford Motor
Credit Co. and General Electric Co., were among the top 10 dealers that acted
as principals in portfolio transactions. The fund held equity securities of
BankAmerica Corp., Beneficial Corp. and General Electric Co. in the amounts of
$24,490,000, $3,510,000 and $15,300,000, respectively, and debt securities of
Beneficial Corp. and Ford Motor Credit Co. in the amounts of $38,973,000 and
$39,136,000, respectively, as of the close of its most recent fiscal year.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, during the years ended December 31, 1994, 1993
and 1992 amounted to $1,050,000, $1,443,000 and $609,000, respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including
proceeds from the sale of shares of the fund and of securities in the fund's
portfolio, are held by The Chase Manhattan Bank, N.A., One Chase Manhattan
Plaza, New York, NY 10081, as Custodian.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the record of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. When fund shares are purchased by an insurance
company separate account to serve as the underlying investment vehicle for
variable insurance contracts, the fund may pay a fee to the insurance company
or another party for performing certain transfer agent services with respect to
contract owners having interests in the fund.
INDEPENDENT ACCOUNTANTS - Deloitte & Touche LLP located at 1000 Wilshire
Boulevard, Los Angeles, CA 90017, serves as the fund's independent accountants
providing audit services, preparing tax returns and reviewing certain documents
of the fund to be filed with the Securities and Exchange Commission. The
financial statements included in this Statement of Additional Information from
the Annual Report have been so included in reliance on the report of Deloitte &
Touche LLP given on the authority of said firm as experts in accounting and
auditing.
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors as
though the fund were a common-law trust. Accordingly, the directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on December 31.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information. The annual
financial statements are audited annually by the fund's independent
accountants, Deloitte & Touche LLP, whose selection is determined annually by
the Board of Directors.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. 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; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
The financial statements including the investment portfolio and the report of
Independent Auditors contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
<TABLE>
<CAPTION>
DETERMINATION OF NET ASSET VALUE,
REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE--DECEMBER 31, 1994
<S> <C>
Net asset value and redemption price per share $12.00
(Net assets divided by shares outstanding)
Maximum offering price per share $12.73
(100/94.25 of net asset value per share which takes into
account the fund's current maximum sales charge.)
</TABLE>
INVESTMENT RESULTS
The fund's yield is 4.62% based on a 30-day (or one month) period ended
December 31, 1994, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last
day of the period, according to the following formula:
YIELD = 2[(a-b/cd+1)/6/-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund's average annual total returns for the one, five and ten-year
periods ended on December 31, 1994 were -5.45%, +7.17% and +11.78%,
respectively. The average annual total return (T) is computed by using the
value at the end of the period (ERV) of a hypothetical initial investment of
$1,000 (P) over a period of years (n) according to the following formula as
required by the Securities and Exchange Commission: P(1+T)/n/ = ERV.
To calculate total return, an initial investment is divided by the offering
price (which includes the sales charge) as of the first day of the period in
order to determine the initial number of shares purchased. Subsequent
dividends and capital gain distributions are then reinvested at net asset value
on the reinvestment date determined by the Board of Directors. The sum of the
initial shares purchased and shares acquired through reinvestment is multiplied
by the net asset value per share as of the end of the period in order to
determine ending value. The difference between the ending value and the
initial investment divided by the initial investment converted to a percentage
equals total return. The resulting percentage indicates the positive or
negative investment results that an investor would have experienced from
reinvested dividends and capital gain distributions and changes in share price
during the period. Total return may be calculated for one year, five years,
ten years and for other periods of years. The average annual total return over
periods greater than one year also may be computed by utilizing ending values
as determined above.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales load of
5.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated.
The fund may include information on its investment results and/or comparisons
of its investment results to various unmanaged indices (such as The Dow Jones
Average of 30 Industrial Stocks, The Standard and Poor's 500 Stock Composite
Index, the Lehman Brothers Corporate Bond Index, the Lehman Brothers Aggregate
Bond Index and the Salomon Brothers High-Grade Corporate Bond Index) or results
of other mutual funds or investment or savings vehicles in advertisements or in
reports furnished to present or prospective shareholders.
The fund may refer to results compiled by organizations such as CDA
Investment Technologies, Ibbotson Associates, Lipper Analytical Services,
Morningstar, Inc. and Wiesenberger Investment Companies Services and by the
U.S. Department of Commerce. Additionally, the fund may, from time to time,
refer to results published in various newspapers or periodicals, including
Barrons, Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance
Magazine, Money, U.S. News and World Report and The Wall Street Journal.
The fund may, from time to time, illustrate the benefits of tax-deferral by
comparing taxable investments to investments made through tax-deferred
retirement plans.
The fund may, from time to time, compare its investment results with the
Consumer Price Index, which is a measure of the average change in prices over
time in a fixed market basket of goods and services (E.G. food, clothing, and
fuels, transportation, and other goods and services that people buy for
day-to-day living).
The investment results for AMBAL set forth below were calculated as described
above. Data contained in Salomon's Market Performance and Lehman Brothers' The
Bond Market Report are used to calculate cumulative total return from their
base period (12/31/68 and 12/31/72, respectively) for each index. The
percentage increases shown in the table below or used in published reports of
the fund are obtained by subtracting the index results at the beginning of the
period from the index results at the end of the period and dividing the
difference by the index results at the beginning of the period.
AMBAL vs. Various Unmanaged Indices
<TABLE>
<CAPTION>
10-Year AMBAL DJIA/1/ S&P 500/2/ Lehman Lehman Salomon Average
Period Brothers Brothers High-Grade/5/ Savings
1/1 - 12/31 Corporate/3/ Aggregate/4/ Account
/6/
<S> <C> <C> <C> <C> <C> <C> <C>
1985 - 1994 +205% +349% +282% +175% +158% +199% +77%
1984 - 1993 +232 +333 +301 +233 +207 +271 +88
1983 - 1992 +246 +367 +346 +225 +203 +248 +99
1982 - 1991 +309 +452 +404 +316 +274 +353 +112
1981 - 1990 +243 +328 +267 +261 +242 +274 +122
1980 - 1989 +298 +426 +402 +236 +223 +240 +125
1979 - 1988 +252 +340 +352 +189 +187 +180 +125
1978 - 1987 +232 +289 +313 +165 +170 +153 +125
1977 - 1986 +221 +221 +264 +167 +171 +158 +125
1976 - 1985 +246 +211 +281 +173 +171 +155 +123
1975#-1984 +275 +143 +198 +134 N/A +108 +113
</TABLE>
________________
# Since July 25, 1975, the period in which Capital Research and Management
Company has been the fund's adviser.
/1/ The Dow Jones Average of 30 Industrial Stocks is comprised of 30 industrial
companies such as General Motors and General Electric.
/2/ The Standard and Poor's 500 Stock Composite Index is comprised of
industrial, transportation, public utilities, and financial stocks and
represents a large portion of the value of issues traded on the New York Stock
Exchange. Selected issues traded on the American Stock Exchange are also
included.
/3/ The Lehman Brothers Corporate Bond Index is comprised of all public, fixed
rate, non-convertible investment grade domestic corporate debt. Issues
included in this index are rated at least Baa by Moody's Investors Service, BBB
by Standard and Poor's Corporation or, in the case of bank bonds not rated by
either of the previously mentioned services, BBB by Fitch Investors Service.
/4/ The Lehman Brothers Aggregate Bond Index covers all sectors of the fixed
income market and is a combination of the Lehman Brothers Treasury Bond Index,
the Agency Bond Index, the Corporate Bond Index, the Yankee Bond Index and the
Mortgage Backed Securities Index.
/5/ The Salomon Brothers High-Grade Corporate Bond Index is comprised of a
sample of high-grade corporate bonds which have a rating of AAA or AA by
Standard and Poor's Corporation.
/6/ Based on figures supplied by the U.S. League of Savings Institutions and
the Federal Reserve Board which reflect all kinds of savings deposits,
including longer-term certificates. Savings accounts offer a guaranteed return
of principal, but no opportunity for capital growth. During a portion of the
period, the maximum rates paid on some savings deposits were fixed by law.
<TABLE>
<CAPTION>
If you are considering the fund for an
Individual Retirement Account. . .
Here's how much you would have if you had invested $2,000 on January 1
of each year in AMBAL over the past 5 and 10 years:
<S> <C>
5 years 10 years
(1/1/90-12/31/94) (1/1/85-12/31/94)
$11,998 $34,154
</TABLE>
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
<S> <C> <C>
If you had . . . and had taken
invested $10,000 all dividends and
in AMBAL this many capital gain
years ago distributions
in shares, your
investment would
have been worth
this much at
12/31/94
| |
Number Periods Value
of Years 1/1 - 12/31
1 1994
$ 9,454
2 1993-1994
10,522
3 1992-1994
11,516
4 1991-1994
14,365
5 1990-1994
14,135
6 1989-1994
17,181
7 1988-1994
19,393
8 1987-1994
20,177
9 1986-1994
23,581
10 1985-1994
30,455
11 1984-1994
33,283
12 1983-1994
38,676
13 1982-1994
50,035
14 1981-1994
52,223
15 1980-1994
59,697
16 1979-1994
64,263
17 1978-1994
68,228
18 1977-1994
68,731
19 1976-1994
86,545
20 1975#-1994
91,386
</TABLE>
__________________
# Since July 26, 1975, the period in which Capital Research and Management
Company has been the fund's adviser.
Illustration of a $10,000 investment in AMBAL with
dividends reinvested and capital gain distributions taken in shares
(for the period under CRMC management: July 26, 1975 - December 31,
1994)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES
Year Annual Dividends Total From Initial From From Total
Ended Dividends (cumulative) Investment Investment Capital Gains Dividends Value
Dec. 31 Cost Reinvested Reinvested
<S> <C> <C> <C> <C> <C> <C> <C>
1975# $ 305 $ 305 $10,305 $ 9,629 - $ 319 $ 9,948
1976 594 899 10,899 11,513 - 1,020 12,533
1977 656 1,555 11,555 10,990 - 1,630 12,620
1978 709 2,264 12,264 11,059 - 2,345 13,404
1979 801 3,065 13,065 11,252 - 3,175 14,427
1980 1,050 4,115 14,115 12,008 - 4,490 16,498
1981 1,303 5,418 15,418 11,609 - 5,615 17,224
1982 1,474 6,892 16,892 13,865 - 8,415 22,280
1983 1,724 8,616 18,616 15,007 - 10,862 25,869
1984 1,852 10,468 20,468 13,838 $2,484 11,969 28,291
1985 1,912 12,380 22,380 16,025 4,520 15,982 36,527
1986 2,202 14,582 24,582 14,897 10,863 16,930 42,690
1987 2,710 17,292 27,292 13,934 12,167 18,305 44,406
1988 2,780 20,072 30,072 14,388 14,035 21,700 50,123
1989 3,284 23,356 33,356 15,695 18,227 26,993 60,915
1990 3,457 26,813 36,813 14,195 17,968 27,796 59,959
1991 3,684 30,497 40,497 16,575 21,807 36,383 74,765
1992 3,816 34,313 44,313 16,891 23,986 40,976 81,853
1993 4,072 38,385 48,385 17,290 27,761 46,029 91,080
1994 4,131 42,516 52,516 16,506 26,866 48,014 91,386
</TABLE>
The dollar amount of capital gain distributions during the period was $24,398.
# Since July 26, 1975, the period in which Capital Research and Management
Company has been the Fund's adviser.
EXPERIENCE OF INVESTMENT ADVISER - Capital Research and Management Company
manages nine common stock funds that are at least 10 years old. In the rolling
10-year periods since 1964 (115 in all), those funds have had better total
returns than the Standard and Poor's 500 Composite Stock Index in 94 of the 115
periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
AMERICAN BALANCED FUND
INVESTMENT MIX
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Percent of
TEN LARGEST EQUITY HOLDINGS Net Assets
- ----------------------------------------- --------------
<S> <C>
AMERICAN HOME PRODUCTS 1.66%
MINNESOTA MINING & MANUFACTURING 1.62
WARNER-LAMBERT 1.48
ELI LILLY 1.42
SAFECO 1.41
AMERICAN BRANDS 1.33
DUN & BRADSTREET 1.27
PHILIP MORRIS 1.24
HONEYWELL 1.21
XEROX 1.19
INVESTMENT MIX BY SECURITY TYPE
- -----------------------------------------
COMMON STOCKS 52%
CONVERTIBLE DEBENTURES 1%
CORPORATE BONDS 9%
GOVERNMENT BONDS 17%
CASH 21%
</TABLE>
American Balanced Fund
Investment Portfolio December 31, 1994
<TABLE>
<CAPTION>
Market Percent
Number Value of Net
COMMON STOCKS of Shares (000) Assets
- ---------------------------------------------- ----------- ----------- --------
<S> <C> <C> <C>
ENERGY
ENERGY SOURCES- 4.36%
Amoco Corp. 280,000 $16,555 0.8%
Atlantic Richfield Co. 100,000 10,175 0.49
Chevron Corp. 100,000 4,462 0.21
Exxon Corp. 320,000 19,440 0.93
Kerr-McGee Corp. 160,000 7,360 0.35
Phillips Petroleum Co. 400,000 13,100 0.63
Royal Dutch Petroleum Co.
