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. 82 (X)
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 21 (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 LLP
345 California Street, 30th Floor
San Francisco, California 94104
The Registrant has filed a declaration
pursuant to Rule 24f-2. On
February 22, 1996, it filed its 24f-2
Notice for fiscal 1995.
Approximate date of proposed public offering:
[X] It is proposed that this filing will
become effective on March 1, 1996
pursuant to paragraph (b) of Rule 485.
<PAGE>
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, 1996
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, 1996, 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 OR
GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, 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.
11-010-0396
<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>
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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 with a
maximum sales charge.
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....................................................... 0.32%
12b-1 expenses........................................................ 0.24%/3/
Other expenses (including audit, legal, shareholder services, transfer
agent and custodian expenses)........................................ 0.11%
Total fund operating expenses......................................... 0.67%
</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 $136
</TABLE>
/1/ Sales charges are reduced for certain large purchases. (See "The American
Funds Shareholder Guide: Purchasing Shares--Sales Charges.")
/2/ Any employer-sponsored 403(b) plan or 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 made 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 five years ended De-
HIGHLIGHTS cember 31, 1995 has been audited by Deloitte & Touche
(For a share llp, independent accountants, whose unqualified report
outstanding covering each of the most recent five years is included
throughout the in the statement of additional information, and for the
fiscal year) five years ended December 31, 1990 by KPMG Peat
Marwick, independent accountants. This information
should be read in conjunction with the financial state-
ments and accompanying notes which are included in the
statement of additional information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Year........... $12.00 $12.57 $12.28 $12.05 $10.32 $11.41 $10.46 $10.13 $10.83 $11.65
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. .57 .57 .59 .61 .62 .63 .66 .59 .59 .67
Net realized and
unrealized gain
(loss) on
investments........... 2.61 (.53) .76 .49 1.86 (.82) 1.54 .68 (.14) 1.17
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from in-
vestment operations. 3.18 .04 1.35 1.10 2.48 (.19) 2.20 1.27 .45 1.84
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net
investment income..... (.56) (.56) (.60) (.60) (.62) (.63) (.67) (.62) (.67) (.64)
Distributions from net
realized gains........ (.47) (.05) (.46) (.27) (.13) (.27) (.58) (.32) (.48) (2.02)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.. (1.03) (.61) (1.06) (.87) (.75) (.90) (1.25) (.94) (1.15) (2.66)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $14.15 $12.00 $12.57 $12.28 $12.05 $10.32 $11.41 $10.46 $10.13 $10.83
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/1/......... 27.13% .34% 11.27% 9.48% 24.69% (1.57)% 21.53% 12.87% 4.02% 16.87%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, end of
year (in millions).... $3,048 $2,082 $1,710 $1,067 $ 642 $ 370 $ 275 $ 218 $ 193 $ 167
Ratio of expenses to
average net assets.... .67% .68% .71% .74% .82% .84% .78% .76% .68% .67%
Ratio of net income to
average net assets.... 4.38% 4.76% 4.74% 5.19% 5.56% 5.95% 5.80% 5.54% 5.17% 5.71%
Portfolio turnover
rate.................. 39.03% 32.05% 27.81% 17.00% 24.65% 25.51% 37.31% 41.90% 42.00% 59.17%
</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 fund aims to the complete investment program of the prudent invest-
provide you with or.
conservation of
capital, current The fund invests in a broadly diversified portfolio of
income and long- securities, including common stocks, preferred stocks,
term growth of corporate bonds and U.S. Government securities. Assets
both capital and may also be held in cash or cash equivalents. (See the
income. statement of additional information for a description
of cash equivalents.) Additionally, the fund will in-
vest 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. 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 unrated but
determined to be of equivalent quality by the fund's
investment adviser, Capital Research and Management
Company. Securities rated Baa or BBB may have specula-
tive characteristics and changes in economic conditions
may lead to a weaker capacity to make principal
4
<PAGE>
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and interest payments than is the case with higher
rated securities. The fund will maintain at least 25%
of the value of its total assets in fixed-income secu-
rities.
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
Investing in short or even extended periods.
stocks and bonds
involves certain The fund also invests in fixed-income securities, in-
risks. cluding bonds, which have market values which tend to
vary inversely with the level of interest rates--when
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
5
<PAGE>
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rate are fixed at the time of the transaction but the
settlement is delayed). The fund as purchaser assumes
the risk of any decline in value of the security begin-
ning on the date of the agreement or purchase. As the
fund's aggregate commitments under these transactions
increase, the opportunity for leverage similarly in-
creases.
The fund also may enter into "roll" transactions, which
consist of the sale of 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.
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.
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.
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 mar-
ket) and which are domiciled outside the U.S. Non-U.S.
companies may not be subject to uniform accounting, au-
diting and financial reporting standards and practices
or regulatory requirements comparable to those applica-
ble to U.S. companies. There may also be less public
information available about non-U.S. companies. Addi-
tionally, 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; limi-
tations on the removal of funds or other assets; polit-
ical or social instability; the diverse structure and
liquidity of the various securities markets; and na-
tionalization policies of governments around the world.
However, investing outside the U.S. can also reduce
certain risks due to greater diversification opportuni-
ties. The fund currently intends to limit these invest-
ments to those that are U.S. dollar denominated.
6
<PAGE>
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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 their 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
YEARS OF EXPERIENCE AS INVESTMENT PROFESSIONAL
PORTFOLIO COUNSELOR (APPROXIMATE)
(AND RESEARCH WITH CAPITAL
PROFESSIONAL, RESEARCH AND
PORTFOLIO COUNSELORS PRIMARY TITLE(S) IF APPLICABLE) FOR MANAGEMENT
FOR AMERICAN BALANCED COMPANY OR
AMERICAN BALANCED FUND, INC. ITS
FUND, INC. (APPROXIMATE) AFFILIATES TOTAL YEARS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Abner D. Goldstine Senior Vice President 21 years 29 years 44 years
of the fund. Senior
Vice President and
Director, Capital
Research and
Management Company
- -------------------------------------------------------------------------------------------------------------
George A. Miller Director of the fund. 30 years* 21 years 35 years
Senior Vice President
and Director, Capital
Research and Manage-
ment Company
- -------------------------------------------------------------------------------------------------------------
Robert G. O'Donnell President of the fund. 10 years (in addition to 14 years 21 years 24 years
Senior Vice President as a research professional prior
and Director, Capital to becoming a portfolio
Research and Manage- counselor for the fund)**
ment Company
- -------------------------------------------------------------------------------------------------------------
Eric S. Richter Vice President of the 1 year 4 years 11 years
fund. Vice President,
Investment 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 PREVIOUS INVESTMENT
ADVISER.
** PRIOR TO JULY 26, 1975, MR. O'DONNELL WAS A RESEARCH PROFESSIONAL WITH
AMERICAN EXPRESS INVESTMENT MANAGEMENT COMPANY, THE FUND'S PREVIOUS
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, total return and/or distribution rate basis for
return of +12.75% various periods, with or without sales charges. Results
a year (assuming calculated without a sales charge will be higher. Total
the maximum sales returns assume the reinvestment of all dividends and
charge was paid) capital gain distributions.
under Capital
Research and The fund's yield and the average annual total returns
Management are calculated in accordance with Securities and Ex-
Company's change Commission requirements which provide that the
management maximum sales charge be reflected. The fund's distribu-
(July 26, 1975 tion rate is calculated by dividing the dividends paid
through December by the fund over the last 12 months by the sum of the
31, 1995). month-end price and the capital gains paid over the
last 12 months. For the 30-day period ended December
31, 1995, the fund's SEC yield was 3.60% and the dis-
tribution rate was 3.62% at the maximum offering price.
The SEC yield reflects income earned by the fund, while
the distribution rate reflects dividends paid by the
fund. The fund's total return over the past 12 months
and average annual total returns over the past five-
and 10-year periods, as of December 31, 1995, were
+19.84%, +12.80% and +11.60%, respectively. Of course,
past results are not an indication of future results.
Further information regarding the fund's investment re-
sults is contained in the fund's annual report which
may be obtained without charge by writing to the Secre-
tary 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, 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 during 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
8
<PAGE>
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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.
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
The fund is a required by applicable state and federal law. Members
member of The of the board who are not employed by Capital Research
American Funds and Management Company or its affiliates are paid cer-
Group, which is tain fees for services rendered to the fund as de-
managed by one of scribed in the statement of additional information.
the largest and They may elect to defer all or a portion of these fees
most experienced through a deferred compensation plan in effect for the
investment fund. Shareholders have one vote per share owned and,
advisers. at the request of the holders of at least 10% of the
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 aver-
age net assets, 0.324% of such assets over $500 million
to $1 billion, 0.30% of such assets over $1 billion to
$1.5 billion, 0.282% of such assets over $1.5 billion
to $2.5 billion, 0.27% of such assets over $2.5 billion
to $4 billion, and 0.264% of such assets over $4 bil-
lion.
9
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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 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 "The
American Funds Shareholder Guide: 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 $1,928,000 for
the fiscal year ended December 31, 1995. 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 ADDRESS AREAS SERVED
AREA
--------------------------------------------------------------
WEST P.O. Box 2205 AK, AZ, CA, HI, ID,
Brea, CA 92622-2205 MT, NV, OR, UT, WA and
Fax: 714/671-7080 outside the U.S.
--------------------------------------------------------------
CENTRAL- P.O. Box 659522 AR, CO, IA, KS, LA,
WEST San Antonio, TX 78265-9522 MN, MO, ND, NE, NM,
Fax: 210/530-4050 OK, SD, TX and WY
--------------------------------------------------------------
CENTRAL- P.O. Box 6007 AL, IL, IN, KY, MI,
EAST Indianapolis, IN 46206-6007 MS, OH, TN and WI
Fax: 317/735-6620
--------------------------------------------------------------
EAST P.O. Box 2280 CT, DE, FL, GA, MA,
Norfolk, VA 23501-2280 MD, ME, NC, NH, NJ,
Fax: 804/670-4773 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 OF AMERICA]
--------------------------------------------------------------
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 By See "Investment $50 minimum (except
dealer can help contacting Minimums and Fund where a lower
you establish your your Numbers" for minimum is noted
account--and help investment initial under "Investment
you add to it dealer investment Minimums and Fund
whenever you like. minimums. Numbers").
Visit any Mail directly to
investment dealer your investment
who is registered dealer's address
in the state printed on your
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 offering price
next determined 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 using 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 AVAIL-
ABLE 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 In-
vestors Fund(SM)..... 250 01
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
BOND FUNDS
American High-Income Mu-
nicipal 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 Securi-
ties 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). Mini-
mums are reduced to $50 for purchases through "Auto-
matic 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 in-
vestments (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 employer-
sponsored 403(b) plan or 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, during
calendar year 1996, provide additional compensation to
dealers. Currently these payments are limited to the
top one hundred dealers who have sold shares of the
fund or other funds in The American Funds Group. These
payments will be based on a pro rata share of a
qualifying dealer's sales. American Funds Distributors
will, on an annual basis, determine the advisability of
continuing these payments.
Any employer-sponsored 403(b) plan or 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 made within twelve months 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
14
<PAGE>
- -------------------------------------------------------------------------------
compensate them for 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.
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 registered representatives,
retired registered representatives with respect to
accounts established while active, or full-time
employees (and their spouses, parents, and children) of
dealers who have sales agreements with American Funds
Distributors (or who clear transactions through such
dealers) and plans for such persons or the dealers; (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
15
<PAGE>
- -------------------------------------------------------------------------------
other accounts and may not be aggregated with other
nominee or street name accounts unless otherwise
qualified as described above.
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 and
the statement of additional information under "Purchase
of Shares--Statement of Intention.")
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.
16
<PAGE>
- -------------------------------------------------------------------------------
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 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, faxing
(see "Transfer Agent" above for the appropriate fax
numbers) or telegraphing American Funds Service Compa-
ny. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for
which Capital Guardian Trust Company serves as trustee
may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simul-
taneously 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. Purchases through automatic investment plans
will be confirmed at least quarterly.
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 use this option, provided the
You may have account is registered in the name of
a redemption an individual(s), a UGMA/UTMA
check sent to custodian, or a non-retirement plan
you by using trust. These redemptions may not
American exceed $10,000 per day, per fund
FundsLine(R) account and the check must be made
or by payable to the shareholder(s) of
telephoning, 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 or fax number.
(subject to
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)), 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 made
within twelve months of purchase on investments of $1
million or more and on any investment made with no
initial sales charge by any employer-sponsored 403(b)
plan or 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 redemptions resulting from participant-
directed switches among investment options within a
participant-directed employer-sponsored retirement
plan; 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 a sales charge (any contingent deferred sales
charge paid will be credited to your
19
<PAGE>
- -------------------------------------------------------------------------------
account) in any fund in The American Funds Group. Send
a written 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.)
You may invest in the funds through various retirement
RETIREMENT plans including the following plans for which Capital
PLANS 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
March 1, 1996
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
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, 1996, 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 OR
GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, 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 11-010-0396
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY OF EXPENSES
Average annual expenses
paid over a 10-year
period would be
approximately $8 per
year, assuming a $1,000
investment and a 5%
annual return with no
sales charge.
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)
Management fees....................................................... 0.32%
12b-1 expenses........................................................ 0.24%/2/
Other expenses (including audit, legal, shareholder services,
transfer agent and custodian expenses)............................... 0.11%
Total fund operating expenses......................................... 0.67%
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following cumulative
expenses on a $1,000 investment,
assuming a 5% annual return./3/ $7 $21 $37 $83
</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 employer-sponsored 403(b) plan or 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 made 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.
TABLE OF CONTENTS
Summary of Expenses.................. 2
Financial Highlights................. 3
Investment Objectives and Policies... 3
Certain Securities and
Investment Techniques............... 4
Investment Results................... 6
Dividends, Distributions and Taxes... 7
Fund Organization and Management..... 7
Purchasing Shares.................... 9
Shareholder Services................. 10
Redeeming Shares..................... 11
2
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information for the five years ended
HIGHLIGHTS December 31, 1995 has been audited by Deloitte & Touche
(For a share LLP, independent accountants, whose unqualified report
outstanding covering each of the most recent five years is included
throughout the in the statement of additional information, and for the
fiscal year) five years ended December 31, 1990 by KPMG Peat
Marwick, independent accountants. This information
should be read in conjunction with the financial state-
ments and accompanying notes which are included in the
statement of additional information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Year........... $12.00 $12.57 $12.28 $12.05 $10.32 $11.41 $10.46 $10.13 $10.83 $11.65
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. .57 .57 .59 .61 .62 .63 .66 .59 .59 .67
Net realized and
unrealized gain (loss)
on investments........ 2.61 (.53) .76 .49 1.86 (.82) 1.54 .68 (.14) 1.17
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from in-
vestment operations. 3.18 .04 1.35 1.10 2.48 (.19) 2.20 1.27 .45 1.84
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net
investment income..... (.56) (.56) (.60) (.60) (.62) (.63) (.67) (.62) (.67) (.64)
Distributions from net
realized gains........ (.47) (.05) (.46) (.27) (.13) (.27) (.58) (.32) (.48) (2.02)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.. (1.03) (.61) (1.06) (.87) (.75) (.90) (1.25) (.94) (1.15) (2.66)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $14.15 $12.00 $12.57 $12.28 $12.05 $10.32 $11.41 $10.46 $10.13 $10.83
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/1/......... 27.13% .34% 11.27% 9.48% 24.69% (1.57)% 21.53% 12.87% 4.02% 16.87%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, end of
year (in millions).... $3,048 $2,082 $1,710 $1,067 $ 642 $ 370 $ 275 $ 218 $ 193 $ 167
Ratio of expenses to
average net assets.... .67% .68% .71% .74% .82% .84% .78% .76% .68% .67%
Ratio of net income to
average net assets.... 4.38% 4.76% 4.74% 5.19% 5.56% 5.95% 5.80% 5.54% 5.17% 5.71%
Portfolio turnover
rate.................. 39.03% 32.05% 27.81% 17.00% 24.65% 25.51% 37.31% 41.90% 42.00% 59.17%
</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 fund aims to the complete investment program of the prudent investor.
provide you with
conservation of The fund invests in a broadly diversified portfolio of
capital, current securities, including common stocks, preferred stocks,
income and long- corporate bonds and U.S. Government securities. Assets
term growth of may also be held in cash or cash equivalents. (See the
both capital and statement of additional information for a description
income. of cash equivalents.) Additionally, 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. 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 unrated but
determined to be of equivalent quality by the fund's
investment adviser, Capital Research and Management
Company. Securities rated Baa or BBB may have
speculative characteristics and changes in economic
conditions may lead to a weaker capacity to make
principal and interest payments than is the case with
higher rated securities. The fund will maintain at
least 25% of the value of its total assets in fixed-
income securities.
3
<PAGE>
- -------------------------------------------------------------------------------
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
Investing in short or even extended periods.
stocks and bonds
involves certain The fund also invests in fixed-income securities, in-
risks. cluding bonds, which have market values which tend to
vary inversely with the level of interest rates--when
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
securities 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
direct 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
delayed). The fund as purchaser assumes the risk of any
decline in value of the security beginning on the date
of the agreement or purchase. As the fund's aggregate
commitments under these transactions increase, the
opportunity for leverage similarly increases.
4
<PAGE>
- -------------------------------------------------------------------------------
The fund also may enter into "roll" transactions, which
consist of the sale of 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.
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.
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.
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 mar-
ket) and which are domiciled outside the U.S. Non-U.S.
companies may not be subject to uniform accounting, au-
diting and financial reporting standards and practices
or regulatory requirements comparable to those applica-
ble to U.S. companies. There may also be less public
information available about non-U.S. companies. Addi-
tionally, 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; limi-
tations on the removal of funds or other assets; polit-
ical or social instability; the diverse structure and
liquidity of the various securities markets; and na-
tionalization policies of governments around the world.
However, investing outside the U.S. can also reduce
certain risks due to greater diversification opportuni-
ties. The fund currently intends to limit these invest-
ments 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 their segment will be
invested (within the limits provided by the fund's
objectives and policies
5
<PAGE>
- --------------------------------------------------------------------------------
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
PORTFOLIO COUNSELOR WITH CAPITAL
PORTFOLIO COUNSELORS (AND RESEARCH PROFESSIONAL, RESEARCH AND
FOR IF APPLICABLE) FOR MANAGEMENT
AMERICAN BALANCED AMERICAN BALANCED FUND, INC. COMPANY OR TOTAL
FUND, INC. PRIMARY TITLE(S) (APPROXIMATE) ITS AFFILIATES YEARS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Abner D. Goldstine Senior Vice President 21 years 29 years 44 years
of the fund. Senior
Vice President and
Director, Capital
Research and
Management Company
- -------------------------------------------------------------------------------------------------------------
George A. Miller Director of the fund. 30 years* 21 years 35 years
Senior Vice President
and Director, Capital
Research and Manage-
ment Company
- -------------------------------------------------------------------------------------------------------------
Robert G. O'Donnell President of the fund. 10 years (in addition to 14 years 21 years 24 years
Senior Vice President as a research professional prior
and Director, Capital to becoming a portfolio
Research and Manage- counselor for the fund)**
ment Company
- -------------------------------------------------------------------------------------------------------------
Eric S. Richter Vice President of the 1 year 4 years 11 years
fund. Vice President,
Investment Management
Group, Capital
Research and
Management Company
- -------------------------------------------------------------------------------------------------------------
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 PREVIOUS INVESTMENT ADVISER.
** PRIOR TO JULY 26, 1975, MR. O'DONNELL WAS A RESEARCH PROFESSIONAL WITH AMERICAN EXPRESS INVESTMENT
MANAGEMENT COMPANY, THE FUND'S PREVIOUS INVESTMENT ADVISER.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
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, total return and/or distribution rate basis for
return (at no various periods, with or without sales charges. Results
sales charge) of calculated without a sales charge will be higher. Total
+13.08% a year returns assume the reinvestment of all dividends and
under Capital capital gain distributions.
Research and
Management The fund's yield and the average annual total returns
Company's are calculated with no sales charge in accordance with
management Securities and Exchange Commission requirements. The
(July 26, 1975 fund's distribution rate is calculated by dividing the
through December dividends paid by the fund over the last 12 months by
31, 1995). the sum of the month-end price and the capital gains
paid over the last 12 months. For the 30-day period
ended December 31, 1995, the fund's SEC yield was 3.82%
and the distribution rate was 3.83% with no sales
charge. The SEC yield reflects income earned by the
fund, while the distribution rate reflects dividends
paid by the fund. The fund's total return over the past
12 months and average annual total returns over the
past five- and ten-year periods, as of December 31,
1995, were +27.13%, +14.14% and +12.27%, respectively.
Of course, past results are not an indication of
6
<PAGE>
- -------------------------------------------------------------------------------
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, 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
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
The fund is a required by applicable state and federal law. Members
member of The of the board who are not employed by Capital Research
American Funds and Management Company or its affiliates are paid cer-
Group, which is tain fees for services rendered to the fund as de-
managed by one of scribed in the statement of additional information.
the largest and They may elect to defer all or a portion of these fees
most experienced through a deferred compensation plan in effect for the
investment fund. Shareholders have one vote per share owned and,
advisers. at the request of the holders of at least 10% of the
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
under 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,
7
<PAGE>
- -------------------------------------------------------------------------------
including those in The American Funds Group. Capital
Research and Management Company is located at 333 South
Hope Street, Los Angeles, CA 90071, and at 135 South
State College Boulevard, Brea, CA 92621. Capital Re-
search 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 average net assets, 0.324% of
such assets over $500 million to $1 billion, 0.30% of
such assets over $1 billion to $1.5 billion, 0.282% of
such assets over $1.5 billion to $2.5 billion, 0.27% of
such assets over $2.5 billion to $4 billion, and 0.264%
of such 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 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.
8
<PAGE>
- -------------------------------------------------------------------------------
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).
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 $1,928,000 for the fiscal year ended De-
cember 31, 1995. 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
employer-sponsored 403(b) plan or 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 made within 12 months 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.)