(New York Registered Shares) 140,000 15,050 0.72
Texaco Inc. 80,000 4,790 0.23
UTILITIES: ELECTRIC & GAS - 4.45%
Carolina Power & Light Co. 600,000 15,975 0.77
Central and South West Corp. 750,000 16,969 0.82
Consolidated Edison Co. of New York, Inc. 500,000 12,875 0.62
Entergy Corp. 600,000 13,125 0.63
Houston Industries Inc. 150,000 5,344 0.26
Long Island Lighting Co. 150,000 2,306 0.11
Pacific Gas and Electric Co. 700,000 17,063 0.82
Texas Utilities Co. 164,177 5,254 0.25
Unicom Corp. 150,000 3,600 0.17
----------- -----------
183,443 8.81
----------- --------
MATERIALS
BUILDING MATERIALS & COMPONENTS - 0.36%
Masco Corp. 330,000 7,466 0.36
CHEMICALS - 2.58%
Dow Chemical Co. 200,000 13,450 0.65
E.I. du Pont de Nemours and Co. 400,000 22,500 1.08
Monsanto Co. 250,000 17,625 0.85
FOREST PRODUCTS & PAPER - 1.18%
James River Corp. of Virginia 400,000 8,100 0.39
Union Camp Corp. 350,000 16,494 0.79
METALS: NONFERROUS - 0.83%
Aluminum Co. of America 200,000 17,325 0.83
----------- --------
102,960 4.95
----------- --------
CAPITAL EQUIPMENT
AEROSPACE & MILITARY TECHNOLOGY - 1.01%
Boeing Co. 450,000 21,038 1.01
DATA PROCESSING & REPRODUCTION - 1.58%
International Business Machines Corp. 110,000 8,085 0.39
Xerox Corp. 250,000 24,750 1.19
ELECTRICAL & ELECTRONIC - 1.94%
General Electric Co. 300,000 15,300 0.73
Honeywell Inc. 800,000 25,200 1.21
ELECTRONIC INSTRUMENTS - 0.72%
Hewlett-Packard Co. 150,000 14,981 0.72
#VALUE
----------- --------
109,354 5.25
----------- --------
CONSUMER GOODS
BEVERAGES & TOBACCO - 2.57%
American Brands, Inc. 740,000 27,750 1.33
Philip Morris Companies Inc. 450,000 25,875 1.24
HEALTH & PERSONAL CARE - 7.16%
Abbott Laboratories 135,000 4,404 0.21
American Home Products Corp. 550,000 34,512 1.66
Bristol-Myers Squibb Co. 200,000 11,575 0.56
Eli Lilly and Co. 450,000 29,531 1.42
Merck & Co., Inc. 510,000 19,444 0.93
Pfizer Inc. 50,000 3,863 0.19
Schering-Plough Corp. 200,000 14,800 0.71
Warner-Lambert Co. 400,000 30,800 1.48
----------- --------
202,554 9.73
----------- --------
SERVICES
BROADCASTING & PUBLISHING - 1.02%
Gannett Co., Inc. 400,000 21,300 1.02
BUSINESS & PUBLIC SERVICES - 2.12%
Dun & Bradstreet Corp. 480,000 26,400 1.27
Pitney Bowes Inc. 230,000 7,303 0.35
WMX Technologies, Inc. 400,000 10,500 0.5
MERCHANDISING - 1.19%
Melville Corp. 800,000 24,700 1.19
TELECOMMUNICATIONS - 2.65%
Ameritech Corp. 400,000 16,150 0.78
MCI Communications Corp. 400,000 7,350 0.35
Sprint Corp. 620,000 17,127 0.82
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) 180,000 7,380 0.36
U S WEST, Inc. 200,000 7,125 0.34
TRANSPORTATION: AIRLINES - 0.34%
Delta Air Lines, Inc. 140,000 7,070 0.34
TRANSPORTATION: RAIL & ROAD - 0.71%
Union Pacific Corp. 325,000 14,828 0.71
----------- --------
167,233 8.03
----------- --------
FINANCE
BANKING - 5.03%
Banc One Corp. 525,000 13,322 0.64
BankAmerica Corp. 620,000 24,490 1.18
First Chicago Corp. 180,000 8,595 0.41
First Hawaiian Bank 800,000 18,400 0.88
First Union Corp. 250,000 10,344 0.5
J.P. Morgan & Co. Inc. 120,000 6,720 0.32
U.S. Bancorp 300,000 6,713 0.32
Wachovia Corp. 500,000 16,125 0.78
FINANCIAL SERVICES - 1.52%
ADVANTA Corp., Class B 300,000 7,575 0.36
American Express Co. 450,000 13,275 0.64
Beneficial Corp. 90,000 3,510 0.17
Federal National Mortgage Assn. 100,000 7,287 0.35
INSURANCE - 4.96%
Allstate Corp. 850,000 20,081 0.97
American General Corp. 810,000 22,882 1.1
Lincoln National Corp. 230,000 8,050 0.39
SAFECO Corp. 565,000 29,380 1.41
St. Paul Companies, Inc. 160,000 7,160 0.34
USLIFE Corp. 450,000 15,694 0.75
----------- --------
239,603 11.51
----------- --------
MULTI-INDUSTRY & MISCELLANEOUS
MULTI-INDUSTRY - 1.62%
Minnesota Mining and Manufacturing Co. 630,000 33,626 1.62
MISCELLANEOUS - 1.83%
Other common stocks in initial period of
acquisition 38,174 1.83
----------- --------
71,800 3.45
----------- --------
TOTAL COMMON STOCKS 1,076,947 51.73
----------- --------
- ---------------------------------------------- --------- --------- ---------
Principal
Amount
CONVERTIBLE DEBENTURES (000)
- ---------------------------------------------- --------- --------- ---------
CONVERTIBLE PREFERRED SECURITIES
----------- --------
CONVERTIBLE DEBENTURES
BROADCASTING & PUBLISHING - 0.29%
Time Warner Inc. 0% 2012 $20,000 6,100 0.29
INDUSTRIALS - 0.85%
Hanson America Inc. 2.39% 2001 1 12,500 8,938 0.43
USX Corp. 0% 2005 20,000 8,750 0.42
TRANSPORTATION: AIRLINES - 0.29%
AMR Corp., quarterly income capital securities,
6.125% 2024 7,500 5,962 0.29
MISCELLANEOUS - 0.13%
Other convertible debentures in initial period
of acquisition 2,745 0.13
----------- --------
TOTAL CONVERTIBLE DEBENTURES 32,495 1.56
----------- --------
TOTAL COMMON STOCKS AND CONVERTIBLE DEBENTURES 1,109,442 53.29
----------- --------
- ---------------------------------------------- --------- --------- ---------
BONDS & NOTES
- ---------------------------------------------- --------- --------- ---------
INDUSTRIALS - 3.72%
Dayton Hudson Corp. 9.50% 2015 1,000 1,091 0.05
Dayton Hudson Corp. 9.52% 2015 4,000 4,372 0.21
Deere & Co. 8.95% 2019 3,400 3,524 0.17
Federal Paper Board Co., Inc. 10.00% 2011 10,000 10,737 0.52
General Motors Corp. 8.80% 2021 12,500 12,798 0.61
News America Holdings Inc. 10.125% 2012 6,000 6,189 0.3
News America Holdings Inc. 8.45% 2034 2,500 2,398 0.12
Occidental Petroleum Corp. 9.25% 2019 5,000 5,217 0.25
Oryx Energy Co. 9.50% 1999 1,000 957 0.05
Oryx Energy Co. 10.00% 1999 900 880 0.04
Polaroid Corp. 8.00% 1999 10,000 9,793 0.47
Samsung Electric Co., Ltd. 8.50% 2002 1 5,000 4,774 0.23
Tele-Communications, Inc. 9.25% 2023 1,000 907 0.04
Tenneco Credit Inc. 9.625% 2001 2,000 2,082 0.1
Tenneco Credit Inc. 10.00% 2001 1,500 1,590 0.08
TKR Cable I, Inc. 10.50% 2007 2,100 2,148 0.1
USX Corp., Series A, 9.625% 2003 2,650 2,719 0.13
Xerox Corp. 9.75% 2000 5,000 5,255 0.25
----------- --------
77,431 3.72
----------- --------
ELECTRIC UTILITIES - 0.40%
Big Rivers Electric Corp. 10.70% 2017 4,000 4,379 0.21
Coso Funding Corp. 7.99% 1997 1 1,500 1,458 0.07
Coso Funding Corp. 8.87% 2001 1 1,000 962 0.05
Texas Utilities Electric Co. 9.75% 2021 1,500 1,558 0.07
----------- --------
8,357 0.4
----------- --------
TELEPHONE - 0.20%
GTE Corp. 10.25% 2020 4,000 4,207 0.2
----------- --------
TRANSPORTATION - 0.82%
American Airlines, 1991-A1, pass-through
certificates, 9.71% 2007 2 1,899 1,826 0.08
AMR Corp. 9.50% 1998 1,000 1,006 0.05
AMR Corp. 9.20% 2012 2,000 1,785 0.09
Delta Air Lines, Inc. 9.875% 1998 1,000 1,011 0.05
Delta Air Lines, Inc. 9.875% 2000 1,500 1,495 0.07
Delta Air Lines, Inc. 10.375% 2011 3,000 2,933 0.14
Delta Air Lines, Inc., 1992-A2, pass-through
certificates, 9.20% 2014 2 1,500 1,283 0.06
Federal Express Corp., A310-A1, pass-through
certificates, 7.53% 2006 2 2,000 1,845 0.09
United Air Lines, Inc. 9.00% 2003 1,500 1,371 0.07
United Air Lines, Inc. 10.67% 2004 2,500 2,518 0.12
----------- --------
17,073 0.82
----------- --------
FINANCIAL - 3.86%
H.F. Ahmanson & Co. 9.875% 1999 3,000 3,133 0.15
American Re Corp. 10.875% 2004 10,000 10,579 0.51
Bank of Nova Scotia 5.437% 3 4,000 3,174 0.15
Beneficial Corp. 12.875% 2013 1,500 1,756 0.09
Canadian Imperial Bank of Commerce 3.875% 3 1,600 1,280 0.06
Continental Bank, NA 12.50% 2001 2,000 2,370 0.11
Den Norske AS 5.25% 3 3,000 2,363 0.11
First Chicago Corp. 11.25% 2001 1,000 1,122 0.05
First Interstate Bancorp 8.625% 1999 4,300 4,317 0.21
First Interstate Bancorp 10.83% 2001 1,360 1,499 0.07
General Motors Acceptance Corp. 6.70% 1997 4,000 3,852 0.19
General Motors Acceptance Corp. 7.875% 1997 10,000 9,885 0.47
General Motors Acceptance Corp. 8.625% 1999 5,000 4,999 0.24
General Motors Acceptance Corp. 9.375% 2000 5,000 5,126 0.25
General Motors Acceptance Corp. 9.625% 2000 4,000 4,144 0.2
General Motors Acceptance Corp. 9.625% 2001 7,000 7,352 0.35
General Motors Acceptance Corp. 8.75% 2005 4,000 4,000 0.19
General Motors Acceptance Corp. 8.875% 2010 1,000 1,002 0.05
Golden West Financial Corp. 10.25% 2000 1,400 1,506 0.07
Security Pacific Corp. 11.00% 2001 3,000 3,331 0.16
Shopping Center Associates 6.75% 2004 1 3,000 2,606 0.13
Xerox Credit Corp. 10.125% 1999 1,000 1,023 0.05
----------- --------
80,419 3.86
----------- --------
OTHER - 0.07%
Trustees of Columbia University in the City of
New York, Series B, 8.62% 2001 1,500 1,522 0.07
----------- --------
COLLATERALIZED MORTGAGE/ASSET-BACKED
OBLIGATIONS 2 - 0.07%
Standard Credit Card Trust, 1990-6, Class A,
9.375% 1998 1,500 1,538 0.07
----------- --------
GOVERNMENTS (EXCLUDING U.S. GOVERNMENT) AND
GOVERNMENTAL AUTHORITIES - 0.35%
British Columbia Hydro & Power Authority
12.50% 2014 2,000 2,333 0.11
New York (City of) General Obligations Bonds,
Fiscal 1992 Series G, 9.10% 2000 1,310 1,313 0.07
New York (City of) General Obligations Bonds,
Fiscal 1991 Series D, 10.00% 2008 1,300 1,326 0.06
Ontario (Province of) 11.50% 2013 2,000 2,221 0.11
----------- --------
7,193 0.35
----------- --------
FEDERAL AGENCY OBLIGATIONS 2 - 0.61%
Federal Home Loan Mortgage Corp., participation
certificates, 8.50% 2008 379 373 0.02
Federal Home Loan Mortgage Corp.
8.50% 2020 11,845 11,653 0.56
Government National Mortgage Assn. 11.00% 2015 168 182 0.01
Government National Mortgage Assn. 9.50% 2018 213 220 0.01
Government National Mortgage Assn. 10.50% 2019 163 174 0.01
----------- --------
12,602 0.61
----------- --------
FEDERAL AGENCY OBLIGATIONS - OTHER - 1.99%
Federal Home Loan Bank 6.00% 1996 10,000 9,787 0.47
Federal National Mortgage Assn. 6.30% 1997 15,000 14,255 0.68
FNSM Callable Principal STRIPS 0%/8.20% 2022 4 10,000 6,475 0.31
FNSM Callable Principal STRIPS 0%/8.25% 2022 4 1,500 982 0.05
Student Loan Marketing Assn. 6.88% 1996 10,000 9,850 0.48
----------- --------
41,349 1.99
----------- --------
U.S. TREASURY OBLIGATIONS - 13.82%
7.50% January 1996 15,000 15,028 0.72
9.25% January 1996 15,000 15,286 0.73
8.875% February 1996 27,000 27,401 1.32
9.375% April 1996 15,000 15,333 0.74
4.25% May 1996 10,000 9,584 0.46
7.875% July 1996 4,000 4,016 0.19
7.25% August 1996 32,000 31,815 1.53
6.50% September 1996 15,000 14,731 0.71
8.00% October 1996 4,000 4,021 0.19
7.25% November 1996 15,000 14,883 0.71
6.75% February 1997 4,000 3,921 0.19
8.50% April 1997 32,000 32,480 1.56
8.50% July 1997 4,000 4,064 0.2
8.75% October 1997 5,000 5,113 0.25
8.875% November 1997 10,000 10,264 0.49
8.875% May 2000 8,000 8,368 0.4
8.75% August 2000 7,500 7,807 0.38
13.125% May 2001 2,000 2,525 0.12
14.25% February 2002 2,000 2,685 0.13
10.75% February 2003 12,800 14,960 0.72
11.125% August 2003 1,000 1,200 0.06
10.75% August 2005 8,500 10,211 0.49
8.75% November 2008 5,000 5,224 0.25
10.375% November 2009 6,750 7,836 0.38
10.375% November 2012 6,000 7,140 0.34
12.00% August 2013 1,600 2,128 0.1
13.25% May 2014 2,500 3,613 0.17
12.50% August 2014 2,000 2,771 0.13
8.875% August 2017 3,000 3,268 0.16
----------- --------
287,676 13.82
----------- --------
TOTAL BONDS & NOTES 539,367 25.91
----------- --------
- ---------------------------------------------- --------- --------- ---------
SHORT-TERM SECURITIES
- ---------------------------------------------- --------- --------- ---------
CORPORATE SHORT-TERM NOTES - 17.27%
Abbott Laboratories 5.90%-6.02% due 2/21/95 27,315 27,079 1.3
American Express Credit Corp. 5.80% due 1/3/95 1,665 1,664 0.08
American Telephone and Telegraph Co.
5.97%-6.05% due 1/19-2/9/95 39,200 38,988 1.87
Beneficial Corp. 5.60%-6.02% due 1/13-2/28/95 37,500 37,217 1.79
Ford Motor Credit Co. 6.00%-6.05% due 1/4-1/19/95 39,200 39,136 1.88
H.J. Heinz Co. 5.55%-5.97% due 1/3-2/13/95 31,100 31,016 1.49
Eli Lilly and Co. 5.70%-6.08% due 1/9-2/21/95 52,585 52,270 2.51
National Rural Utilities Cooperative Finance
Corp. 5.97%-6.07% due 1/13-2/17/95 35,410 35,241 1.69
J.C. Penney Funding Corp. 5.57%-5.98% due 1/10/95 5,535 5,526 0.26
PepsiCo, Inc. 5.685%-5.92% due 1/6-1/20/95 34,550 34,472 1.65
Pitney Bowes Credit Corp. 5.70% due 1/20-1/24/95 20,000 19,926 0.96
Procter & Gamble Co. 5.85% due 1/26/95 21,500 21,409 1.03
Xerox Corp. 5.95% due 1/25/95 15,800 15,735 0.76
----------- --------
359,679 17.27
----------- --------
FEDERAL AGENCY DISCOUNT NOTES - 1.47%
Federal Farm Credit Banks
5.94%-6.04% due 1/23-3/2/95 30,800 30,556 1.47
----------- --------
30,556 1.47
----------- --------
U.S. TREASURY SHORT-TERM NOTES - 0.87%
7.75% due 2/15/95 15,000 15,040 0.72
11.50% due 11/15/95 3,000 3,110 0.15
----------- --------
18,150 0.87
----------- --------
TOTAL SHORT-TERM SECURITIES 408,385 19.61
----------- --------
TOTAL INVESTMENT SECURITIES
(cost: $2,018,582,000) 2,057,194 98.81
Excess of cash and receivables over payables 24,692 1.19
----------- --------
NET ASSETS $2,081,886 100%
=========== ========
1 Purchased in a private placement transaction;
resale potential extends to qualified
institutional buyers.
2 Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore, the
effective maturity of these securities is
shorter than the stated maturity.
3 Coupon rates may change periodically.
4 Represents a zero coupon bond which will
convert to an interest-bearing security at a
later date.
See Notes to Financial Statements
- ---------------------------------------------- ----------- ----------- ---------
Equity-type securities appearing in the Equity-type securities eliminated from
portfolio since June 30, 1994 the portfolio since June 30, 1994
- ----------------------------------------------
----------- ----------- ---------
ADVANTA BFGoodrich
Banc One Commonwealth Edison
Federal National Mortgage Assn. Great Western Financial
General Electric GTE
Kerr-McGee ITT
Masco Johnson & Johnson
MCI Communications NBD Bancorp
Pitney Bowes Sundstrand
SAFECO United Technologies
Time Warner
Unicom
Union Pacific
USLIFE
U S WEST
</TABLE>
*******
American Balanced Fund
Financial Statements
<TABLE>
<CAPTION>
- ---------------------------------------------- ---------------- ----------------
<S> <C> <C>
Statement of Assets and Liabilities (dollars in
at December 31, 1994 thousands)
- ---------------------------------------------- ---------------- ----------------
Assets:
Investment securities at market
(cost: $2,018,582) $2,057,194
Cash 100
Receivables for -
Sales of investments $1,486
Sales of fund's shares 24,826
Dividends and accrued interest 15,850 42,162
---------------- ----------------
2,099,456
Liabilities:
Payables for -
Purchases of investments 13,634
Repurchases of fund's shares 3,042
Management services 562
Accrued expenses 332 17,570
---------------- ----------------
Net Assets at December 31, 1994 -
Equivalent to $12.00 per share on
173,543,068 shares of $1 par value
capital stock outstanding (authorized
capital stock--300,000,000 shares) $2,081,886
==============
Statement of Operations
for the year ended December 31, 1994 (dollars in
thousands)
- ---------------------------------------------- ---------------- ----------------
Investment Income:
Income:
Dividends $38,531
Interest 62,774 $101,305
----------------
Expenses:
Management services fee 6,234
Distribution expenses 3,935
Transfer agent fee 1,384
Reports to shareholders 251
Registration statement and prospectus 319
Postage, stationery and supplies 309
Directors' fees 72
Auditing and legal fees 40
Custodian fee 66
Taxes other than federal
income tax 2
Other expenses 35 12,647
---------------- ----------------
Net investment income 88,658
----------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 4,768
Net change in unrealized appreciation on
investments:
Beginning of year 125,067
End of year 38,612 (86,455)
---------------- ----------------
Net realized gain and change in unrealized
appreciation on investments (81,687)
----------------
Net Increase in Net Assets Resulting
from Operations $6,971
==============
See Notes to Financial Statements
- ---------------------------------------------- ---------------- ----------------
Statement of Changes in Net Assets (dollars in
thousands)
Year Ended
December 31
--------------- ---------------
1994 1993
- ---------------------------------------------- ---------------- ----------------
Operations:
Net investment income $88,658 $66,790
Net realized gain on investments 4,768 62,345
Net change in unrealized appreciation
on investments (86,455) 16,008
---------------- ----------------
Net increase in net assets
resulting from operations 6,971 145,143
---------------- ----------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (86,005) (66,337)
Distributions from net realized gain on
investments (7,886) (59,148)
---------------- ----------------
Total dividends and distributions (93,891) (125,485)
---------------- ----------------
Capital Share Transactions:
Proceeds from shares sold: 54,791,351
and 52,519,100 shares, respectively 669,530 669,659
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 6,959,833 and 9,005,875 shares,
respectively 84,678 112,498
Cost of shares repurchased: 24,180,499
and 12,422,469 shares, respectively (294,907) (158,812)
---------------- ----------------
Net increase in net assets resulting from
capital share transactions 459,301 623,345
---------------- --------------
Total Increase in Net Assets 372,381 643,003
Net Assets:
Beginning of year 1,709,505 1,066,502
---------------- ----------------
End of year (including undistributed
net investment income: $5,690
and $3,037, respectively) $2,081,886 $1,709,505
================ ===============
</TABLE>
See Notes to Financial Statements
Notes to Financial Statements
1. American Balanced Fund, Inc. (the "fund") is registered under the Investment
Company Act of 1940 as an open-end, diversified management investment company.
The following paragraphs summarize the significant accounting policies
consistently followed by the fund in the preparation of its financial
statements:
Common stocks and convertible debentures are stated at market value based upon
closing sales prices reported on recognized securities exchanges on the last
business day of the year or, for listed securities having no sales reported and
for unlisted securities, upon last-reported bid prices on that date.
Non-convertible bonds, debentures, and other long-term debt securities are
valued at prices obtained from a bond pricing service provided by a major
dealer in bonds, when such prices are available; however, in circumstances
where the investment adviser deems it appropriate to do so, such securities
will be valued at the mean of their representative quoted bid and asked prices
or, if such prices are not available, at the mean of such prices for securities
of comparable maturity, quality, and type.
Short-term securities with original or remaining maturities in excess of 60
days are valued at the mean of their quoted bid and asked prices. Short-term
securities with 60 days or less to maturity are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Valuation Committee of the Board of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis.
Discounts on securities purchased are amortized over the life of the respective
securities. The fund does not amortize premiums on securities purchased.
Dividends and distributions paid to shareholders are recorded on the
ex-dividend date.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $66,000 includes $22,000 that was paid by these credits
rather than in cash.
2.It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of December 31, 1994, net unrealized appreciation on investments for
federal income tax purposes aggregated $38,632,000, of which $106,334,000
related to appreciated securities and $67,702,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended December 31, 1994. The cost of
portfolio securities for federal income tax purposes was $2,018,562,000 at
December 31, 1994.
3.The fee of $6,234,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.42% of the first $500 million of average net assets;
0.324% of such assets in excess of $500 million but not exceeding $1 billion;
0.30% of such assets in excess of $1 billion but not exceeding $1.5 billion;
0.282% of such assets in excess of $1.5 billion but not exceeding $2.5 billion;
0.27% of such assets in excess of $2.5 billion but not exceeding $4 billion;
and 0.264% of such assets in excess of $4 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the year ended December 31, 1994,
distribution expenses under the Plan were $3,935,000. As of December 31, 1994,
accrued and unpaid distribution expenses were $266,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $1,384,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $1,598,000 (after
allowances to dealers) as its portion of the sales charges paid by purchasers
of the fund's shares. Such sales charges are not an expense of the fund and,
hence, are not reflected in the accompanying statement of operations.
Directors of the fund who are unaffiliated with CRMC may elect to defer part
or all of the fees earned for services as members of the Board. Amounts
deferred are not funded and are general unsecured liabilities of the fund. As
of December 31, 1994, aggregate amounts deferred were $54,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS, and/or AFD. No
affiliated officers, Directors, or employees of CRMC, AFS, or AFD received any
remuneration directly from the fund.
4.As of December 31, 1994, accumulated excess distributions of net realized
gain were $60,000 and additional paid-in capital was $1,864,101,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $682,083,000 and $503,882,000, respectively, during
the year ended December 31, 1994.