The minimum initial investment is $250, except that the
money market funds have a minimum of $1,000 for
individual retirement accounts
9
<PAGE>
- -------------------------------------------------------------------------------
(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.
American Funds Distributors, at its expense (from a
designated percentage of its income), will, during
calendar year 1996, provide additional compensation to
dealers. Currently these payments are limited to the
top one hundred dealers who have sold shares of the
fund or other funds in The American Funds Group. These
payments will be based on a pro rata share of a
qualifying dealer's sales. American Funds Distributors
will, on an annual basis, determine the advisability of
continuing these payments.
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--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 next determined 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
10
<PAGE>
- -------------------------------------------------------------------------------
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.
--------------------------------------------------------
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 (i.e., trustees 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 contacting Shares may also be redeemed through
an investment an investment dealer; however, you or
dealer your plan may be charged for this
service. SHARES HELD FOR YOU IN AN
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 made
within twelve months of purchase on investments of $1
million or more and on any investment made with no
initial sales charge by any employer-sponsored 403(b)
plan or 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; for redemptions resulting from participant-
directed
11
<PAGE>
- -------------------------------------------------------------------------------
switches among investment options within a participant-
directed employer-sponsored retirement plan; 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 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.
This prospectus has been printed on
[RECYCLE LOGO] recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
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.
12
<PAGE>
American
Balanced
Fund(R)
March 1, 1996
AMERICAN BALANCED FUND(R)
Profile
Four Embarcadero Center, Suite 1800 March 1, 1996
San Francisco, CA 94111
1. Goal
The fund strives for the accomplishment of three objectives - conservation of
capital, current income, and long-term growth of capital and income by
investing in a broadly diversified portfolio of securities including stocks and
bonds.
2. Investment Strategies
The fund invests in a broadly diversified portfolio of securities, including
common stocks, preferred stocks, corporate bonds and U.S. Government
securities. Assets may also be held in cash or cash equivalents.
3. Risks
Bond and stock prices rise and fall. Bonds are subject to credit risk (the
possibility that the bond issuer will default on its obligation) and market
risk (when interest rates rise, bond prices fall and vice versa). Lower rated
bonds are subject to greater price fluctuations and risk of loss than higher
rated bonds. Stocks are also subject to certain market risks.
You can lose money by investing in the fund; your investment is not guaranteed.
The likelihood of loss is greater if you intend to invest for a shorter period
of time.
4. Appropriateness
If you are not a long-term investor seeking conservation of capital, current
income, and long-term growth of capital and income, this fund may not be
appropriate for you. Please consult your investment dealer.
5. Fees and Expenses
Shareholder transaction expenses are charges you pay when you buy or sell
shares of a fund. Annual fund operating expenses are paid out of the fund's
assets. The fund's expenses are factored into its share price and
distributions and are not charged directly to shareholder accounts.
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
<S> <C>
Maximum sales charge
on purchases
(as a percentage of offering price) 5.75%
</TABLE>
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. The fund has no
sales charge on reinvested dividends, and no deferred sales charge or
redemption or exchange fees. A contingent deferred sales charge of 1% applies
on certain redemptions within 12 months following purchases without a sales
charge.
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C>
Management fees 0.32%
12b-1 expenses 0.24%
Other expenses 0.11%
Total fund operating expenses 0.67%
</TABLE>
Example
You would pay the following cumulative expenses on a $1,000 investment,
assuming a 5% annual return. This example should not be considered a
representation of past or future expenses.
<TABLE>
<CAPTION>
<S> <C>
One year $ 64
Three years 78
Five years 93
Ten years 136
</TABLE>
6. Past Results
Here are the fund's annual total returns for each of the past 10 calendar
years:
[CHART]
<TABLE>
<CAPTION>
<S> <C>
1986 +16.9%
1987 +4.0%
1988 +12.9%
1989 +21.5%
1990 -1.6%
1991 +24.7%
1992 +9.5%
1993 +11.3%
1994 +0.3%
1995 +27.1%
</TABLE>
[END CHART]
Sales charges have not been deducted from results shown above.
The fund's average annual total return* is +12.75% under Capital Research and
Management Company's management (July 26, 1975 through December 31, 1995).
PAST RESULTS ARE NOT A GUARANTEE OF FUTURE RESULTS.
<TABLE>
<CAPTION>
<S> <C>
Average Annual
Total Returns*
One year + 19.84%
Five years + 12.80%
Ten years + 11.60%
30-Day Yield*
3.60%
</TABLE>
* These results were calculated for periods ended December 31, 1995 in
accordance with Securities and Exchange Commission rules which require that the
maximum sales charge be deducted.
7. Investment Adviser
Capital Research and Management Company, one of the world's largest and most
experienced investment advisers, manages the fund, which is a member of The
American Funds Group. Capital Research and Management Company manages this
diversified mutual fund using the multiple portfolio counselor system. Under
this system, the fund's assets are divided into several portions. Each portion
is independently managed by a portfolio counselor or a group of research
professionals, subject to oversight by the investment adviser's investment
committee.
8. Purchases
The fund's shares are sold through investment dealers. Your investment dealer
can help you with your account, or you may call American Funds Service Company
at 800/421-0180 with questions about your account. Generally, the minimum
initial investment is $500.
9. Redemptions
You may redeem shares at no cost at any time through your investment dealer or
by calling American FundsLineR at 800/325-3590. (You will need the fund's
number - 11 - if you use this service.) Transactions will be processed as of
the next close of the New York Stock Exchange.
10. Distributions
Dividends and capital gain distributions are automatically reinvested unless
you notify American Funds Service Company that you would like to invest them in
another of the American Funds or receive payment in cash. Income distributions
are usually made in February, May, August and December. Capital gains, if any,
are usually distributed in December.
11. Other Services
You may exchange your shares for any of the other American Funds or obtain
information about your investment any time by calling American FundsLineR. If
you purchase shares at net asset value through a retirement plan, some or all
of the services or features described may not be available. Contact your
employer for details.
This Profile contains key information about the fund. More details appear in
the fund's accompanying prospectus.
This profile has been printed on recycled
paper that meets the guidelines of the United
States Environmental Protection Agency.
<PAGE>
AMERICAN BALANCED FUND, INC.
Part B
Statement of Additional Information
MARCH 1, 1996
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, 1996. 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
- ----------------------------------------------------
DESCRIPTION OF CERTAIN SECURITIES
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUND OFFICERS AND DIRECTORS
MANAGEMENT
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
PURCHASE OF SHARES
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
EXECUTION OF PORTFOLIO TRANSACTIONS
GENERAL INFORMATION
INVESTMENT RESULTS
FINANCIAL STATEMENTS
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 rated '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 rated '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 that 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.
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 delayed). 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 will identify 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 holdings
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
(because it will have an amount greater than its net assets subject to market
risk). Should market values of the fund's portfolio securities decline while
the fund is in a leveraged position, greater depreciation of its net assets
will 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 necessary to generate
additional cash to meet its obligations thereunder.
The fund also may enter into "roll" transactions, which consist of the sale of
securities together with a commitment (for which the fund typically receives a
fee) to purchase similar, but not identical, securities at a later date. The
fund intends to treat roll transactions as two separate transactions: one
involving the purchase of a security and a separate transaction involving the
sale of a security. Since the fund does not intend to enter into roll
transactions for financing purposes, it may treat these transactions as not
falling within the definition of "borrowing" set forth in Section 2(a)(23) of
the Investment Company Act of 1940.
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 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.
<PAGE>
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 FOR THE YEAR ENDED SERVES
YEAR ENDED 12/31/95 12/31/95
<S> <C> <C> <C> <C> <C>
Robert A. Fox Director President and Chief Executive
P.O. Box 457 Officer, Foster Farms Inc. $8,900/3/ $78,400 5
1000 Davis Street Former President, Revlon
Livingston, CA 95334 International; Chairman and Chief
Age: 58 Executive Officer, Clarke Hooper
America (advertising).
Roberta L. Hazard Director Consultant; Rear Admiral, United
1419 Audmar Drive States Navy (Retired). 9,035 41,700 3
McLean, VA 22101
Age: 61
++ Richard H. M. Holmes Director Retired; former Vice President,
580 Laurent Road Capital Research and 7,650 55,800 4
Hillsborough, CA 94010 Management Company (retired
Age: 70 1986).
Leonade D. Jones Director Treasurer, The Washington Post
1150-15th Street, N.W. Company. 9,335 63,767 5
Washington, D.C. 20071
Age: 48
John G. McDonald Director The IBJ Professor of Finance,
Graduate School of Business Graduate School of Business, 9,167/3/ 136,300 7
Stanford University Stanford University.
Stanford, CA 94305
Age: 58
***+ George A. Miller Director Senior Vice President and
Age: 60 Director, Capital Research and none/4/ none/4/ 1
Management Company.
Theodore D. Nierenberg Director Private investor; former
15 Middle Patent Road Armonk, NY 10504 President, Dansk International 9,035 40,500 3
Age: 72 Designs, Ltd.
***+ James W. Ratzlaff Director Senior Partner, The Capital Group
Age: 59 Partners L.P. none/4/ none/4/ 8
Henry E. Riggs Director President and Professor of
Kingston Hall 201 Engineering, Harvey Mudd 8,900/3/ 65,300 5
Harvey Mudd College College.
Claremont, CA 91711
Age: 61
+ Walter P. Stern Chairman of the Board Chairman, Capital Group
630 Fifth Avenue International, Inc.; Vice none/4/ none/4/ 8
New York, NY 10111 Chairman, Capital Research
Age: 67 International;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 63,400 5
Princeton, NJ 08540 Biology, Princeton University.
Age: 61
Robert L. Cody Director Emeritus Retired; former Vice Chairman of
8545 Carmel Valley Road the Board, Capital Research and 4,000 4,000 1
Carmel, CA 93923 Management Company (retired
Age: 80 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 fund's Investment
Adviser, Capital Research and Management Company.
++ Not considered an "interested person" 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, Inc, 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. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicle for certain
variable insurance contracts; and Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt organizations.
/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 ($56,420), Leonade D. Jones ($10,283), John G.
McDonald ($19,323) and Henry E. Riggs ($21,131). 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 compensation 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 /3/, President. Senior Vice President and Director,
Capital Research and Management Company.
ABNER D. GOLDSTINE /4/, Senior Vice President. Senior Vice President and
Director, Capital Research and Management Company.
PAUL G. HAAGA, JR. /1/, Senior Vice President; Senior Vice President and
Director, Capital Research and Management Company; Director, American Funds
Service Company.
STEVEN N. KEARSLEY /2/, Vice President. Vice President and Treasurer, Capital
Research and Management Company; Director, American Funds Service Company.
ERIC S. RICHTER /5/, Vice President. Vice President, Investment Management
Group, Capital Research and Management Company.
PATRICK F. QUAN /3/, Secretary. Vice President, Fund Business Management
Group, Capital Research and Management Company.
MARY C. HALL /2/, Treasurer. Senior Vice President, Fund Business Management
Group, Capital Research and Management Company.
R. MARCIA GOULD /2/, Assistant Treasurer; Vice President, Fund Business
Management Group, Capital Research and Management Company.
_________________
# Positions within the organizations listed may have changed during this
period.