Per-Share Data and Ratios
<TABLE>
<CAPTION>
Year Ended December 31
------- ------- ------- ------- -------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.57 $12.28 $12.05 $10.32 $11.41
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income .57 .59 .61 .62 .63
Net realized and unrealized gain
(loss) on investments (.53) .76 .49 1.86 (.82)
------- ------- ------- ------- -------
Total income (loss) from investment
operations .04 1.35 1.10 2.48 (.19)
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment
income (.56) (.60) (.60) (.62) (.63)
Distributions from net realized
gains (.05) (.46) (.27) (.13) (.27)
------- ------- ------- ------- -------
Total distributions (.61) (1.06) (.87) (.75) (.90)
------- ------- ------- ------- -------
Net Asset Value, End of Year $12.00 $12.57 $12.28 $12.05 $10.32
======= ======= ======= ======= =======
Total Return* .34% 11.27% 9.48% 24.69% (1.57%)
Ratios/Supplemental Data:
Net assets, end of year
(in millions) $2,082 $1,710 $1,067 $642 $370
Ratio of expenses to average
net assets .68% .71% .74% .82% .84%
Ratio of net income to average
net assets 4.76% 4.74% 5.19% 5.56% 5.95%
Portfolio turnover rate 32% 28% 17% 25% 26%
</TABLE>
*This was calculated without deducting
a sales charge. The maximum sales
charge is 5.75% of the fund's
Independent Auditors' Report
To the Board of Directors and Shareholders of American Balanced Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the investment portfolio, of American Balanced Fund, Inc. (the
"Fund") as of December 31, 1994, the related statement of operations for the
year then ended, the statements of changes in net assets for the years ended
December 31, 1994 and 1993 and the per-share data and ratios for each of the
four years in the period ended December 31, 1994. These financial statements
and the per-share data and ratios are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the per-share data and ratios based on our audits. The
per-share data and ratios for the year ended December 31, 1990 were audited by
other auditors whose report dated January 25, 1991 expressed an unqualified
opinion on the per-share data and ratios.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
per-share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at December 31, 1994 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above and per-share data
and ratios for each of the four years in the period ended December 31, 1994
present fairly, in all material respects, the financial position of American
Balanced Fund, Inc. as of December 31, 1994, and the results of its operations,
the changes in its net assets and the per-share data and ratios for the
respective stated years, in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche
Los Angeles, California
January 27, 1995
U.S. Tax Information (unaudited)
During the fiscal year ended December 31, 1994, 42% of the dividends paid by
the fund from investment income earned qualified for the corporate
dividends-received deduction. Of those dividends, 25% was derived from
interest on direct U.S. Treasury obligations.
This information is given to meet certain requirements of the Internal Revenue
Code.
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Selected Per-Share Data and Ratios
Independent Auditors' Report
(b) Exhibits.
1. On file (see SEC file nos. 811-66 and 2-10758)
2. On file (see SEC file nos. 811-66 and 2-10758)
3. None
4. On file (see SEC file nos. 811-66 and 2-10758)
5. On file (see SEC file nos. 811-66 and 2-10758)
6. On file (see SEC file nos. 811-66 and 2-10758)
7. None
8. On file (see SEC file nos. 811-66 and 2-10758)
9. On file (see SEC file nos. 811-66 and 2-10758)
10. Not applicable to this filing
11. Consent of Independent Auditors
12. None
13. None
14. On file (see SEC file nos. 811-66 and 2-10758)
15. On file (see SEC file nos. 811-66 and 2-10758)
16. Updates to previously filed schedule for computation of each performance
quotation provided in the Registration Statement in response to Item 22 (see
SEC files nos. 811-66 and 2-10758)
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
As of January 31, 1995
Title of Class Number of Record-Holders
Common Stock 91,324
($1.00 Par Value)
Item 27. Indemnification.
Registrant is a joint-insured under an Investment Adviser/Mutual Fund Errors
and Omissions Policy. The carrier of the primary policy in the amount of $15
million is American International Surplus Lines Insurance Company, and it has a
$250,000 deductible. The carrier of the secondary policy in the amount of $10
million is Chubb Custom Insurance Company. The carrier of the excess policy in
the amount of $20 million is ICI Mutual Insurance Company.
The Articles of Incorporation state:
The Corporation shall indemnify (1) its directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by law, and (2) its other employees and agents to
such extent as shall be authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of this
Charter of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal. Nothing contained herein shall be construed
to authorize the Corporation to indemnify any director or officer of the
Corporation against any liability to the Corporation or to any holders of
securities of the Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. Any indemnification by the Corporation
shall be consistent with the requirements of law, including the Investment
Company Act of 1940.
To the fullest extent permitted by Maryland statutory and decisional law and
the 1940 Act, as amended or interpreted, no director or officer of the
Corporation shall be personally liable to the Corporation or its stockholders
for money damages; provided, however, that nothing herein shall be construed to
protect any director or officer of the Corporation against any liability to
which such director or officer 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 office. No amendment, modification or repeal of
this Article VIII shall adversely affect any right or protection of a director
or officer that exists at the time of such amendment, modification or repeal.
Section 2-418 (b) of The Annotated Code of Maryland states:
Permitted indemnification of director. - (1) A corporation may indemnify any
director made a party to any proceeding by reason of service in that capacity
unless it is established that:
(i) The act or omission of the director was material to the matter giving
rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate dishonesty; or
(ii) The director actually received an improper personal benefit in money,
property, or services; or
(iii) In the case of any criminal proceeding, the director had reasonable
cause to believe that the act or omission was unlawful.
(2) (i) Indemnification may be against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding.
(ii) However, if the proceeding was one by or in the right of the
corporation, indemnification may not be made in respect of any proceeding in
which the director shall have been adjudged to be liable to the corporation.
Item 28. Business and Other Connections of Investment Adviser.
None.
Item 29. Principal Underwriters.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., The American Funds Income Series, The American
Funds Tax-Exempt Series I, The American Funds Tax-Exempt Series II, American
High-Income Municipal Bond Fund, American High-Income Trust, American Mutual
Fund, Inc., The Bond Fund of America, Inc., Capital Income Builder, Capital
World Bond Fund, Capital World Growth and Income Fund, Inc., The Cash
Management Trust of America, EuroPacific Growth Fund, Fundamental Investors,
Inc., The Growth Fund of America, Inc., The Income Fund of America, Inc.,
Intermediate Bond Fund of America, The Investment Company of America, Limited
Term Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective
Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America,
Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money Fund of
America and Washington Mutual Investors Fund, Inc.
(b)
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <C> <C> <C>
* David A. Abzug Assistant Vice President None
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
% Richard Armstrong Assistant Vice President None
* William W. Bagnard Vice President None
Steven L. Barnes Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Regional Vice President None
1190 Rockmont Circle
Kennesaw, GA 30144
Joseph T. Blair Vice President None
27 Drumlin Road
West Simsbury, CT 06092
Ian B. Bodell Regional Vice President None
5900 Robert E. Lee Court
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
9937 Coddington Way
St. Louis, MO 63132
* Daniel C. Brown Director and None
Senior Vice President
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensignton, MO 20895
Victor C. Cassato Vice President None
999 Green Oaks Drive
Littleton, CO 80121
Christopher J. Cassin Regional Vice President None
231 Burlington
Clarendon Hills, IL 60514
* Larry P. Clemmensen Director and Treasurer None
* Kevin G. Clifford Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th Street, Suite 12K
New York, NY 10023
* Don R. Conlan Director None
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
1230 31st Street
Washington, DC 20007
* Carl D. Cutting Vice President None
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07430
G. Michael Dill Vice President None
3622 E. 87th Street
Tulsa, OK 74137
Kirk D. Dodge Regional Vice President None
2617 Salisbury Road
Ann Arbor, MI 48103
Peter J. Doran Vice President None
1205 Franklin Avenue
Garden City, NY 11530
* Michael J. Downer Secretary None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
& Lloyd G. Edwards Vice President None
@ Richard A. Eychner Vice President None
* Paul H. Fieberg Senior Vice President None
John Fodor Regional Vice President None
5 Marlborough Street - Suite 51
Boston, MA 02116
Steven S. Fogerty Regional Vice President None
535 Spring Club Drive
Altamonte Springs, FL 32714
* Mark P. Freeman, Jr. President and Director None
Clyde E. Gardner Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
# Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
* Paul G. Haaga, Jr. Director Senior
Vice Presdent
David E. Harper Vice President None
R.D. 1, Box 210, Rte. 519
Frenchtown, NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
* Robert L. Johansen Vice President and None
Controller
* V. John Kriss Senior Vice President None
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
Blake Liberty Regional Vice President None
12585-E East Tennessee Circle
Aurora, CO 80012
* Heather A. Maier Assistant Vice-President - None
Institutional Investment Services
Division
Steve A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5241 South Race Street
Littleton, CO 80121
* John C. Massar Vice President None
E. Lee McClennahan Vice President None
4445 N. Highway AIA, Suite 232
Vero Beach, FL 32963
Laurie B. McCurdy Regional Vice President None
5200 Valley View Road
Edina, MN 55436
% John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
* R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Regional Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Road
Charlotte, NC 28226
* Barbara G. Nicholich Assistant Vice President - None
Institutional Investment
Services Division
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Center, MA 02159
# Candance D. Pilgrim Assistant Vice President None
Steven J. Reitman Vice President None
212 the Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
6632 - A3 Fishers Farm Lane
Charlotte, NC 28277
* George L. Romine Vice President - Institutional None
Investment Services Division
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
* Julie D. Roth Vice President None
* Christopher Rowey Regional Vice President None
Dean B. Rydquist Vice President None
155 Willow Brook Drive
Roswell, GA 30076
Richard R. Samson Vice President None
4604 Glencoe, Ave., No. 4
Marina del Rey, CA 90292
* R. Michael Shanahan Chairman of the Board None
David W. Short Vice President None
621 Berkshire Drive
Pittsburgh, PA 15215
* Victor S. Sidhu Vice President - Institutional None
Investment Services Divisioin
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Assistant Vice President - None
Institutional Investment
Services Division
# Mark S. Smith Senior Vice President and None
Director
Rodney G. Smith Regional Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue, Suite
406
San Mateo, CA 94402
Craig R. Strauser Regional Vice President None
308 S. Eagle Nest Lane
Danville, CA 94506
% James P. Toomey Assistant Vice President None
& Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
@ Andrew J. Ward Vice President None
* David M. Ward Assistant Vice President - None
Institutional Investment
Services Division
Thoams E. Warren Regional Vice President None
1231 Starboard Lane
Sarasota, FL 34242
@ J. Kelly Webb Senior Vice President None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Cannonsburg, PA 15317
# Timothy W. Weiss Director None
** N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
* Marshall D. Wingo Senior Vice President None
* Robert L. Winston Director and None
Senior Vice President
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55436
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
</TABLE>
* Business Address, 333 South Hope Street, Los Angeles, CA 90071
** Business Address, Four Embarcadero Center, Suite 1800, San Francisco, CA
94111
# Business Address, 135 South State College Blvd., Brea, CA 92621
% Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
@ Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
& Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
Item 30. 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, are maintained and held in the offices of its
investment adviser, Capital Research and Management Company, 333 South Hope
Street, Los Angeles, California 90071, and/or 135 South State College
Boulevard, Brea, California 92621, and/or the offices of the Registrant, Four
Embarcadero Center (Suite 1800), San Francisco, California 94111.
Registrant's records covering shareholder accounts are maintained and kept by
the Fund's transfer agent, American Funds Service Company, 135 South State
College Boulevard, Brea, California 92621, 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240, 8000 IH-10, Suite 1400, San Antonio, Texas 78230 and
5300 Robin Hood Road, Norfolk, VA 23513.
Registrant's records covering portfolio transactions are maintained and kept
by the Fund's custodian, The Chase Manhattan Bank, N.A., One Chase Manhattan
Plaza, New York, New York 10081.
Item 31. Management Services.
None.
Item 32. Undertakings.
As reflected in the prospectus, the fund undertakes to provide each person to
whom a prospectus is delivered with a copy of the fund's latest annual report
to shareholders, upon request and without charge.
SIGNATURE OF REGISTRANT
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 pursuant 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, thereunto duly
authorized, in the City and County of San Francisco, and State of California on
the day of , 199__.
AMERICAN BALANCED FUND, INC.
By
Patrick F. Quan, Secretary
ATTEST:
Louise M. Pescetta
Pursuant to the requirements of the Securities Act of 1933, this amendment to
its registration statement has been signed below on February 27, 1995 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
<S> <C> <C>
(1) Principal Executive Officer
____________________________________ President
(Robert G. O'Donnell)
(2) Principal Financial Officer and Principal Accounting Officer: Treasurer
____________________________________
(Mary C. Cremin)
(3) Directors:
Robert A. Fox* Director
Roberta L. Hazard* Director
Richard H. M. Holmes* Director
Leonade D. Jones* Director
John G. McDonald* Director
____________________________________
(George A. Miller) Director
Theodore D. Nierenberg* Director
____________________________________
(James W. Ratzlaff) Director
Henry E. Riggs* Director
Walter P. Stern* Chairman
Patricia K. Woolf* Director
*By ____________________________________
Patrick F. Quan, Attorney-in-Fact
</TABLE>
Counsel reports that the amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of Rule
485(b).
Michele Yang, Counsel
CONSENT OF INDEPENDENT AUDITORS
American Balanced Fund, Inc.
We consent to (a) the use in this Post-Effective Amendment No. 81 to
Registration Statement No. 2-10758 on Form N-1A of our report dated January 27,
1995 appearing in the Financial Statements which are included in Part B, the
Statement of Additional Information of such Registration Statements, (b) the
reference to us under the heading "General Information" in such Statement of
Additional Information, and (c) the reference to us under the heading
"Financial Highlights" in the Prospectus, which is a part of such Registration
Statement.
\s\ Deloitte & Touche LLP
Los Angeles, California
February 24, 1995
EXHIBIT 16
SCHEDULE FOR COMPUTATION OF EACH PERFORMANCE QUOTATION
PROVIDED IN THE REGISTRATION STATEMENT
(1) ENDING REDEMPTION VALUE AND TOTAL RETURN
Value of an initial investment at the end of a period and total return for the
period are computed as set forth below.
(A) INITIAL INVESTMENT divided by
PUBLIC OFFERING PRICE FOR ONE SHARE AT
BEGINNING OF PERIOD equals
NUMBER OF SHARES INITIALLY PURCHASED
(B) NUMBER OF SHARES INITIALLY PURCHASED plus
NUMBER OF SHARES ACQUIRED AT NET ASSET
VALUE THROUGH REINVESTMENT OF DIVIDENDS
AND CAPITAL GAIN DISTRIBUTIONS DURING
PERIOD equals
NUMBER OF SHARES PURCHASED DURING PERIOD
(C) NUMBER OF SHARES PURCHASED DURING PERIOD multiplied by
NET ASSET VALUE OF ONE SHARE AS OF THE LAST
DAY OF THE PERIOD equals
VALUE OF INVESTMENT AT END OF PERIOD
(D) VALUE OF INVESTMENT AT END OF PERIOD divided by
INITIAL INVESTMENT minus one and then multiplied by 100 equals
TOTAL RETURN FOR THE PERIOD EXPRESSED AS A
PERCENTAGE
(2) AVERAGE ANNUAL TOTAL RETURN
Average annual total return quotations for the 1-, 5-, and 10-year periods
ended on the date of the most recent balance sheet are computed according to
the formula set forth below.
P(1+T)/n/ = ERV
WHERE: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 investment as of the
end of 1-, 5-, and 10-year periods (computed in accordance with the formula
shown in (1), above)
THUS:
AVG. ANNUAL TOTAL RETURN AT PUBLIC OFFERING PRICE:
1 Year Total Return 1,000(1+T)/1/ = 945.46
T = -5.45%
5 Year Avg. Annual Total Return 1,000(1+T)/5/ = 1,413.53
T = +7.17%
10 Year Avg. Annual Total Return 1,000(1+T)/10/ = 3,045.58
T = +11.78%
Hypothetical illustrations based on $1,000 and $10,000 initial investments used
to obtain ending values over various time periods are attached. Illustrations
of $2,000 per year which show the benefits of systematic investing are also
included.
(3) YIELD
Yield is computed as set forth below.
(A) DIVIDENDS AND INTEREST EARNED DURING
THE PERIOD minus
EXPENSES ACCRUED FOR THE PERIOD equals
NET INVESTMENT INCOME
(B) NET INCOME INVESTMENT divided by
AVERAGE DAILY NUMBER OF SHARES OUTSTANDING
DURING THE PERIOD THAT WERE ENTITLED
TO RECEIVE DIVIDENDS equals
NET INVESTMENT INCOME PER SHARE EARNED
DURING THE PERIOD
(C) NET INVESTMENT INCOME PER SHARE EARNED
DURING THE PERIOD divided by
MAXIMUM OFFERING PRICE PER SHARE ON
LAST DAY OF THE PERIOD equals
CURRENT MONTH'S YIELD
(D) CURRENT MONTH'S YIELD plus one raised to the sixth power equals
SEMIANNUAL COMPOUNDED YIELD
(E) SEMIANNUAL COMPOUNDED YIELD minus one multiplied by two equals
ANNUALIZED RATE
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/25/75 1000.00 7.27 5.75 % 137.552 6.850 942
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/75 1000 30 30 1030 0 963 0 963 31 994.83 142.119
12/31/76 1000 60 90 1090 0 1151 0 1151 102 1253.27 149.733
12/31/77 1000 65 155 1155 0 1099 0 1099 163 1262.04 157.952
12/31/78 1000 71 226 1226 0 1106 0 1106 234 1340.39 166.715
12/31/79 1000 81 307 1307 0 1125 0 1125 317 1442.67 176.365
12/31/80 1000 105 412 1412 0 1201 0 1201 448 1649.79 188.979
12/31/81 1000 130 542 1542 0 1161 0 1161 561 1722.38 204.074
12/31/82 1000 148 690 1690 0 1387 0 1387 841 2228.01 221.033
12/31/83 1000 172 862 1862 0 1501 0 1501 1085 2586.87 237.110
12/31/84 1000 186 1048 2048 232 1384 248 1632 1197 2829.13 281.226
12/31/85 1000 191 1239 2239 141 1602 452 2054 1598 3652.76 313.542
12/31/86 1000 220 1459 2459 680 1490 1086 2576 1693 4269.07 394.189
12/31/87 1000 270 1729 2729 197 1393 1217 2610 1830 4440.64 438.365
12/31/88 1000 279 2008 3008 146 1439 1404 2843 2169 5012.33 479.190
12/31/89 1000 329 2337 3337 289 1569 1823 3392 2699 6091.55 533.878
12/31/90 1000 346 2683 3683 149 1420 1797 3217 2778 5995.94 581.002
12/31/91 1000 368 3051 4051 78 1657 2181 3838 3638 7476.53 620.459
12/31/92 1000 381 3432 4432 173 1689 2399 4088 4097 8185.34 666.559
12/31/93 1000 407 3839 4839 318 1729 2776 4505 4603 9108.06 724.587
12/31/94 1000 413 4252 5252 37 1651 2687 4338 4800 9138.68 761.557
TOTAL $ 2440
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/25/75 1000.00 6.85 0.00 % 145.985 6.850 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/75 1000 32 32 1032 0 1022 0 1022 33 1055.82 150.832
12/31/76 1000 64 96 1096 0 1222 0 1222 108 1330.10 158.913
12/31/77 1000 69 165 1165 0 1166 0 1166 173 1339.40 167.635
12/31/78 1000 75 240 1240 0 1174 0 1174 248 1422.57 176.936
12/31/79 1000 85 325 1325 0 1194 0 1194 337 1531.11 187.177
12/31/80 1000 111 436 1436 0 1274 0 1274 476 1750.93 200.565
12/31/81 1000 138 574 1574 0 1232 0 1232 595 1827.98 216.585
12/31/82 1000 157 731 1731 0 1472 0 1472 892 2364.62 234.585
12/31/83 1000 184 915 1915 0 1593 0 1593 1152 2745.45 251.645
12/31/84 1000 196 1111 2111 247 1469 264 1733 1269 3002.56 298.465
12/31/85 1000 203 1314 2314 149 1701 480 2181 1695 3876.68 332.762
12/31/86 1000 233 1547 2547 721 1581 1153 2734 1796 4530.77 418.354
12/31/87 1000 287 1834 2834 209 1479 1291 2770 1942 4712.87 465.239
12/31/88 1000 296 2130 3130 155 1527 1490 3017 2302 5319.62 508.568
12/31/89 1000 347 2477 3477 307 1666 1934 3600 2865 6465.02 566.610
12/31/90 1000 367 2844 3844 158 1507 1907 3414 2949 6363.55 616.623
12/31/91 1000 390 3234 4234 83 1759 2314 4073 3861 7934.93 658.500
12/31/92 1000 405 3639 4639 183 1793 2546 4339 4348 8687.19 707.426
12/31/93 1000 432 4071 5071 337 1835 2946 4781 4885 9666.51 769.014
12/31/94 1000 439 4510 5510 39 1752 2851 4603 5096 9699.01 808.251
TOTAL $ 2588
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/94 1000.00 13.34 5.75 % 74.963 12.570 942
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 1000 43 43 1043 4 900 4 904 41 945.46 78.788
TOTAL $ 4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/94 1000.00 12.57 0.00 % 79.554 12.570 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 1000 45 45 1045 4 955 4 959 44 1003.36 83.613
TOTAL $ 4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/90 1000.00 12.11 5.75 % 82.576 11.410 942
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 1000 54 54 1054 23 852 23 875 52 927.41 89.865
12/31/91 1000 57 111 1111 12 995 40 1035 121 1156.41 95.968
12/31/92 1000 59 170 1170 27 1014 68 1082 184 1266.07 103.100
12/31/93 1000 63 233 1233 49 1038 119 1157 251 1408.81 112.077
12/31/94 1000 64 297 1297 6 991 119 1110 303 1413.53 117.794
TOTAL $ 117
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/90 1000.00 11.41 0.00 % 87.642 11.410 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 1000 57 57 1057 25 904 24 928 56 984.31 95.379
12/31/91 1000 61 118 1118 13 1056 42 1098 129 1227.38 101.857
12/31/92 1000 63 181 1181 28 1076 72 1148 195 1343.75 109.426
12/31/93 1000 67 248 1248 52 1102 126 1228 267 1495.21 118.951
12/31/94 1000 68 316 1316 6 1052 126 1178 322 1500.24 125.020
TOTAL $ 124
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 1000.00 10.67 5.75 % 93.721 10.060 943
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 1000 63 63 1063 47 1092 55 1147 70 1217.32 104.491
12/31/86 1000 74 137 1137 227 1015 273 1288 134 1422.70 131.367
12/31/87 1000 90 227 1227 66 949 322 1271 208 1479.88 146.089
12/31/88 1000 93 320 1320 49 980 382 1362 308 1670.40 159.694
12/31/89 1000 110 430 1430 96 1069 514 1583 447 2030.09 177.922
12/31/90 1000 116 546 1546 50 967 514 1481 517 1998.22 193.626
12/31/91 1000 122 668 1668 26 1129 628 1757 734 2491.63 206.774
12/31/92 1000 127 795 1795 58 1151 698 1849 878 2727.83 222.136
12/31/93 1000 136 931 1931 106 1178 822 2000 1035 3035.35 241.476
12/31/94 1000 138 1069 2069 12 1125 797 1922 1123 3045.58 253.798
TOTAL $ 737
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 1000.00 10.06 0.00 % 99.404 10.060 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 1000 67 67 1067 50 1158 58 1216 75 1291.12 110.826
12/31/86 1000 78 145 1145 240 1077 289 1366 142 1508.95 139.331
12/31/87 1000 96 241 1241 70 1007 342 1349 220 1569.61 154.947
12/31/88 1000 99 340 1340 52 1040 405 1445 326 1771.69 169.378
12/31/89 1000 116 456 1456 102 1134 545 1679 474 2153.16 188.708
12/31/90 1000 122 578 1578 53 1026 545 1571 548 2119.38 205.366
12/31/91 1000 130 708 1708 28 1198 666 1864 778 2642.72 219.313
12/31/92 1000 135 843 1843 61 1221 741 1962 931 2893.28 235.609
12/31/93 1000 144 987 1987 112 1250 872 2122 1097 3219.44 256.121
12/31/94 1000 146 1133 2133 13 1193 845 2038 1192 3230.28 269.190
TOTAL $ 781
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 10.67 5.75 % 937.207 10.060 9428
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 637 637 10637 469 10918 548 11466 707 12173.10 1044.901
12/31/86 10000 733 1370 11370 2265 10150 2729 12879 1347 14226.97 1313.663
12/31/87 10000 902 2272 12272 656 9494 3221 12715 2083 14798.73 1460.882
12/31/88 10000 926 3198 13198 488 9803 3817 13620 3083 16703.91 1596.932
12/31/89 10000 1095 4293 14293 964 10694 5135 15829 4471 20300.52 1779.187
12/31/90 10000 1152 5445 15445 497 9672 5139 14811 5170 19981.91 1936.232
12/31/91 10000 1227 6672 16672 261 11293 6276 17569 7347 24916.11 2067.727
12/31/92 10000 1270 7942 17942 575 11509 6983 18492 8786 27278.29 2221.359
12/31/93 10000 1356 9298 19298 1059 11781 8217 19998 10355 30353.37 2414.747
12/31/94 10000 1376 10674 20674 123 11246 7966 19212 11243 30455.42 2537.952
TOTAL $ 7357
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DOW JONES INDUSTRIAL AVERAGE
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 1211.57 0.00 % 8.254 1211.570 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 522 522 10522 0 12766 0 12766 597 13363.23 8.640
12/31/86 10000 588 1110 11110 0 15649 0 15649 1334 16983.92 8.958
12/31/87 10000 646 1756 11756 0 16003 0 16003 1929 17932.24 9.249
12/31/88 10000 747 2503 12503 0 17899 0 17899 2943 20842.13 9.611
12/31/89 10000 1006 3509 13509 0 22724 0 22724 4824 27548.52 10.006
12/31/90 10000 1053 4562 14562 0 21737 0 21737 5655 27392.70 10.401
12/31/91 10000 1002 5564 15564 0 26155 0 26155 7878 34033.23 10.740