/1/ Address is 333 South Hope Street, Los Angeles, CA 90071.
/2/ Address is 135 South State College Boulevard, Brea, CA 92621.
/3/ P.O. Box 7650, San Francisco, CA 94120.
/4/ 11100 Santa Monica Boulevard, Los Angeles, CA 90025.
/5/ 3000 K Street, N.W., Suite 230, Washington, D.C. 20007.
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
$700 for each Board of Directors meeting attended, 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, 1995 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 more than $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 11, 1995 through November 30, 1996. 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, 1995, 1994 and 1993, the Investment
Adviser received from the fund advisory fees of $8,091,000, $6,234,000 and
$4,947,000, 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, 1995
amounted to $1,918,000 after allowance, of $9,904,000 to dealers. During the
years ended December 31, 1994 and 1993, the Principal Underwriter retained
$1,598,000 and $2,279,000, after allowance of $8,038,000 and $11,810,000 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 employer-sponsored
403(b) plan or 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, 1995, the fund paid or accrued $6,031,000 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 in 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 substantially identical
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, U.S. residents, 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%. However, to
eliminate the benefit of lower marginal corporate income tax rates,
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 a national
securities exchange (or reported on the NASDAQ national market) and securities
traded in the over-the-counter market stated at the last reported sales price
on such exchange on the day of valuation; other securities, and securities for
which no sale was reported on that date, are stated at the last-quoted 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 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. 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 Valuation Committee of 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 subject to the following statement of intention (the Statement)
terms. The Statement is not a binding obligation to purchase the indicated
amount. When a shareholder elects to utilize the 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 45 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. Existing holdings
eligible for rights of accumulation (see the prospectus and account
application) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
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 regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. 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.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
DEALER COMMISSIONS - The following commissions will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or 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, 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 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 at least quarterly. 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, J.P. Morgan and Co., General Electric Co. and
General Electric Capital Corp., were among the top 10 dealers that acted as
principals in portfolio transactions. The fund held equity securities of J.P.
Morgan and Co. and General Electric Co. in the amounts of $9,630,000 and
$21,600,000, respectively, and debt securities of General Electric Capital
Corp. in the amount of $47,537,000, 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, 1995, 1994
and 1993 amounted to $2,653,000, $1,050,000 and $1,443,000, 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, 1995
<S> <C>
Net asset value and redemption price per share $14.15
(Net assets divided by shares outstanding)
Maximum offering price per share $15.01
(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 3.60% based on a 30-day (or one month) period ended
December 31, 1995, 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, 1995 were +19.84%, +12.80% and +11.60%,
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 also calculate a distribution rate on a taxable and tax
equivalent basis. The distribution rate is computed by dividing the dividends
paid by the fund over the last 12 months by the sum of the month-end net asset
value or maximum offering price and the capital gains paid over the last 12
months. The distribution rate may differ from the yield.
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>
1986 - 1995 +200% +360% +299% +171% +151% +192% +69%
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 26, 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
(1/1/91-12/31/95) (1/1/86-12/31/95)
$14,056 $38,076
</TABLE>
<TABLE>
<CAPTION>
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<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
12/31/95
| |
Number Periods Value
of Years 1/1 - 12/31
1 1995 $11,984
2 1994-1995 12,019
3 1993-1995 13,377
4 1992-1995 14,640
5 1991-1995 18,262
6 1990-1995 17,970
7 1989-1995 21,843
8 1988-1995 24,654
9 1987-1995 25,651
10 1986-1995 29,979
11 1985-1995 38,718
12 1984-1995 42,313
13 1983-1995 49,169
14 1982-1995 63,609
15 1981-1995 66,391
16 1980-1995 75,893
17 1979-1995 81,696
18 1978-1995 86,738
19 1977-1995 87,377
20 1976-1995 110,024
21 1975#-1995 116,179
</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, 1995)
<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
1995 4,335 46,851 56,851 19,464 35,427 61,288 116,179
</TABLE>
The dollar amount of capital gain distributions during the period was $28,095.
# 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 January 1, 1966 (121 in all), those funds have had better
total returns than the Standard and Poor's 500 Composite Stock Index in 94 of
the 121 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.
<PAGE>
AMERICAN BALANCED FUND
INVESTMENT PORTFOLIO DECEMBER 31, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------- ----------- ----------- --------
Percent
Of
TEN LARGEST EQUITY HOLDINGS Net Assets
<S> <C> <C> <C>
Phillips Petroleum 2.02%
Wal-Mart Stores 1.95
Minnesota Mining and Manufacturing 1.74
Philip Morris 1.63
DuPont 1.44
Allstate 1.42
Warner-Lambert 1.27
Merck 1.19
Ford Motor 1.14
CSX 1.14
INVESTMENT MIX BY SECURITY TYPE
- ----------------------------------------------
Common Stocks 57%
Goverment Bonds 16
Corporate Bonds 11
Convertible Debentures 1
Cash 15
Market Percent
Number Value of Net
COMMON STOCKS of Shares (000) Assets
- ---------------------------------------------- ----------- ----------- -------
ENERGY
Energy Sources- 6.40%
Amoco Corp. 280,000 $20,125 .66%
Atlantic Richfield Co. 100,000 11,075 .36
Chevron Corp. 600,000 31,500 1.03
Exxon Corp. 270,000 21,634 .71
Kerr-McGee Corp. 210,000 13,335 .44
Phillips Petroleum Co. 1,800,000 61,425 2.02
Royal Dutch Petroleum Co.
(New York Registered Shares) 140,000 19,758 .65
Unocal Corp. 560,000 16,310 .53
Utilities: Electric & Gas - 3.15%
Consolidated Edison Co. of New York, Inc. 500,000 16,000 .53
Duke Power Co. 500,000 23,687 .78
Entergy Corp. 600,000 17,550 .58
Long Island Lighting Co. 150,000 2,456 .08
Pacific Gas and Electric Co. 700,000 19,863 .65
PP&L Resources, Inc. 650,000 16,250 .53
------- -------
290,968 9.55
------- -------
MATERIALS
Building Materials & Components - 0.37%
Masco Corp. 360,000 11,295 .37
Chemicals - 2.53%
Dow Chemical Co. 300,000 21,113 .69
E.I. du Pont de Nemours and Co. 630,000 44,021 1.44
Great Lakes Chemical Corp. 170,000 12,240 .40
Forest Products & Paper - 4.08%
Bowater Inc. 460,000 16,330 .54
Federal Paper Board Co., Inc. 400,000 20,750 .68
Georgia-Pacific Corp. 230,000 15,784 .52
International Paper Co. 500,000 18,937 .62
Louisiana-Pacific Corp. 1,075,000 26,069 .86
Union Camp Corp. 550,000 26,194 .86
Metals: Nonferrous - 0.69%
Aluminum Co. of America 400,000 21,150 .69
------- -------
233,883 7.67
------- -------
CAPITAL EQUIPMENT
Aerospace & Military Technology - 0.64%
Boeing Co. 250,000 19,593 .64
Data Processing & Reproduction - 0.78%
International Business Machines Corp. 110,000 10,093 .33
Xerox Corp. 100,000 13,700 .45
Electrical & Electronic - 0.71%
General Electric Co. 300,000 21,600 .71
Industrial Components - 0.54%
Goodyear Tire & Rubber Co. 360,000 16,335 .54
Machinery & Engineering- 0.54%
Caterpillar Inc. 280,000 16,450 .54
------- -------
97,771 3.21
------- -------
CONSUMER GOODS
Automobiles - 1.14%
Ford Motor Co., Class A 1,200,000 34,800 1.14
Beverages & Tobacco - 2.48%
Anheuser-Busch Companies, Inc. 170,000 11,369 .37
Philip Morris Companies Inc. 550,000 49,775 1.63
UST Inc. 440,000 14,685 .48
Health & Personal Care - 6.02%
Abbott Laboratories 135,000 5,636 .19
American Home Products Corp. 300,000 29,100 .96
Bristol-Myers Squibb Co. 200,000 17,175 .56
Eli Lilly and Co. 500,000 28,125 .92
Merck & Co., Inc. 550,000 36,163 1.19
Pfizer Inc 100,000 6,300 .21
Schering-Plough Corp. 400,000 21,900 .72
Warner-Lambert Co. 400,000 38,850 1.27
------- -------
293,878 9.64
------- -------
SERVICES
Broadcasting & Publishing - 1.53%
Dow Jones & Co., Inc. 400,000 15,950 .52
Gannett Co., Inc. 350,000 21,481 .70
Time Warner Inc.,preferred equity redemption
cumulative stock 135,000 4,219 .14
U S WEST Media Group/1/ 280,000 5,320 .17
Business & Public Services - 3.09%
Columbia/HCA Healthcare Corp. 250,000 12,688 .42
Dun & Bradstreet Corp. 530,000 34,317 1.13
Pitney Bowes Inc. 350,000 16,450 .54
U.S. Healthcare, Inc. 370,000 17,205 .56
WMX Technologies, Inc. 450,000 13,444 .44
Leisure & Tourism - 0.12%
Marriott International, Inc. 100,000 3,825 .12
Merchandising - 1.95%
Wal-Mart Stores, Inc. 2,650,000 59,294 1.95
Telecommunications - 2.29%
AT&T Corp. 300,000 19,425 .64
MCI Communications Corp. 540,000 14,107 .46
Pacific Telesis Group 360,000 12,105 .40
Sprint Corp. 350,000 13,956 .46
U S WEST Communications Group
(Formerly U S WEST Inc.) 280,000 10,010 .33
Transportation: Rail & Road - 1.94%
CSX Corp. 760,000 34,675 1.14
Union Pacific Corp. 370,000 24,420 .80
------- -------
332,891 10.92
------- -------
FINANCE
Banking - 7.21%
Banc One Corp. 450,000 16,987 .56
BankAmerica Corp. 400,000 25,900 .85