12/31/92 10000 1095 6659 16659 0 27246 0 27246 9300 36546.59 11.071
12/31/93 10000 1116 7775 17775 0 30985 0 30985 11751 42736.56 11.384
12/31/94 10000 1238 9013 19013 0 31648 0 31648 13249 44897.46 11.709
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 COMPOSITE INDEX
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 167.24 0.00 % 59.794 167.240 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 480 480 10480 0 12633 0 12633 533 13166.34 62.317
12/31/86 10000 524 1004 11004 0 14480 0 14480 1130 15610.52 64.461
12/31/87 10000 575 1579 11579 0 14774 0 14774 1662 16436.01 66.521
12/31/88 10000 657 2236 12236 0 16606 0 16606 2552 19158.79 68.986
12/31/89 10000 772 3008 13008 0 21131 0 21131 4085 25216.50 71.354
12/31/90 10000 876 3884 13884 0 19745 0 19745 4682 24427.36 73.973
12/31/91 10000 912 4796 14796 0 24940 0 24940 6910 31850.24 76.363
12/31/92 10000 956 5752 15752 0 26053 0 26053 8215 34268.16 78.649
12/31/93 10000 1000 6752 16752 0 27891 0 27891 9820 37711.55 80.848
12/31/94 10000 1078 7830 17830 0 27462 0 27462 10737 38199.32 83.174
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 812 812 10812 0 10000 0 10000 810 10810.53 1081.053
12/31/86 10000 747 1559 11559 0 10000 0 10000 1557 11557.79 1155.779
12/31/87 10000 715 2274 12274 0 10000 0 10000 2271 12271.85 1227.185
12/31/88 10000 803 3077 13077 0 10000 0 10000 3075 13075.01 1307.501
12/31/89 10000 981 4058 14058 0 10000 0 10000 4055 14055.93 1405.593
12/31/90 10000 1012 5070 15070 0 10000 0 10000 5067 15067.46 1506.746
12/31/91 10000 919 5989 15989 0 10000 0 10000 5985 15985.76 1598.576
12/31/92 10000 661 6650 16650 0 10000 0 10000 6646 16646.38 1664.638
12/31/93 10000 530 7180 17180 0 10000 0 10000 7175 17175.26 1717.526
12/31/94 10000 546 7726 17726 0 10000 0 10000 7720 17720.95 1772.095
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/84 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/84 10000 956 956 10956 0 10000 0 10000 956 10956.52 1095.652
12/31/85 10000 889 1845 11845 0 10000 0 10000 1844 11844.59 1184.459
12/31/86 10000 819 2664 12664 0 10000 0 10000 2663 12663.31 1266.331
12/31/87 10000 782 3446 13446 0 10000 0 10000 3445 13445.67 1344.567
12/31/88 10000 880 4326 14326 0 10000 0 10000 4325 14325.65 1432.565
12/31/89 10000 1074 5400 15400 0 10000 0 10000 5400 15400.39 1540.039
12/31/90 10000 1108 6508 16508 0 10000 0 10000 6508 16508.66 1650.866
12/31/91 10000 1006 7514 17514 0 10000 0 10000 7514 17514.78 1751.478
12/31/92 10000 724 8238 18238 0 10000 0 10000 8238 18238.59 1823.859
12/31/93 10000 579 8817 18817 0 10000 0 10000 8818 18818.06 1881.806
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/83 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/83 10000 918 918 10918 0 10000 0 10000 918 10918.02 1091.802
12/31/84 10000 1044 1962 11962 0 10000 0 10000 1962 11962.34 1196.234
12/31/85 10000 970 2932 12932 0 10000 0 10000 2931 12931.93 1293.193
12/31/86 10000 894 3826 13826 0 10000 0 10000 3825 13825.81 1382.581
12/31/87 10000 854 4680 14680 0 10000 0 10000 4679 14679.99 1467.999
12/31/88 10000 961 5641 15641 0 10000 0 10000 5640 15640.76 1564.076
12/31/89 10000 1173 6814 16814 0 10000 0 10000 6814 16814.17 1681.417
12/31/90 10000 1210 8024 18024 0 10000 0 10000 8024 18024.19 1802.419
12/31/91 10000 1100 9124 19124 0 10000 0 10000 9122 19122.67 1912.267
12/31/92 10000 792 9916 19916 0 10000 0 10000 9912 19912.91 1991.291
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/82 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/82 10000 1086 1086 11086 0 10000 0 10000 1085 11085.58 1108.558
12/31/83 10000 1018 2104 12104 0 10000 0 10000 2103 12103.25 1210.325
12/31/84 10000 1158 3262 13262 0 10000 0 10000 3260 13260.94 1326.094
12/31/85 10000 1075 4337 14337 0 10000 0 10000 4335 14335.78 1433.578
12/31/86 10000 992 5329 15329 0 10000 0 10000 5326 15326.72 1532.672
12/31/87 10000 946 6275 16275 0 10000 0 10000 6273 16273.64 1627.364
12/31/88 10000 1065 7340 17340 0 10000 0 10000 7338 17338.70 1733.870
12/31/89 10000 1300 8640 18640 0 10000 0 10000 8639 18639.50 1863.950
12/31/90 10000 1341 9981 19981 0 10000 0 10000 9980 19980.88 1998.088
12/31/91 10000 1218 11199 21199 0 10000 0 10000 11198 21198.62 2119.862
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/81 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/81 10000 1098 1098 11098 0 10000 0 10000 1098 11098.56 1109.856
12/31/82 10000 1205 2303 12303 0 10000 0 10000 2303 12303.40 1230.340
12/31/83 10000 1129 3432 13432 0 10000 0 10000 3432 13432.87 1343.287
12/31/84 10000 1284 4716 14716 0 10000 0 10000 4717 14717.74 1471.774
12/31/85 10000 1193 5909 15909 0 10000 0 10000 5910 15910.66 1591.066
12/31/86 10000 1100 7009 17009 0 10000 0 10000 7010 17010.45 1701.045
12/31/87 10000 1052 8061 18061 0 10000 0 10000 8061 18061.39 1806.139
12/31/88 10000 1183 9244 19244 0 10000 0 10000 9243 19243.46 1924.346
12/31/89 10000 1444 10688 20688 0 10000 0 10000 10687 20687.15 2068.715
12/31/90 10000 1489 12177 22177 0 10000 0 10000 12175 22175.89 2217.589
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/80 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/80 10000 891 891 10891 0 10000 0 10000 891 10891.33 1089.133
12/31/81 10000 1197 2088 12088 0 10000 0 10000 2087 12087.80 1208.780
12/31/82 10000 1312 3400 13400 0 10000 0 10000 3400 13400.05 1340.005
12/31/83 10000 1230 4630 14630 0 10000 0 10000 4630 14630.20 1463.020
12/31/84 10000 1400 6030 16030 0 10000 0 10000 6029 16029.59 1602.959
12/31/85 10000 1299 7329 17329 0 10000 0 10000 7328 17328.84 1732.884
12/31/86 10000 1198 8527 18527 0 10000 0 10000 8526 18526.65 1852.665
12/31/87 10000 1145 9672 19672 0 10000 0 10000 9671 19671.26 1967.126
12/31/88 10000 1287 10959 20959 0 10000 0 10000 10958 20958.70 2095.870
12/31/89 10000 1573 12532 22532 0 10000 0 10000 12531 22531.08 2253.108
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/79 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/79 10000 743 743 10743 0 10000 0 10000 742 10742.84 1074.284
12/31/80 10000 958 1701 11701 0 10000 0 10000 1700 11700.39 1170.039
12/31/81 10000 1285 2986 12986 0 10000 0 10000 2985 12985.74 1298.574
12/31/82 10000 1410 4396 14396 0 10000 0 10000 4395 14395.45 1439.545
12/31/83 10000 1322 5718 15718 0 10000 0 10000 5716 15716.97 1571.697
12/31/84 10000 1503 7221 17221 0 10000 0 10000 7220 17220.32 1722.032
12/31/85 10000 1395 8616 18616 0 10000 0 10000 8616 18616.08 1861.608
12/31/86 10000 1287 9903 19903 0 10000 0 10000 9902 19902.88 1990.288
12/31/87 10000 1230 11133 21133 0 10000 0 10000 11132 21132.51 2113.251
12/31/88 10000 1383 12516 22516 0 10000 0 10000 12515 22515.57 2251.557
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/78 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/78 10000 642 642 10642 0 10000 0 10000 641 10641.90 1064.190
12/31/79 10000 790 1432 11432 0 10000 0 10000 1432 11432.42 1143.242
12/31/80 10000 1019 2451 12451 0 10000 0 10000 2451 12451.43 1245.143
12/31/81 10000 1367 3818 13818 0 10000 0 10000 3819 13819.30 1381.930
12/31/82 10000 1501 5319 15319 0 10000 0 10000 5319 15319.51 1531.951
12/31/83 10000 1406 6725 16725 0 10000 0 10000 6725 16725.85 1672.585
12/31/84 10000 1599 8324 18324 0 10000 0 10000 8325 18325.70 1832.570
12/31/85 10000 1486 9810 19810 0 10000 0 10000 9811 19811.06 1981.106
12/31/86 10000 1369 11179 21179 0 10000 0 10000 11180 21180.46 2118.046
12/31/87 10000 1310 12489 22489 0 10000 0 10000 12489 22489.02 2248.902
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/77 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/77 10000 613 613 10613 0 10000 0 10000 612 10612.59 1061.259
12/31/78 10000 681 1294 11294 0 10000 0 10000 1293 11293.81 1129.381
12/31/79 10000 839 2133 12133 0 10000 0 10000 2132 12132.77 1213.277
12/31/80 10000 1081 3214 13214 0 10000 0 10000 3214 13214.20 1321.420
12/31/81 10000 1452 4666 14666 0 10000 0 10000 4665 14665.85 1466.585
12/31/82 10000 1593 6259 16259 0 10000 0 10000 6257 16257.96 1625.796
12/31/83 10000 1493 7752 17752 0 10000 0 10000 7750 17750.46 1775.046
12/31/84 10000 1698 9450 19450 0 10000 0 10000 9448 19448.32 1944.832
12/31/85 10000 1577 11027 21027 0 10000 0 10000 11024 21024.67 2102.467
12/31/86 10000 1452 12479 22479 0 10000 0 10000 12477 22477.97 2247.797
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/76 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/76 10000 610 610 10610 0 10000 0 10000 610 10610.50 1061.050
12/31/77 10000 650 1260 11260 0 10000 0 10000 1260 11260.49 1126.049
12/31/78 10000 723 1983 11983 0 10000 0 10000 1983 11983.30 1198.330
12/31/79 10000 892 2875 12875 0 10000 0 10000 2873 12873.47 1287.347
12/31/80 10000 1148 4023 14023 0 10000 0 10000 4020 14020.93 1402.093
12/31/81 10000 1540 5563 15563 0 10000 0 10000 5561 15561.20 1556.120
12/31/82 10000 1690 7253 17253 0 10000 0 10000 7250 17250.52 1725.052
12/31/83 10000 1583 8836 18836 0 10000 0 10000 8834 18834.13 1883.413
12/31/84 10000 1801 10637 20637 0 10000 0 10000 10635 20635.64 2063.564
12/31/85 10000 1672 12309 22309 0 10000 0 10000 12308 22308.23 2230.823
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE FIXED INCOME ACCOUNT
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/01/75 10000.00 10.00 0.00 % 1000.000 10.000 10000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/75 10000 304 304 10304 0 10000 0 10000 303 10303.77 1030.377
12/31/76 10000 629 933 10933 0 10000 0 10000 932 10932.81 1093.281
12/31/77 10000 670 1603 11603 0 10000 0 10000 1602 11602.54 1160.254
12/31/78 10000 746 2349 12349 0 10000 0 10000 2347 12347.31 1234.731
12/31/79 10000 917 3266 13266 0 10000 0 10000 3264 13264.52 1326.452
12/31/80 10000 1182 4448 14448 0 10000 0 10000 4446 14446.83 1444.683
12/31/81 10000 1586 6034 16034 0 10000 0 10000 6033 16033.91 1603.391
12/31/82 10000 1740 7774 17774 0 10000 0 10000 7774 17774.55 1777.455
12/31/83 10000 1631 9405 19405 0 10000 0 10000 9406 19406.28 1940.628
12/31/84 10000 1856 11261 21261 0 10000 0 10000 11262 21262.52 2126.252
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/90 2000.00 12.11 5.75 % 165.153 11.410 1884
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 2000 107 107 2107 46 1705 46 1751 104 1855 180
12/31/91 4000 230 337 4337 49 4191 105 4296 367 4663 387
12/31/92 6000 334 671 6671 151 6192 261 6453 715 7168 584
12/31/93 8000 450 1121 9121 351 8267 622 8889 1184 10073 801
12/31/94 10000 543 1664 11664 49 9691 642 10333 1665 11998 1000
TOTAL $ 646
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 2000.00 10.67 5.75 % 187.441 10.060 1886