Boatmen's Bancshares, Inc. 400,000 16,350 .54
First Fidelity Bancorporation 150,000 11,306 .37
First Hawaiian Bank 769,000 23,070 .76
First Union Corp. 250,000 13,906 .46
First Virginia Banks, Inc. 320,300 13,373 .44
Fleet Financial Group, Inc. 750,000 30,563 1.00
Integra Financial Corp. 350,000 22,050 .72
J.P. Morgan & Co. Inc. 120,000 9,630 .32
NationsBank Corp. 300,000 20,887 .68
PNC Bank Corp. 175,000 5,644 .18
U.S. Bancorp 300,000 10,088 .33
Financial Services - 1.22%
Beneficial Corp. 90,000 4,196 .14
Federal Home Loan Mortgage Corp. 200,000 16,700 .55
Federal National Mortgage Assn. 130,000 16,136 .53
Insurance - 5.15%
Allstate Corp. 1,050,000 43,181 1.42
American General Corp. 350,000 12,206 .40
CIGNA Corp. 188,200 19,432 .64
Lincoln National Corp. 230,000 12,363 .40
SAFECO Corp. 1,000,000 34,500 1.13
St. Paul Companies, Inc. 260,000 14,463 .47
USLIFE Corp. 700,000 20,912 .69
------- -------
413,843 13.58
------- -------
MULTI-INDUSTRY AND MISCELLANEOUS
Multi-Industry - 2.07%
Minnesota Mining and Manufacturing Co. 800,000 53,000 1.74
Tenneco Inc. 200,000 9,925 .33
Miscellaneous - 0.19%
Other common stocks in initial period of acquisition 5,660 .19
------- -------
68,585 2.26
------- -------
TOTAL COMMON STOCKS 1,731,819 56.83
------- -------
- ---------------------------------------------- --------- ------- -------
Principal
Amount
CONVERTIBLE DEBENTURES (000)
- ---------------------------------------------- --------- ------- -------
Broadcasting & Publishing - 0.21%
Time Warner Inc. 0% 2012 $6,500 2,283 .07
Time Warner Inc. 0% 2013 10,000 4,125 .14
Industrials - 0.27%
Hanson America Inc. 2.39% 2001/2/ 10,000 8,325 .27
Trasportation: Airlines - 0.10%
Airborne Freight Corp. 6.75% 2001 3,000 3,015 .10
Miscellaneous - 0.23%
Other convertible debentures in initial period
of acquisition 7,075 .23
------- -------
TOTAL CONVERTIBLE DEBENTURES 24,823 .81
------- -------
TOTAL COMMON STOCKS AND CONVERTIBLE DEBENTURES 1,756,642 57.64
------- -------
- ---------------------------------------------- --------- ------- -------
BONDS & NOTES
- ---------------------------------------------- --------- ------- -------
INDUSTRIALS - 4.90%
Dayton Hudson Corp. 10.00% 2010 5,000 6,244 .20
Dayton Hudson Corp. 9.50% 2015 1,000 1,232 .04
Deere & Co. 8.95% 2019 3,400 4,182 .14
Federal Paper Board Co., Inc. 10.00% 2011 10,000 13,337 .44
General Motors Corp. 8.80% 2021 12,500 15,407 .51
Inco Ltd. 9.875% 2019 3,000 3,365 .11
Inco Ltd. 9.60% 2022 5,000 5,783 .19
May Department Stores Co. 9.875% 2021 6,500 7,818 .26
Mobil Corp. 8.00% 2032 5,000 5,529 .18
News America Holdings Inc. 10.125% 2012 5,000 6,051 .20
News America Holdings Inc. 8.45% 2034 2,500 2,884 .09
Occidental Petroleum Corp. 8.50% 2004 2,500 2,686 .09
Occidental Petroleum Corp. 9.25% 2019 5,000 6,291 .21
Pohang Iron & Steel Co., Ltd. 7.375% 2005 5,000 5,312 .17
Polaroid Corp. 8.00% 1999 10,000 10,564 .35
Samsung Electric Co., Ltd. 8.50% 2002/2/ 5,000 5,563 .18
Swire Pacific Ltd. 8.50% 2004/2/ 7,500 8,238 .27
TCI Communications Inc. 8.75% 2015 4,000 4,435 .15
Tele-Communications, Inc. 9.25% 2023 7,500 8,187 .27
Tenneco Credit Inc. 9.625% 2001 2,000 2,329 .08
Tenneco Credit Inc. 10.00% 2001 1,500 1,764 .06
Time Warner Inc. 10.15% 2012 5,000 6,197 .20
TKR Cable I, Inc. 10.50% 2007 4,000 4,650 .15
USX Corp., Series A, 9.375% 2012 7,700 8,895 .29
USX Corp., Series A, 9.125% 2013 2,000 2,299 .07
------- -------
149,242 4.90
------- -------
ELECTRIC UTILITIES - 0.15%
Big Rivers Electric Corp. 10.70% 2017 4,000 4,507 .15
------- -------
GAS UTILITIES - 0.24%
The Columbia Gas System, Inc.7.32% 2010 5,000 5,144 .17
The Columbia Gas System Inc.7.42% 2015 2,000 2,025 .07
------- -------
7,169 .24
------- -------
TELEPHONE - 0.21%
AT&T Corp. 8.625% 2031 5,600 6,516 .21
------- -------
TRANSPORTATION - 0.90%
American Airlines, 1991-A1, pass-through
certificates, 9.71% 2007/3/ 1,849 2,147 .07
AMR Corp. 9.20% 2012 2,000 2,265 .07
Delta Air Lines, Inc. 9.875% 2000 1,500 1,696 .05
Delta Air Lines, Inc. 10.375% 2011 3,000 3,753 .12
Delta Air Lines, Inc., 1992-A2, pass-through
certificates, 9.20% 2014/3/ 1,500 1,704 .06
Delta Air Lines, Inc., 1993-A2, pass-through
certificates, 10.50% 2016/3/ 5,000 6,303 .21
Federal Express Corp., A310-A1, pass-through
certificates, 7.53% 2006/3/ 1,888 1,988 .07
United Air Lines, Inc. 9.00% 2003 1,500 1,668 .05
United Air Lines, Inc. 10.67% 2004 5,000 6,031 .20
------ -------
27,555 .90
------ -------
FINANCIAL - 2.97%
H.F. Ahmanson & Co. 9.875% 1999 3,000 3,399 .11
American Re Corp. 10.875% 2004 5,000 5,578 .18
Bank of Nova Scotia 6.00%/4/ 4,000 3,120 .10
Bankers Trust New York Corp. 8.25% 2005 2,000 2,246 .07
Beneficial Corp. 12.875% 2013 1,500 1,814 .06
Canadian Imperial Bank of Commerce 6.125%/4/ 1,600 1,256 .04
Capital One Bank 8.33% 1997 5,000 5,132 .17
CIGNA Corp. 6.375% 2006 5,000 4,927 .16
Continental Bank, NA 12.50% 2001 2,000 2,569 .08
Den Danske Bank 7.25% 2005 5,000 5,278 .17
Den Norske AS 6.125%/4/ 3,000 2,385 .08
First Interstate Bancorp 8.625% 1999 4,300 4,661 .15
General Motors Acceptance Corp. 7.875% 1997 10,000 10,257 .34
General Motors Acceptance Corp. 8.625% 1999 5,000 5,418 .18
General Motors Acceptance Corp. 9.375% 2000 5,000 5,605 .19
General Motors Acceptance Corp. 9.625% 2000 4,000 4,548 .15
General Motors Acceptance Corp. 9.625% 2001 7,000 8,235 .27
General Motors Acceptance Corp. 8.75% 2005 4,000 4,646 .15
General Motors Acceptance Corp. 8.875% 2010 1,000 1,217 .04
Golden West Financial Corp. 10.25% 2000 1,400 1,641 .05
Midland Bank 5.8125%/4/ 4,000 3,208 .11
Security Pacific Corp. 11.00% 2001 3,000 3,659 .12
------ -------
90,799 2.97
------ -------
REAL ESTATE - 0.59%
ERP Operating Limited Partnership 7.95% 2002 1,500 1,603 .05
Irvine Co. 7.46% 2006/2/ 2,500 2,497 .08
Security Capital Industrial Trust 7.875% 2009 5,000 5,313 .18
Shopping Center Associates 6.75% 2004/2/ 5,000 5,006 .16
Wharf Capital International Ltd. 8.875% 2004 3,500 3,759 .12
------ -------
18,178 .59
------ -------
OTHER - 0.06%
Trustees of Columbia University in the City of
New York, Series B, 8.62% 2001 1,500 1,685 .06
------ -------
COLLATERALIZED MORTGAGE/ASSET-BACKED
OBLIGATIONS/3/ - 1.38%
Case Equipment Loan Trust, 1995-A, 7.30% 2002 7,754 7,909 .26
Green Tree Financial Corp. 6.80% 2027 10,000 10,225 .33
Grupo Financiero Banamex Accival, SA de CV
0% 2002/2/ 6,467 4,801 .16
Jet Equipment Trust, Series 1995-A, Class B,
8.64% 2015/2/ 4,977 5,519 .18
Jet Equipment Trust, Series 1995-B, Class B,
7.83% 2015/2/ 8,000 8,410 .28
Merrill Lynch Mortgage Investors, Inc. 1995-A
7.4283% 2021 4,968 5,115 .17
------ -------
41,979 1.38
------ -------
GOVERNMENTS (EXCLUDING U.S. GOVERNMENT) AND
GOVERNMENTAL AUTHORITIES - 0.45%
British Columbia Hydro & Power Authority
12.50% 2014 2,000 2,442 .08
Israel (State of) 6.375% 2005 9,000 9,090 .30
Ontario (Province of) 11.50% 2013 2,000 2,317 .07
------ -------
13,849 .45
------ -------
FEDERAL AGENCY OBLIGATIONS/3/ - 0.53%
Federal Home Loan Mortgage Corp.
8.50% 2008 322 336 .01
Federal Home Loan Mortgage Corp.
8.50% 2020 10,240 10,691 .35
Government National Mortgage Assn. 11.00% 2015 135 153 .01
Government National Mortgage Assn. 9.50% 2018 145 156 .01
Government National Mortgage Assn. 10.50% 2019 100 112 .00
Government National Mortgage Assn. 8.50% 2025 4,422 4,644 .15
------ -------
16,092 .53
------ -------
FEDERAL AGENCY OBLIGATIONS - OTHER - 2.37%
Federal Home Loan Mortgage Corp. 6.945% 2005 6,500 6,617 .22
Federal National Mortgage Assn. 8.16% 2000 20,000 20,625 .68
Federal National Mortgage Assn. 8.71% 2005 22,000 23,269 .76
FNSM Callable Principal STRIPS 0%/8.20% 2022/5/ 10,000 8,181 .27
FNSM Callable Principal STRIPS 0%/8.25% 2022/5/ 1,500 1,255 .04
Student Loan Marketing Assn. 7.67% 2000 11,850 12,146 .40
------ -------
72,093 2.37
------ -------
U.S. TREASURY OBLIGATIONS - 12.99%
9.25% due 1/15/96 15,000 15,021 .49
7.50% due 1/31/96 15,000 15,026 .49
8.875% due 2/15/96 20,000 20,085 .66
9.375% due 4/15/96 15,000 15,171 .50
4.25% due 5/15/96 10,000 9,964 .33
7.25% due 8/31/96 20,000 20,244 .66
7.25% due 11/15/96 15,000 15,248 .50
4.75% February 1997 50,000 49,703 1.63
6.75% February 1997 4,000 4,068 .13
8.50% July 1997 4,000 4,193 .14
8.75% October 1997 5,000 5,299 .17
7.375% November 1997 25,000 25,945 .85
8.875% November 1997 10,000 10,644 .35
5.625% January 1998 25,000 25,207 .83
8.25% July 1998 25,000 26,758 .88
8.875% May 2000 8,000 9,080 .30
8.75% August 2000 7,500 8,518 .28
13.125% May 2001 2,000 2,719 .09
14.25% February 2002 2,000 2,906 .10
10.75% February 2003 12,800 16,702 .55
11.125% August 2003 1,000 1,342 .04
10.75% August 2005 8,500 11,678 .39
8.75% November 2008 10,000 11,928 .39
10.375% November 2009 6,750 8,906 .29
10.375% November 2012 32,000 44,240 1.45
10.625% August 2015 10,000 15,317 .50
------ -------
395,912 12.99
------ -------
TOTAL BONDS & NOTES 845,576 27.74
------ -------
- ---------------------------------------------- --------- ------ -------
SHORT-TERM SECURITIES
- ---------------------------------------------- --------- ------ -------
CORPORATE SHORT-TERM NOTES - 15.25%
A. I. Credit Corp. 5.70% due 1/4/96 20,000 19,987 .65
American Express Credit Corp. 5.68% due 2/1/96 21,000 20,894 .69
American Telephone & Telegraph Co. 5.57%-5.75%
due 2/2-2/22/96 24,900 24,733 .81
Associates Corp. of North America 5.99% due 1/2/96 11,020 11,016 .36
BellSouth Telecommunications Inc. 5.67%-5.70%
due 1/10/-2/21/96 25,000 24,931 .82
Chevron Oil Finance Co. 5.70% due 2/9/96 11,500 11,427 .37
CIT Group Holdings, Inc. 5.68% due 2/2/96 25,000 24,872 .82
Emerson Electric Co. 5.66% due 1/25/96 4,500 4,482 .15
Ford Motor Credit Co. 5.70%-5.72% due 1/5-2/7/96 36,600 36,550 1.20
General Electric Capital Corp. 5.68%-5.70%
due 1/17-1/25/96 47,700 47,537 1.56
Kimberly-Clark Corp. 5.75% due 1/26/96 15,000 14,938 .49
Eli Lilly and Co. 5.70%-5.71% due 1/5-1/12/96 24,700 24,659 .81
Motorola Inc. 5.72% due 1/30/96 21,100 20,999 .69
Pactel Capital Resources 5.90% due 1/2/96 7,600 7,598 .25
PepsiCo, Inc. 5.58% due 2/8/96 30,000 29,819 .98
Pitney Bowes Credit Corp. 5.64%-5.72% due 1/30-2/1/96 32,900 32,745 1.07
Procter & Gamble Co. 5.63%-5.66% due 1/29-2/12/96 29,000 28,837 .95
Safeco Credit Co., Inc. 5.68% due 1/12/96 10,000 9,981 .33
United Parcel Service of America Inc.