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 2000 127 127 2127 94 2184 110 2294 141 2435 209
12/31/86 4000 260 388 4388 804 3782 890 4672 377 5049 466
12/31/87 6000 440 828 6828 320 5301 1158 6459 753 7212 712
12/31/88 8000 569 1397 9397 300 7420 1497 8917 1351 10268 982
12/31/89 10000 796 2193 12193 701 10151 2340 12491 2279 14770 1294
12/31/90 12000 945 3138 15138 408 10884 2522 13406 2985 16391 1588
12/31/91 14000 1123 4261 18261 238 14910 3197 18107 4682 22789 1891
12/31/92 16000 1259 5520 21520 570 17114 3840 20954 6058 27012 2200
12/31/93 18000 1438 6957 24957 1122 19448 5063 24511 7644 32155 2558
12/31/94 20000 1544 8502 28502 138 20366 4969 25335 8819 34154 2846
TOTAL $ 4695
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
7/25/75 10000.00 7.27 5.75 % 1375.516 6.850 9422
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/75 10000 305 305 10305 0 9629 0 9629 319 9948.29 1421.184
12/31/76 10000 594 899 10899 0 11513 0 11513 1019 12532.65 1497.330
12/31/77 10000 656 1555 11555 0 10990 0 10990 1630 12620.35 1579.518
12/31/78 10000 709 2264 12264 0 11059 0 11059 2344 13403.87 1667.148
12/31/79 10000 801 3065 13065 0 11252 0 11252 3174 14426.53 1763.635
12/31/80 10000 1050 4115 14115 0 12008 0 12008 4489 16497.74 1889.776
12/31/81 10000 1303 5418 15418 0 11609 0 11609 5614 17223.71 2040.724
12/31/82 10000 1474 6892 16892 0 13865 0 13865 8415 22280.13 2210.330
12/31/83 10000 1724 8616 18616 0 15007 0 15007 10861 25868.57 2371.088
12/31/84 10000 1852 10468 20468 2324 13838 2484 16322 11969 28291.10 2812.237
12/31/85 10000 1912 12380 22380 1406 16025 4520 20545 15982 36527.34 3135.394
12/31/86 10000 2202 14582 24582 6796 14897 10863 25760 16930 42690.31 3941.857
12/31/87 10000 2710 17292 27292 1969 13934 12167 26101 18304 44405.94 4383.607
12/31/88 10000 2780 20072 30072 1464 14388 14035 28423 21699 50122.71 4791.846
12/31/89 10000 3284 23356 33356 2892 15695 18227 33922 26992 60914.93 5338.732
12/31/90 10000 3457 26813 36813 1492 14195 17968 32163 27795 59958.87 5809.968
12/31/91 10000 3684 30497 40497 782 16575 21807 38382 36382 74764.77 6204.545
12/31/92 10000 3816 34313 44313 1726 16891 23986 40877 40975 81852.84 6665.541
12/31/93 10000 4072 38385 48385 3177 17290 27761 45051 46029 91080.16 7245.836
12/31/94 10000 4131 42516 52516 370 16506 26866 43372 48014 91386.46 7615.538
TOTAL $ 24398
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/76 10000.00 7.43 5.75 % 1345.895 7.000 9421
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/76 10000 563 563 10563 0 11265 0 11265 603 11868.71 1418.006
12/31/77 10000 622 1185 11185 0 10754 0 10754 1197 11951.77 1495.841
12/31/78 10000 672 1857 11857 0 10821 0 10821 1872 12693.79 1578.829
12/31/79 10000 758 2615 12615 0 11009 0 11009 2653 13662.29 1670.206
12/31/80 10000 995 3610 13610 0 11750 0 11750 3873 15623.77 1789.664
12/31/81 10000 1234 4844 14844 0 11359 0 11359 4952 16311.27 1932.615
12/31/82 10000 1397 6241 16241 0 13567 0 13567 7532 21099.83 2093.237
12/31/83 10000 1633 7874 17874 0 14684 0 14684 9814 24498.19 2245.480
12/31/84 10000 1753 9627 19627 2201 13540 2353 15893 10899 26792.37 2663.257
12/31/85 10000 1809 11436 21436 1332 15680 4280 19960 14632 34592.29 2969.295
12/31/86 10000 2085 13521 23521 6436 14576 10287 24863 15565 40428.80 3733.038
12/31/87 10000 2565 16086 26086 1865 13634 11523 25157 16896 42053.57 4151.389
12/31/88 10000 2633 18719 28719 1387 14078 13292 27370 20097 47467.51 4538.003
12/31/89 10000 3110 21829 31829 2739 15357 17262 32619 25069 57688.02 5055.918
12/31/90 10000 3274 25103 35103 1413 13890 17017 30907 25875 56782.60 5502.190
12/31/91 10000 3487 28590 38590 741 16218 20652 36870 33934 70804.15 5875.863
12/31/92 10000 3613 32203 42203 1635 16528 22715 39243 38273 77516.74 6312.438
12/31/93 10000 3856 36059 46059 3009 16918 26290 43208 43047 86255.24 6861.992
12/31/94 10000 3914 39973 49973 351 16151 25443 41594 44951 86545.28 7212.107
TOTAL $ 23109
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/77 10000.00 8.88 5.75 % 1126.126 8.370 9426
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/77 10000 493 493 10493 0 8998 0 8998 493 9491.65 1187.941
12/31/78 10000 534 1027 11027 0 9054 0 9054 1026 10080.93 1253.847
12/31/79 10000 601 1628 11628 0 9212 0 9212 1638 10850.06 1326.413
12/31/80 10000 790 2418 12418 0 9831 0 9831 2576 12407.79 1421.282
12/31/81 10000 980 3398 13398 0 9505 0 9505 3448 12953.78 1534.808
12/31/82 10000 1109 4507 14507 0 11351 0 11351 5405 16756.67 1662.368
12/31/83 10000 1296 5803 15803 0 12286 0 12286 7169 19455.52 1783.274
12/31/84 10000 1393 7196 17196 1748 11329 1868 13197 8080 21277.46 2115.056
12/31/85 10000 1437 8633 18633 1058 13119 3399 16518 10953 27471.85 2358.099
12/31/86 10000 1655 10288 20288 5112 12196 8170 20366 11741 32107.00 2964.635
12/31/87 10000 2037 12325 22325 1481 11408 9151 20559 12838 33397.32 3296.873
12/31/88 10000 2091 14416 24416 1101 11779 10556 22335 15361 37696.87 3603.907
12/31/89 10000 2470 16886 26886 2175 12849 13709 26558 19255 45813.60 4015.215
12/31/90 10000 2599 19485 29485 1122 11622 13514 25136 19958 45094.56 4369.628
12/31/91 10000 2769 22254 32254 588 13570 16401 29971 26258 56229.95 4666.386
12/31/92 10000 2869 25123 35123 1298 13829 18040 31869 29691 61560.81 5013.095
12/31/93 10000 3062 28185 38185 2390 14155 20879 35034 33466 68500.60 5449.531
12/31/94 10000 3109 31294 41294 278 13514 20206 33720 35010 68730.92 5727.577
TOTAL $ 18351
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/78 10000.00 8.48 5.75 % 1179.245 7.990 9422
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/78 10000 529 529 10529 0 9481 0 9481 526 10007.14 1244.669
12/31/79 10000 597 1126 11126 0 9646 0 9646 1124 10770.66 1316.706
12/31/80 10000 783 1909 11909 0 10295 0 10295 2022 12317.00 1410.882
12/31/81 10000 972 2881 12881 0 9953 0 9953 2905 12858.99 1523.577
12/31/82 10000 1100 3981 13981 0 11887 0 11887 4747 16634.06 1650.204
12/31/83 10000 1287 5268 15268 0 12866 0 12866 6447 19313.15 1770.225
12/31/84 10000 1383 6651 16651 1735 11863 1855 13718 7403 21121.78 2099.581
12/31/85 10000 1427 8078 18078 1050 13738 3374 17112 10158 27270.84 2340.845
12/31/86 10000 1644 9722 19722 5074 12771 8110 20881 10991 31872.06 2942.942
12/31/87 10000 2023 11745 21745 1470 11946 9084 21030 12122 33152.93 3272.747
12/31/88 10000 2075 13820 23820 1093 12335 10478 22813 14608 37421.01 3577.534
12/31/89 10000 2451 16271 26271 2159 13455 13608 27063 18415 45478.35 3985.833
12/31/90 10000 2582 18853 28853 1114 12170 13415 25585 19179 44764.58 4337.653
12/31/91 10000 2751 21604 31604 584 14210 16281 30491 25327 55818.49 4632.240
12/31/92 10000 2849 24453 34453 1289 14481 17908 32389 28721 61110.35 4976.413
12/31/93 10000 3041 27494 37494 2372 14823 20726 35549 32450 67999.36 5409.655
12/31/94 10000 3085 30579 40579 276 14151 20058 34209 34019 68228.00 5685.667
TOTAL $ 18216
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/79 10000.00 8.53 5.75 % 1172.333 8.040 9426
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/79 10000 563 563 10563 0 9590 0 9590 554 10144.69 1240.182
12/31/80 10000 738 1301 11301 0 10234 0 10234 1367 11601.15 1328.883
12/31/81 10000 916 2217 12217 0 9894 0 9894 2217 12111.65 1435.030
12/31/82 10000 1037 3254 13254 0 11817 0 11817 3850 15667.30 1554.296
12/31/83 10000 1212 4466 14466 0 12790 0 12790 5400 18190.68 1667.340
12/31/84 10000 1301 5767 15767 1634 11794 1747 13541 6353 19894.17 1977.552
12/31/85 10000 1344 7111 17111 989 13658 3178 16836 8849 25685.87 2204.796
12/31/86 10000 1549 8660 18660 4779 12696 7639 20335 9684 30019.68 2771.900
12/31/87 10000 1905 10565 20565 1385 11876 8556 20432 10794 31226.09 3082.536
12/31/88 10000 1954 12519 22519 1030 12263 9869 22132 13114 35246.08 3369.606
12/31/89 10000 2308 14827 24827 2034 13376 12817 26193 16642 42835.14 3754.175
12/31/90 10000 2431 17258 27258 1049 12098 12635 24733 17429 42162.83 4085.546
12/31/91 10000 2590 19848 29848 550 14127 15335 29462 23112 52574.28 4363.011
12/31/92 10000 2682 22530 32530 1214 14396 16867 31263 26295 57558.58 4687.181
12/31/93 10000 2864 25394 35394 2234 14736 19521 34257 29790 64047.20 5095.243
12/31/94 10000 2905 28299 38299 260 14068 18892 32960 31302 64262.56 5355.213
TOTAL $ 17158
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/80 10000.00 8.68 5.75 % 1152.074 8.180 9424
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/80 10000 685 685 10685 0 10058 0 10058 718 10776.98 1234.476
12/31/81 10000 851 1536 11536 0 9724 0 9724 1527 11251.20 1333.081
12/31/82 10000 962 2498 12498 0 11613 0 11613 2941 14554.26 1443.875
12/31/83 10000 1126 3624 13624 0 12569 0 12569 4329 16898.39 1548.890
12/31/84 10000 1210 4834 14834 1518 11590 1623 13213 5267 18480.87 1837.065
12/31/85 10000 1248 6082 16082 919 13422 2953 16375 7486 23861.10 2048.163
12/31/86 10000 1438 7520 17520 4440 12477 7096 19573 8314 27887.01 2574.978
12/31/87 10000 1770 9290 19290 1286 11671 7948 19619 9388 29007.72 2863.546
12/31/88 10000 1816 11106 21106 957 12051 9168 21219 11523 32742.15 3130.225
12/31/89 10000 2146 13252 23252 1889 13145 11907 25052 14740 39792.07 3487.473
12/31/90 10000 2258 15510 25510 975 11889 11738 23627 15540 39167.53 3795.303
12/31/91 10000 2406 17916 27916 511 13882 14245 28127 20712 48839.34 4053.057
12/31/92 10000 2492 20408 30408 1128 14147 15669 29816 23653 53469.55 4354.198
12/31/93 10000 2660 23068 33068 2076 14482 18134 32616 26881 59497.23 4733.272
12/31/94 10000 2700 25768 35768 242 13825 17550 31375 28322 59697.31 4974.776
TOTAL $ 15941
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/81 10000.00 9.26 5.75 % 1079.914 8.730 9428
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/81 10000 745 745 10745 0 9114 0 9114 728 9842.51 1166.174
12/31/82 10000 843 1588 11588 0 10886 0 10886 1846 12732.00 1263.095
12/31/83 10000 986 2574 12574 0 11782 0 11782 3000 14782.62 1354.961
12/31/84 10000 1059 3633 13633 1328 10864 1420 12284 3882 16166.97 1607.055
12/31/85 10000 1092 4725 14725 804 12581 2583 15164 5709 20873.58 1791.724
12/31/86 10000 1258 5983 15983 3884 11695 6208 17903 6492 24395.43 2252.579
12/31/87 10000 1547 7530 17530 1125 10940 6953 17893 7482 25375.86 2505.021
12/31/88 10000 1589 9119 19119 837 11296 8020 19316 9326 28642.73 2738.311
12/31/89 10000 1877 10996 20996 1653 12322 10416 22738 12071 34809.99 3050.832
12/31/90 10000 1976 12972 22972 853 11145 10268 21413 12850 34263.64 3320.120
12/31/91 10000 2104 15076 25076 447 13013 12462 25475 17249 42724.50 3545.602
12/31/92 10000 2180 17256 27256 987 13261 13707 26968 19807 46775.00 3809.039
12/31/93 10000 2326 19582 29582 1816 13575 15864 29439 22609 52048.00 4140.652
12/31/94 10000 2362 21944 31944 212 12959 15353 28312 23911 52223.00 4351.917
TOTAL $ 13946
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/82 10000.00 8.95 5.75 % 1117.318 8.440 9430
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/82 10000 808 808 10808 0 11263 0 11263 935 12198.61 1210.180
12/31/83 10000 945 1753 11753 0 12190 0 12190 1973 14163.32 1298.196
12/31/84 10000 1014 2767 12767 1272 11240 1360 12600 2889 15489.68 1539.730
12/31/85 10000 1047 3814 13814 770 13017 2475 15492 4507 19999.15 1716.665
12/31/86 10000 1205 5019 15019 3721 12101 5948 18049 5324 23373.47 2158.215
12/31/87 10000 1483 6502 16502 1078 11318 6662 17980 6332 24312.79 2400.078
12/31/88 10000 1522 8024 18024 802 11687 7684 19371 8071 27442.79 2623.594
12/31/89 10000 1798 9822 19822 1583 12749 9980 22729 10622 33351.67 2923.021
12/31/90 10000 1893 11715 21715 817 11531 9838 21369 11459 32828.22 3181.029
12/31/91 10000 2017 13732 23732 428 13464 11940 25404 15530 40934.61 3397.063
12/31/92 10000 2089 15821 25821 945 13721 13133 26854 17961 44815.41 3649.463
12/31/93 10000 2229 18050 28050 1740 14045 15199 29244 20623 49867.48 3967.182
12/31/94 10000 2263 20313 30313 203 13408 14709 28117 21918 50035.18 4169.598
TOTAL $ 13359
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/83 10000.00 10.69 5.75 % 935.454 10.080 9429
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/83 10000 730 730 10730 0 10206 0 10206 742 10948.09 1003.491
12/31/84 10000 783 1513 11513 983 9411 1051 10462 1511 11973.34 1190.193
12/31/85 10000 808 2321 12321 595 10898 1913 12811 2648 15459.08 1326.960
12/31/86 10000 932 3253 13253 2876 10131 4597 14728 3339 18067.37 1668.271
12/31/87 10000 1147 4400 14400 833 9476 5149 14625 4168 18793.46 1855.228
12/31/88 10000 1175 5575 15575 620 9785 5940 15725 5487 21212.90 2028.002
12/31/89 10000 1389 6964 16964 1224 10674 7714 18388 7392 25780.37 2259.454
12/31/90 10000 1463 8427 18427 632 9654 7605 17259 8116 25375.74 2458.890
12/31/91 10000 1560 9987 19987 331 11272 9229 20501 11140 31641.88 2625.882
12/31/92 10000 1615 11602 21602 731 11487 10151 21638 13003 34641.67 2820.983
12/31/93 10000 1723 13325 23325 1345 11759 11749 23508 15038 38546.85 3066.575
12/31/94 10000 1749 15074 25074 157 11225 11370 22595 16081 38676.47 3223.039
TOTAL $ 10327
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/84 10000.00 11.58 5.75 % 863.558 10.910 9421
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/84 10000 675 675 10675 846 8687 905 9592 711 10303.70 1024.225
12/31/85 10000 696 1371 11371 512 10060 1646 11706 1597 13303.36 1141.919
12/31/86 10000 802 2173 12173 2475 9352 3956 13308 2239 15547.95 1435.637
12/31/87 10000 987 3160 13160 717 8748 4431 13179 2993 16172.80 1596.525
12/31/88 10000 1011 4171 14171 533 9033 5112 14145 4109 18254.87 1745.207
12/31/89 10000 1196 5367 15367 1053 9853 6638 16491 5694 22185.44 1944.386
12/31/90 10000 1260 6627 16627 544 8912 6544 15456 6381 21837.25 2116.013
12/31/91 10000 1341 7968 17968 285 10406 7942 18348 8881 27229.61 2259.719
12/31/92 10000 1390 9358 19358 629 10604 8736 19340 10471 29811.12 2427.616
12/31/93 10000 1483 10841 20841 1157 10855 10111 20966 12205 33171.76 2638.963
12/31/94 10000 1505 12346 22346 135 10363 9785 20148 13135 33283.31 2773.609
TOTAL $ 8886
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/85 10000.00 10.67 5.75 % 937.207 10.060 9428
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/85 10000 637 637 10637 469 10918 548 11466 707 12173.10 1044.901
12/31/86 10000 733 1370 11370 2265 10150 2729 12879 1347 14226.97 1313.663
12/31/87 10000 902 2272 12272 656 9494 3221 12715 2083 14798.73 1460.882
12/31/88 10000 926 3198 13198 488 9803 3817 13620 3083 16703.91 1596.932
12/31/89 10000 1095 4293 14293 964 10694 5135 15829 4471 20300.52 1779.187
12/31/90 10000 1152 5445 15445 497 9672 5139 14811 5170 19981.91 1936.232
12/31/91 10000 1227 6672 16672 261 11293 6276 17569 7347 24916.11 2067.727
12/31/92 10000 1270 7942 17942 575 11509 6983 18492 8786 27278.29 2221.359
12/31/93 10000 1356 9298 19298 1059 11781 8217 19998 10355 30353.37 2414.747
12/31/94 10000 1376 10674 20674 123 11246 7966 19212 11243 30455.42 2537.952
TOTAL $ 7357
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/86 10000.00 12.36 5.75 % 809.061 11.650 9426
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 10000 567 567 10567 1754 8762 1719 10481 534 11015.88 1017.163
12/31/87 10000 699 1266 11266 508 8196 2126 10322 1136 11458.59 1131.154
12/31/88 10000 718 1984 11984 378 8463 2574 11037 1896 12933.74 1236.495
12/31/89 10000 847 2831 12831 746 9231 3561 12792 2926 15718.58 1377.614
12/31/90 10000 892 3723 13723 385 8350 3603 11953 3518 15471.87 1499.212
12/31/91 10000 950 4673 14673 202 9749 4421 14170 5122 19292.41 1601.030
12/31/92 10000 984 5657 15657 445 9935 4960 14895 6226 21121.40 1719.984
12/31/93 10000 1050 6707 16707 820 10170 5905 16075 7427 23502.44 1869.725
12/31/94 10000 1066 7773 17773 96 9709 5731 15440 8141 23581.46 1965.122
TOTAL $ 5334
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/87 10000.00 11.49 5.75 % 870.322 10.830 9426
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/87 10000 598 598 10598 435 8816 443 9259 545 9804.39 967.857
12/31/88 10000 613 1211 11211 323 9104 782 9886 1180 11066.60 1057.992
12/31/89 10000 725 1936 11936 639 9930 1498 11428 2021 13449.42 1178.740
12/31/90 10000 764 2700 12700 330 8982 1682 10664 2574 13238.32 1282.783
12/31/91 10000 812 3512 13512 173 10487 2146 12633 3874 16507.32 1369.902
12/31/92 10000 842 4354 14354 381 10688 2576 13264 4808 18072.32 1471.687
12/31/93 10000 899 5253 15253 702 10940 3346 14286 5823 20109.61 1599.810
12/31/94 10000 912 6165 16165 82 10444 3274 13718 6459 20177.24 1681.437
TOTAL $ 3065
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/88 10000.00 10.75 5.75 % 930.233 10.130 9423
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/88 10000 591 591 10591 311 9730 312 10042 594 10636.40 1016.864
12/31/89 10000 698 1289 11289 614 10614 960 11574 1352 12926.59 1132.918
12/31/90 10000 734 2023 12023 317 9600 1183 10783 1940 12723.71 1232.918
12/31/91 10000 782 2805 12805 166 11209 1556 12765 3100 15865.66 1316.652
12/31/92 10000 811 3616 13616 366 11423 1960 13383 3986 17369.80 1414.479
12/31/93 10000 864 4480 14480 674 11693 2687 14380 4947 19327.92 1537.623
12/31/94 10000 877 5357 15357 79 11163 2643 13806 5586 19392.91 1616.076
TOTAL $ 2527
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/89 10000.00 11.10 5.75 % 900.901 10.460 9423
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/89 10000 617 617 10617 544 10279 549 10828 624 11452.46 1003.721
12/31/90 10000 651 1268 11268 281 9297 775 10072 1200 11272.71 1092.317
12/31/91 10000 693 1961 11961 147 10856 1060 11916 2140 14056.34 1166.501
12/31/92 10000 718 2679 12679 325 11063 1412 12475 2913 15388.98 1253.174
12/31/93 10000 766 3445 13445 597 11324 2048 13372 3751 17123.80 1362.275
12/31/94 10000 777 4222 14222 70 10811 2024 12835 4346 17181.37 1431.781
TOTAL $ 1964
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/90 10000.00 12.11 5.75 % 825.764 11.410 9422
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 10000 535 535 10535 231 8522 229 8751 523 9274.09 898.652
12/31/91 10000 570 1105 11105 121 9950 396 10346 1218 11564.18 959.683
12/31/92 10000 591 1696 11696 267 10140 676 10816 1844 12660.52 1030.987
12/31/93 10000 630 2326 12326 491 10380 1188 11568 2519 14087.75 1120.744
12/31/94 10000 640 2966 12966 57 9909 1190 11099 3036 14135.12 1177.927
TOTAL $ 1167
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/91 10000.00 10.95 5.75 % 913.242 10.320 9425
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/91 10000 579 579 10579 123 11005 130 11135 616 11751.94 975.265
12/31/92 10000 599 1178 11178 271 11215 409 11624 1242 12866.08 1047.726
12/31/93 10000 640 1818 11818 499 11479 923 12402 1914 14316.46 1138.939
12/31/94 10000 648 2466 12466 58 10959 939 11898 2466 14364.59 1197.049
TOTAL $ 951
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/92 10000.00 12.79 5.75 % 781.861 12.050 9421
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/92 10000 481 481 10481 218 9601 222 9823 491 10314.62 839.953
12/31/93 10000 514 995 10995 400 9828 632 10460 1017 11477.40 913.079
12/31/94 10000 520 1515 11515 47 9382 649 10031 1485 11516.00 959.667
TOTAL $ 665
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/93 10000.00 13.03 5.75 % 767.460 12.280 9424
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/93 10000 469 469 10469 366 9647 369 10016 470 10486.82 834.274
12/31/94 10000 476 945 10945 43 9210 395 9605 917 10522.08 876.840
TOTAL $ 409
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/94 10000.00 13.34 5.75 % 749.625 12.570 9423
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 10000 428 428 10428 38 8996 38 9034 420 9454.46 787.872
TOTAL $ 38
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 2,018,582
<INVESTMENTS-AT-VALUE> 2,057,194
<RECEIVABLES> 42,162
<ASSETS-OTHER> 100
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,099,456
<PAYABLE-FOR-SECURITIES> 13,634
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,936
<TOTAL-LIABILITIES> 17,570
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,864,101
<SHARES-COMMON-STOCK> 173,543
<SHARES-COMMON-PRIOR> 135,972
<ACCUMULATED-NII-CURRENT> 5,690
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 60
<ACCUM-APPREC-OR-DEPREC> 38,612
<NET-ASSETS> 2,081,886
<DIVIDEND-INCOME> 38,531
<INTEREST-INCOME> 62,774
<OTHER-INCOME> 0
<EXPENSES-NET> 12,647
<NET-INVESTMENT-INCOME> 88,658
<REALIZED-GAINS-CURRENT> 4,768
<APPREC-INCREASE-CURRENT> (86,455)
<NET-CHANGE-FROM-OPS> 6,971
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 86,005
<DISTRIBUTIONS-OF-GAINS> 7,886
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 54,791
<NUMBER-OF-SHARES-REDEEMED> 24,180
<SHARES-REINVESTED> 6,960
<NET-CHANGE-IN-ASSETS> 372,381
<ACCUMULATED-NII-PRIOR> 3,037
<ACCUMULATED-GAINS-PRIOR> 3,058
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,234
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,647
<AVERAGE-NET-ASSETS> 1,863,276
<PER-SHARE-NAV-BEGIN> 12.57
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> (.53)
<PER-SHARE-DIVIDEND> .56
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.00
<EXPENSE-RATIO> .007
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