5.50% due 2/23/96 9,200 9,123 .30
Vermont American Corp. 5.70% due 1/19/96 15,000 14,955 .49
Xerox Corp. 5.68%-5.70% due 1/9-1/26/96 44,700 44,583 1.46
------ -------
464,666 15.25
------ -------
FEDERAL AGENCY DISCOUNT NOTES - 2.28%
Federal Home Loan Bank 5.61% due 1/18/96 19,000 18,947 .62
Federal National Mortgage Assn. 5.54%-5.67%
due 1/5-2/14/96 50,700 50,505 1.66
------ -------
69,452 2.28
------ -------
TOTAL SHORT-TERM SECURITIES 534,118 17.53
------ -------
TOTAL INVESTMENT SECURITIES
(cost: $2,720,196,000) 3,136,336 102.91
Excess of payables over cash and receivables 88,823 2.91
------ -------
NET ASSETS $3,047,513 100.00%
====== =======
</TABLE>
/1/ Non-income-producing security
/2/ Purchased in a private placement transaction; resale to the public may
require registration or may extend only to qualified institutional buyers.
/3/ 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.
/4/ Coupon rates may change periodically.
/5/ 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
PORTFOLIO SINCE JUNE 30, 1995
- -----------------------------------------
Anhauser-Busch
Boatmens's Bancshares
Bowater
Caterpillar
Duke Power
Federal Home Loan Mortage
Federal Paper Board
First Virginia Banks
Integra Financial
International Paper
NationsBank
PP&L Resources
U.S. Healthcare
UST
EQUITY-TYPE SECURITIES ELIMINATED FROM THE
PORTFOLIO SINCE JUNE 30, 1995
- ----------------------------------------------
American Brands
Ameritech
Burlington Northern
Carolina Power
Comerica
First Chicago
Houston Industries
Huntington Bancshares
Melville
Monsato
Northrop Grumman
Telefonos de Mexico
Texas Utilities
Textron
Wachovia
American Balanced Fund
Financial Statements
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (dollars in
at December 31, 1995 thousands)
- ---------------------------------------------- --------- ----------
<S> <C> <C>
ASSETS:
Investment securities at market
(cost: $2,720,196) $3,136,336
Cash 64
Receivables for -
Sales of investments $ 6,982
Sales of fund's shares 9,227
Dividends and accrued interest 20,349 36,558
--------- ----------
3,172,958
LIABILITIES:
Payables for -
Purchases of investments 120,233
Repurchases of fund's shares 3,688
Management services 799
Accrued expenses 725 125,445
--------- ----------
NET ASSETS AT DECEMBER 31, 1995 -
Equivalent to $14.15 per share on
215,418,149 shares of $1 par value
capital stock outstanding (authorized
capital stock--300,000,000 shares) $3,047,513
==========
STATEMENT OF OPERATIONS
for the year ended December 31, 1995 (dollars in
thousands)
- ---------------------------------------------- --------- ----------
INVESTMENT INCOME:
Income:
Dividends $ 48,037
Interest 79,534 $127,571
---------
Expenses:
Management services fee 8,091
Distribution expenses 6,031
Transfer agent fee 1,928
Reports to shareholders 161
Registration statement and prospectus 234
Postage, stationery and supplies 322
Directors' fees 75
Auditing and legal fees 48
Custodian fee 84
Taxes other than federal income tax 2
Other expenses 40 17,016
--------- ----------
Net investment income 110,555
----------
REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS:
Net realized gain 113,063
Net increase in unrealized appreciation on
investments:
Beginning of year 38,612
End of year 416,140 377,528
--------- ----------
Net realized gain and increase in unrealized
appreciation on investments 490,591
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 601,146
==========
See Notes to Financial Statements
- ---------------------------------------------- --------- ----------
STATEMENT OF CHANGES IN NET ASSETS (dollars in
thousands)
Year ended December 31
--------- ----------
1995 1994
- ---------------------------------------------- --------- ----------
OPERATIONS:
Net investment income $110,555 $88,658
Net realized gain on investments 113,063 4,768
Net increase (decrease) in unrealized appreciation
on investments 377,528 (86,455)
--------- ----------
Net increase in net assets
resulting from operations 601,146 6,971
--------- ----------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (105,991) (86,005)
Distributions from net realized gain on
investments (97,006) (7,886)
--------- ----------
Total dividends and distributions (202,997) (93,891)
--------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold: 64,847,892
and 54,791,351 shares, respectively 866,745 669,530
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 14,004,916 and 6,959,833 shares,
respectively 189,603 84,678
Cost of shares repurchased: 36,977,727
and 24,180,499 shares, respectively (488,870) (294,907)
--------- ----------
Net increase in net assets resulting from
capital share transactions 567,478 459,301
--------- ----------
TOTAL INCREASE IN NET ASSETS 965,627 372,381
NET ASSETS:
Beginning of year 2,081,886 1,709,505
--------- ----------
End of year (including undistributed
net investment income: $10,254
and $5,690, respectively) $3,047,513 $2,081,886
========= ==========
</TABLE>
<PAGE>
American Balanced Fund
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 fund seeks conservation of capital, current income, and long-term growth of
both capital and income by investing in stocks and fixed income securities. 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 traded on a national securities
exchange (or reported on the NASDAQ national market) and securities traded in
the over-the-counter market are stated at the last reported sales price on the
day of valuation; other securities, and securities for which no sale was
reported on that date, are stated at the last quoted bid price.
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 $84,000 includes $61,000 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, 1995, net unrealized appreciation on investments for
federal income tax purposes aggregated $416,161,000, of which $431,952,000
related to appreciated securities and $15,791,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended December 31, 1995. The cost of
portfolio securities for federal income tax purposes was $2,720,196,000 at
December 31, 1995.
3.The fee of $8,091,000 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, 1995,
distribution expenses under the Plan were $6,031,000. As of December 31, 1995,
accrued and unpaid distribution expenses were $380,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $1,928,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $1,918,000(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, 1995, aggregate amounts deferred were $90,000.
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 AFD. No such
persons received any remuneration directly from the fund.
4.As of December 31, 1995, accumulated undistributed net realized gain on
investments was $15,997,000 and additional paid-in capital was $2,389,704,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,257,401,000 and $814,947,000, respectively, during
the year ended December 31, 1995.
<PAGE>
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
Year ended December 31
------- ------- ------- ------- -------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
------- ------- ------- ------- -------
Net Asset Value, Beginning of Year $12.00 $12.57 $12.28 $12.05 $10.32
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .57 .57 .59 .61 .62
Net realized and unrealized gain
(loss) on investments 2.61 (.53) .76 .49 1.86
------- ------- ------- ------- -------
Total income from
investment operations 3.18 .04 1.35 1.10 2.48
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.56) (.56) (.60) (.60) (.62)
Distributions from net realized
gains (.47) (.05) (.46) (.27) (.13)
------- ------- ------- ------- -------
Total Distributions (1.03) (.61) (1.06) (.87) (.75)
------- ------- ------- ------- -------
Net Asset Value, End of Year $14.15 $12.00 $12.57 $12.28 $12.05
======= ======= ======= ======= =======
Total Return * 27.13% .34% 11.27% 9.48% 24.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) $3,048 $2,082 $1,710 $1,067 $642
Ratio of expenses to average
net assets .67% .68% .71% .74% .82%
Ratio of net income to average
net assets 4.38% 4.76% 4.74% 5.19% 5.56%
Portfolio turnover rate 39.03% 32.05% 27.81% 17.00% 24.65%
</TABLE>
* This was calculated without
deducting a sales charge. The
maximum sales charge is 5.75% of the
fund's offering price.
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 of
American Balanced Fund, Inc., including the schedule of portfolio investments,
as of December 31, 1995, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years in
the period then ended, and the per-share data and ratios for each of the five
years in the period then ended. These financial statements and 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.
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 the
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, 1995 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 and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of American Balanced Fund, Inc. at of December 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the per-share data and
ratios for the each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
January 26, 1996
1995 Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
Dividends and Distributions per Share
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
From Net From Net
Realized Realized
To From Net Short- Long-
Shareholders Investment Term Term
of Record Payment Date Income Gains Gains
February 10, 1995 February 13, 1995 $0.14 - -
May 19, 1995 May 22, 1995 0.14 - -
August 11, 1995 August 14, 1995 0.14 - -
December 20, 1995 December 21, 1995 0.14 $0.20 $0.27
</TABLE>
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 43% of the
dividends paid by the fund from net investment income represent qualifying
dividends.
Certain states may exempt from income taxation that portion of the dividends
paid from net investment income that was derived from direct U.S. Treasury
obligations. For purposes of computing this exclusion, 16% of the dividends
paid by the fund from net investment income were derived from interest on
direct U.S. Treasury obligations.
<PAGE>
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, 1996
Title of Class Number of Record-Holders
Common Stock 108,953
($1.00 Par Value)
Item 27. Indemnification.
Registrant is a joint-insured under Investment Advisor/Mutual Fund Errors and
Omissions Policies written by American International Surplus Lines Insurance
Company, Chubb Custom Insurance Company, and ICI Mutual Insurance Company which
insures its officers and directors against certain liabilities.
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
John A. Agar Regional Vice President None
1501 N. University Drive
Little Rock, AR 72207
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 Ave. South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Regional Vice President None
1190 Rockmart Circle
Kennesaw, GA 30144
Joseph T. Blair Vice President None
27 Drumlin Road
West Simsbury, CT 06092
Ian B. Bodell Vice President None
3100 West End Avenue
Suite 870
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4916 McPherson Avenue
St. Louis, MO 63108
* Daniel C. Brown Senior Vice President and None
Director
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 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
Denise M. Cassin Regional Vice President None
1425 Vallejo, #203
San Francisco, CA 94109
* Larry P. Clemmensen Treasurer and Director Senior Vice President
* Kevin G. Clifford Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th Street, #12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Blvd.
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
4116 Woodbine St.
Chevy Chase, MD 20815
* Carl D. Cutting Vice President None
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior 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 Senior 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 R. Fodor Regional Vice President None
15 Latisquama Road
Southborough, MA 01772
* 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 President and Director
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 Controller None
Michael J. Johnston Chairman of the Board None
630 Fifth Ave., 36th Fl.
New York, NY 10111-0121
* Victor J. Kriss, Jr. Senior Vice President None
P.O. Box 274
Surfside, CA 90743
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
12585-E E. Tennessee Cir.
Aurora, CO 80012
* Susan G. Lindgren Vice President - Institutional Investment Services Division None
Steve A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Littleton, CO 80121
* John C. Massar Senior Vice President None
* E. Lee McClennahan Senior Vice President None
Laurie B. McCurdy Regional Vice President None
6008 E. Anderson Drive
Scottsdale, AZ 85255
& 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 SE 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Road
Charlotte, NC 28226
* Barbara G. Nicolich Assistant Vice President, None
Institutional Investment Services Division
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
# Candance Pilgram Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, SE
Mercer Island, WA 98040
* John O. Post, Jr. Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07960
* Julie D. Roth Vice President None
* James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30309 Oak Tree Drive
Georgetown, TX 78628
* Christopher Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe, Ave., # 4
Marina del Rey, CA 90292
Joe D. Scarpitti Regional Vice President None
25760 Kensington Drive
Westlake, OH 44145
* R. Michael Shanahan Director None
David W. Short Senior Vice President None
1000 RIDC Plaza, Ste. 212
Pittsburgh, PA 15238
* Victor S. Sidhu Vice President, Institutional None
Investment Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Vice President, Institutional None
Investment Services Division
* Mary E. Smith Assistant Vice President, None
Institutional Investment
Services Division
Rodney G. Smith Regional Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
4 West 4th Avenue, Ste. 406
San Mateo, CA 94402
Thomas A. Stout Regional Vice President None
2603 Kresson Place
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
& 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
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd. #1012
Sarasota, FL 34238
# J. Kelly Webb Senior Vice President None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Canonsburg, 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 Senior Vice President and None
Director
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55437
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.
<PAGE>
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 28th day of February , 1996.
AMERICAN BALANCED FUND, INC.
By
/s/ Patrick F. Quan, Secretary
ATTEST:
/s/ Barbara A. Preddy
Pursuant to the requirements of the Securities Act of 1933, this amendment to
its registration statement has been signed below on February 28, 1996 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
<S> <C> <C>
(1) Principal Executive Officer
/s/ Robert G. O'Donnell
____________________________________
(Robert G. O'Donnell) President
(2) Principal Financial Officer and Principal Accounting Officer:
/s/ Mary C. Hall
____________________________________
(Mary C. Hall) Treasurer
(3) Directors:
Robert A. Fox* Director
Roberta L. Hazard* Director
Richard H. M. Holmes* Director
Leonade D. Jones* Director
John G. McDonald* Director
/s/ George A. Miller
____________________________________
(George A. Miller) Director
Theodore D. Nierenberg* Director
/s/ James W. Ratzlaff
____________________________________
(James W. Ratzlaff) Director
Henry E. Riggs* Director
Walter P. Stern* Chairman
Patricia K. Woolf* Director
/s/ Patrick F. Quan
*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).
/s/ Michele Y. Yang, Counsel
CONSENT OF INDEPENDENT AUDITORS
American Balanced Fund, Inc.:
We consent to (a) the use in this Post-Effective Amendment No. 82 to
Registration Statement No. 2-10758 on Form N-1A of our report dated January 26,
1996 appearing in the Financial Statements, which are included in Part B, the
Statement of Additional Information of such Registration Statement; (b) the
references 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
February 22, 1996
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/ = 1,198.39
T = +19.84%
5 Year Avg. Annual Total Return 1,000(1+T)/5/ = 1,826.23
T = +12.80%
10 Year Avg. Annual Total Return 1,000(1+T)/10/ = 2,997.88
T = +11.60%
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 INVESTMENT INCOME 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
1/01/95 1000.00 12.73 5.75 % 78.555 12.000 943
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>
12/31/95 1000 44 44 1044 38 1112 39 1151 47 1198.39 84.692
TOTAL $ 38
</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 1000.00 10.95 5.75 % 91.324 10.320 942
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>
12/31/91 1000 58 58 1058 12 1100 13 1113 62 1175.20 97.527
12/31/92 1000 60 118 1118 27 1121 41 1162 124 1286.64 104.775
12/31/93 1000 64 182 1182 50 1148 92 1240 191 1431.70 113.898
12/31/94 1000 65 247 1247 6 1096 94 1190 246 1436.52 119.710
12/31/95 1000 68 315 1315 58 1292 170 1462 364 1826.23 129.062
TOTAL $ 153
</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 1000.00 12.36 5.75 % 80.906 11.650 943
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>
12/31/86 1000 57 57 1057 175 876 172 1048 53 1101.57 101.715
12/31/87 1000 70 127 1127 51 820 213 1033 112 1145.85 113.115
12/31/88 1000 71 198 1198 38 846 257 1103 190 1293.38 123.650
12/31/89 1000 85 283 1283 75 923 356 1279 292 1571.86 137.762
12/31/90 1000 89 372 1372 39 835 360 1195 352 1547.16 149.919
12/31/91 1000 95 467 1467 20 975 442 1417 512 1929.22 160.101
12/31/92 1000 99 566 1566 45 994 496 1490 622 2112.12 171.997
12/31/93 1000 105 671 1671 82 1017 591 1608 742 2350.24 186.972
12/31/94 1000 107 778 1778 10 971 573 1544 814 2358.13 196.511
12/31/95 1000 112 890 1890 95 1145 773 1918 1079 2997.88 211.864
TOTAL $ 630
</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
7/26/75 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
12/31/95 1000 434 4686 5686 370 1946 3543 5489 6128 11617.94 821.056
TOTAL $ 2810
</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
1/01/95 1000.00 12.00 0.00 % 83.333 12.000 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>
12/31/95 1000 48 48 1048 40 1179 41 1220 51 1271.29 89.844
TOTAL $ 40
</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 1000.00 10.32 0.00 % 96.899 10.320 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>
12/31/91 1000 62 62 1062 13 1168 14 1182 64 1246.95 103.481
12/31/92 1000 64 126 1126 29 1190 43 1233 132 1365.17 111.170
12/31/93 1000 68 194 1194 53 1218 98 1316 203 1519.06 120.848
12/31/94 1000 69 263 1263 6 1163 100 1263 261 1524.18 127.015
12/31/95 1000 72 335 1335 62 1371 180 1551 386 1937.69 136.939
TOTAL $ 163
</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 1000.00 11.65 0.00 % 85.837 11.650 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>
12/31/86 1000 61 61 1061 186 930 182 1112 56 1168.71 107.914
12/31/87 1000 74 135 1135 54 870 226 1096 119 1215.68 120.008
12/31/88 1000 76 211 1211 40 898 273 1171 201 1372.18 131.184
12/31/89 1000 90 301 1301 79 979 378 1357 310 1667.63 146.155
12/31/90 1000 95 396 1396 41 886 382 1268 373 1641.45 159.055
12/31/91 1000 101 497 1497 21 1034 469 1503 543 2046.78 169.857
12/31/92 1000 104 601 1601 47 1054 526 1580 660 2240.84 182.479
12/31/93 1000 111 712 1712 87 1079 626 1705 788 2493.47 198.367
12/31/94 1000 113 825 1825 10 1030 608 1638 863 2501.88 208.490
12/31/95 1000 119 944 1944 101 1215 820 2035 1145 3180.62 224.779
TOTAL $ 666
</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
7/26/75 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
12/31/95 1000 460 4970 5970 392 2066 3760 5826 6504 12330.27 871.397
TOTAL $ 2980
</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
12/31/95 10000 1118 8891 18891 954 11448 7725 19173 10805 29978.91 2118.651
TOTAL $ 6288
</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
1/01/86 10000.00 1546.67 0.00 % 6.466 1546.670 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>
12/31/86 10000 441 441 10441 0 12258 0 12258 450 12708.55 6.703
12/31/87 10000 482 923 10923 0 12536 0 12536 880 13416.70 6.920
12/31/88 10000 559 1482 11482 0 14021 0 14021 1571 15592.02 7.190
12/31/89 10000 752 2234 12234 0 17801 0 17801 2806 20607.70 7.485
12/31/90 10000 787 3021 13021 0 17028 0 17028 3464 20492.51 7.781
12/31/91 10000 749 3770 13770 0 20488 0 20488 4967 25455.21 8.033
12/31/92 10000 818 4588 14588 0 21343 0 21343 5993 27336.49 8.281
12/31/93 10000 834 5422 15422 0 24272 0 24272 7694 31966.08 8.515
12/31/94 10000 927 6349 16349 0 24792 0 24792 8790 33582.03 8.758
12/31/95 10000 1031 7380 17380 0 33085 0 33085 12892 45977.32 8.985
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
1/01/86 10000.00 211.28 0.00 % 47.331 211.280 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>
12/31/86 10000 397 397 10397 0 11462 0 11462 394 11856.64 48.960
12/31/87 10000 436 833 10833 0 11694 0 11694 789 12483.47 50.524
12/31/88 10000 499 1332 11332 0 13145 0 13145 1406 14551.69 52.397
12/31/89 10000 587 1919 11919 0 16727 0 16727 2425 19152.51 54.195
12/31/90 10000 664 2583 12583 0 15629 0 15629 2924 18553.41 56.185
12/31/91 10000 694 3277 13277 0 19741 0 19741 4450 24191.64 58.001
12/31/92 10000 726 4003 14003 0 20622 0 20622 5406 26028.44 59.738
12/31/93 10000 759 4762 14762 0 22077 0 22077 6566 28643.76 61.408
12/31/94 10000 818 5580 15580 0 21737 0 21737 7277 29014.84 63.176
12/31/95 10000 880 6460 16460 0 29152 0 29152 10753 39905.49 64.789
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
1/01/86 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>
12/31/86 10000 692 692 10692 0 10000 0 10000 692 10692.28 1069.228
12/31/87 10000 660 1352 11352 0 10000 0 10000 1352 11352.87 1135.287
12/31/88 10000 742 2094 12094 0 10000 0 10000 2095 12095.88 1209.588
12/31/89 10000 908 3002 13002 0 10000 0 10000 3003 13003.35 1300.335
12/31/90 10000 936 3938 13938 0 10000 0 10000 3937 13937.76 1393.776
12/31/91 10000 850 4788 14788 0 10000 0 10000 4788 14788.67 1478.867
12/31/92 10000 611 5399 15399 0 10000 0 10000 5399 15399.81 1539.981
12/31/93 10000 490 5889 15889 0 10000 0 10000 5889 15889.09 1588.909
12/31/94 10000 506 6395 16395 0 10000 0 10000 6393 16393.92 1639.392
12/31/95 10000 514 6909 16909 0 10000 0 10000 6908 16908.07 1690.807
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 749 1561 11561 0 10000 0 10000 1558 11558.93 1155.893
12/31/87 10000 715 2276 12276 0 10000 0 10000 2273 12273.07 1227.307
12/31/88 10000 803 3079 13079 0 10000 0 10000 3076 13076.31 1307.631
12/31/89 10000 981 4060 14060 0 10000 0 10000 4057 14057.33 1405.733
12/31/90 10000 1010 5070 15070 0 10000 0 10000 5067 15067.48 1506.748
12/31/91 10000 920 5990 15990 0 10000 0 10000 5987 15987.34 1598.734
12/31/92 10000 661 6651 16651 0 10000 0 10000 6648 16648.03 1664.803
12/31/93 10000 530 7181 17181 0 10000 0 10000 7176 17176.97 1717.697
12/31/94 10000 546 7727 17727 0 10000 0 10000 7722 17722.71 1772.271
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 820 2665 12665 0 10000 0 10000 2664 12664.57 1266.457
12/31/87 10000 782 3447 13447 0 10000 0 10000 3447 13447.01 1344.701
12/31/88 10000 880 4327 14327 0 10000 0 10000 4327 14327.09 1432.709
12/31/89 10000 1074 5401 15401 0 10000 0 10000 5401 15401.95 1540.195
12/31/90 10000 1107 6508 16508 0 10000 0 10000 6508 16508.71 1650.871
12/31/91 10000 1008 7516 17516 0 10000 0 10000 7516 17516.56 1751.656
12/31/92 10000 724 8240 18240 0 10000 0 10000 8240 18240.44 1824.044
12/31/93 10000 579 8819 18819 0 10000 0 10000 8819 18819.97 1881.997
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 895 3827 13827 0 10000 0 10000 3827 13827.18 1382.718
12/31/87 10000 854 4681 14681 0 10000 0 10000 4681 14681.44 1468.144
12/31/88 10000 961 5642 15642 0 10000 0 10000 5642 15642.31 1564.231
12/31/89 10000 1173 6815 16815 0 10000 0 10000 6815 16815.84 1681.584
12/31/90 10000 1208 8023 18023 0 10000 0 10000 8024 18024.22 1802.422
12/31/91 10000 1100 9123 19123 0 10000 0 10000 9124 19124.60 1912.460
12/31/92 10000 792 9915 19915 0 10000 0 10000 9914 19914.92 1991.492
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 5328 15328.22 1532.822
12/31/87 10000 947 6276 16276 0 10000 0 10000 6275 16275.23 1627.523
12/31/88 10000 1065 7341 17341 0 10000 0 10000 7340 17340.41 1734.041
12/31/89 10000 1300 8641 18641 0 10000 0 10000 8641 18641.34 1864.134
12/31/90 10000 1340 9981 19981 0 10000 0 10000 9980 19980.88 1998.088
12/31/91 10000 1220 11201 21201 0 10000 0 10000 11200 21200.71 2120.071
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 1101 7010 17010 0 10000 0 10000 7012 17012.12 1701.212
12/31/87 10000 1052 8062 18062 0 10000 0 10000 8063 18063.16 1806.316
12/31/88 10000 1183 9245 19245 0 10000 0 10000 9245 19245.35 1924.535
12/31/89 10000 1444 10689 20689 0 10000 0 10000 10689 20689.19 2068.919
12/31/90 10000 1486 12175 22175 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 8528 18528.48 1852.848
12/31/87 10000 1145 9672 19672 0 10000 0 10000 9673 19673.20 1967.320
12/31/88 10000 1287 10959 20959 0 10000 0 10000 10960 20960.76 2096.076
12/31/89 10000 1574 12533 22533 0 10000 0 10000 12533 22533.29 2253.329
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 1288 9904 19904 0 10000 0 10000 9904 19904.84 1990.484
12/31/87 10000 1230 11134 21134 0 10000 0 10000 11134 21134.60 2113.460
12/31/88 10000 1384 12518 22518 0 10000 0 10000 12517 22517.82 2251.782
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 1372 11182 21182 0 10000 0 10000 11182 21182.53 2118.253
12/31/87 10000 1310 12492 22492 0 10000 0 10000 12491 22491.24 2249.124
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 1456 12483 22483 0 10000 0 10000 12480 22480.17 2248.017
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
1/01/91 2000.00 10.95 5.75 % 182.648 10.320 1885
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>
12/31/91 2000 115 115 2115 25 2201 26 2227 123 2350.39 195.053
12/31/92 4000 216 331 4331 98 4163 126 4289 347 4636.13 377.535
12/31/93 6000 326 657 6657 253 6191 385 6576 680 7256.13 577.258
12/31/94 8000 415 1072 9072 37 7709 404 8113 1058 9171.43 764.286
12/31/95 10000 524 1596 11596 447 11314 930 12244 1812 14056.33 993.380
TOTAL $ 860
</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 2000.00 12.36 5.75 % 161.812 11.650 1885
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>
12/31/86 2000 114 114 2114 351 1752 344 2096 107 2203.18 203.433
12/31/87 4000 259 373 4373 189 3402 514 3916 336 4252.60 419.803
12/31/88 6000 385 758 6758 202 5459 734 6193 734 6927.37 662.272
12/31/89 8000 577 1335 9335 508 8011 1313 9324 1385 10709.43 938.600
12/31/90 10000 715 2050 12050 309 8950 1494 10444 1952 12396.17 1201.179
12/31/91 12000 878 2928 14928 186 12651 1942 14593 3214 17807.59 1477.808
12/31/92 14000 1004 3932 17932 455 14813 2443 17256 4302 21558.76 1755.599
12/31/93 16000 1166 5098 21098 910 17092 3420 20512 5574 26086.45 2075.294
12/31/94 18000 1270 6368 24368 114 18116 3376 21492 6573 28065.06 2338.755
12/31/95 20000 1420 7788 27788 1212 23585 5210 28795 9280 38075.64 2690.858
TOTAL $ 4436
</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
7/26/75 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
12/31/95 10000 4335 46851 56851 3697 19464 35427 54891 61287 116178.83 8210.518
TOTAL $ 28095
</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
12/31/95 10000 4106 44079 54079 3502 19044 33550 52594 57430 110024.26 7775.566
TOTAL $ 26611
</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
12/31/95 10000 3261 34555 44555 2781 15935 26644 42579 44798 87377.06 6175.057
TOTAL $ 21132
</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
12/31/95 10000 3237 33816 43816 2760 16686 26450 43136 43601 86737.67 6129.871
TOTAL $ 20976
</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
12/31/95 10000 3048 31347 41347 2600 16589 24912 41501 40195 81696.44 5773.600
TOTAL $ 19758
</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
12/31/95 10000 2831 28599 38599 2415 16302 23142 39444 36448 75892.69 5363.441
TOTAL $ 18356
</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
12/31/95 10000 2477 24421 34421 2113 15281 20245 35526 30864 66390.65 4691.919
TOTAL $ 16059
</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
12/31/95 10000 2374 22687 32687 2024 15810 19397 35207 28402 63609.29 4495.356
TOTAL $ 15383
</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
12/31/95 10000 1834 16908 26908 1565 13237 14993 28230 20939 49169.09 3474.847
TOTAL $ 11892
</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
12/31/95 10000 1579 13925 23925 1347 12219 12903 25122 17190 42312.82 2990.305
TOTAL $ 10233
</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
12/31/95 10000 1444 12118 22118 1232 13261 10642 23903 14814 38717.71 2736.234
TOTAL $ 8589
</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
12/31/95 10000 1118 8891 18891 954 11448 7725 19173 10805 29978.91 2118.651
TOTAL $ 6288
</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
12/31/95 10000 957 7122 17122 816 12315 4688 17003 8648 25651.16 1812.803
TOTAL $ 3881
</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
12/31/95 10000 920 6277 16277 785 13163 3911 17074 7580 24654.03 1742.334
TOTAL $ 3312
</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
12/31/95 10000 815 5037 15037 695 12748 3091 15839 6003 21842.53 1543.642
TOTAL $ 2659
</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
12/31/95 10000 671 3637 13637 572 11685 1983 13668 4301 17969.86 1269.955
TOTAL $ 1739
</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
12/31/95 10000 682 3148 13148 581 12922 1696 14618 3643 18261.59 1290.572
TOTAL $ 1532
</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
12/31/95 10000 546 2061 12061 466 11063 1237 12300 2340 14640.18 1034.642
TOTAL $ 1131
</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
12/31/95 10000 500 1445 11445 426 10860 897 11757 1619 13376.66 945.347
TOTAL $ 835
</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
12/31/95 10000 449 877 10877 383 10607 432 11039 980 12019.38 849.426
TOTAL $ 421
</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
1/01/95 10000.00 12.73 5.75 % 785.546 12.000 9427
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>
12/31/95 10000 447 447 10447 381 11115 387 11502 481 11983.90 846.919
TOTAL $ 381
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 2,720,196
<INVESTMENTS-AT-VALUE> 3,136,336
<RECEIVABLES> 36,558
<ASSETS-OTHER> 64
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,172,958
<PAYABLE-FOR-SECURITIES> 120,233
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,212
<TOTAL-LIABILITIES> 125,445
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,389,704
<SHARES-COMMON-STOCK> 215,418,149
<SHARES-COMMON-PRIOR> 173,543,068
<ACCUMULATED-NII-CURRENT> 10,254
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,997
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 416,140
<NET-ASSETS> 3,047,513
<DIVIDEND-INCOME> 48,037
<INTEREST-INCOME> 79,534
<OTHER-INCOME> 0
<EXPENSES-NET> 17,016
<NET-INVESTMENT-INCOME> 110,555
<REALIZED-GAINS-CURRENT> 113,063
<APPREC-INCREASE-CURRENT> 377,528
<NET-CHANGE-FROM-OPS> 601,146
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 105,991
<DISTRIBUTIONS-OF-GAINS> 97,006
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 64,847,892
<NUMBER-OF-SHARES-REDEEMED> 36,977,727
<SHARES-REINVESTED> 14,004,916
<NET-CHANGE-IN-ASSETS> 965,627
<ACCUMULATED-NII-PRIOR> 5,690
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (60)
<GROSS-ADVISORY-FEES> 8,091
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 17,016
<AVERAGE-NET-ASSETS> 2,525,196
<PER-SHARE-NAV-BEGIN> 12.00
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> 2.61
<PER-SHARE-DIVIDEND> .56
<PER-SHARE-DISTRIBUTIONS> .47
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.15
<EXPENSE-RATIO> .007
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
