AMERICAN BALANCED FUND, INC.
One Market, Steuart Tower, San Francisco, California 94105
FELLOW SHAREHOLDERS:
We are writing to inform you of the upcoming meeting of the shareholders of
American Balanced Fund, Inc. (the "Fund") to be held at the offices of the
Corporation, One Market, Steuart Tower (Suite 1800), San Francisco, California,
on Wednesday, December 1, 1999 at 1:00 p.m., local time (the "Meeting"). At
this meeting, you are being asked to vote on important proposals affecting the
Fund. THE BOARD OF DIRECTORS OF THE FUND BELIEVES THAT THESE PROPOSALS ARE IN
THE BEST INTERESTS OF THE FUND AND ITS SHAREHOLDERS, AND RECOMMENDS THAT YOU
APPROVE ALL PROPOSALS PRESENTED FOR YOUR CONSIDERATION.
At the Meeting, you will be asked to vote on:
1. The election of a Board of 10 Directors (Proposal 1).
2. A proposal to amend the Fund's Articles of Incorporation reducing the par
value per share of the Fund's capital stock from $1.00 to $0.001 in order to
reduce certain costs (Proposal 2).
3. A proposal to eliminate or revise certain of the Fund's investment
restrictions (Proposal 3).
4. The ratification of the selection, by the Board of Directors, of Deloitte &
Touche llp as independent accountant for the Fund for the fiscal year 1999
(Proposal 4).
5. Any other business that may come before the Meeting (we are not currently
aware of any other items to be considered).
Some key points about Proposals 2, 3 and 4 are described below. The proposals
are described in more detail in the full text of the Proxy Statement which you
should read before you vote.
ABOUT PROPOSAL 2:
In Proposal 2, we are asking you to approve an amendment to the Fund's
Articles of Incorporation reducing the par value per share of the Fund's
capital stock. When the Fund increases its authorized capital stock, it must
pay a fee to Maryland, its state of incorporation, based on the aggregate par
value of the new shares. Therefore, a reduced par value per share will reduce
the amount the Fund pays in fees for the registration of its shares. THE LOWER
PAR VALUE WILL HAVE NO EFFECT ON THE VALUE OF YOUR SHARES.
ABOUT PROPOSAL 3:
Because the Fund was formed many years ago, it is subject to a number of
investment restrictions that do not reflect current conditions, practices or
legal requirements. In some cases restrictions, although described as
"fundamental" because they require shareholder approval to modify, were
originally adopted in response to state regulation that no longer applies to
the Fund. In other cases, we believe the language of the restrictions should
be modified to reflect current standards. We are also requesting a restriction
be reclassified as non-fundamental, requiring only Board approval to change.
You may vote for any or all of the changes that are the subject of Proposal 3
by so indicating on your Proxy card. THIS PROPOSAL WILL NOT AFFECT THE FUND'S
INVESTMENT OBJECTIVE, WHICH REMAINS UNCHANGED. MOREOVER, THE BOARD DOES NOT
ANTICIPATE THAT THE CHANGES, INDIVIDUALLY OR IN THE AGGREGATE, WILL INCREASE TO
A MATERIAL DEGREE THE LEVEL OF INVESTMENT RISK ASSOCIATED WITH AN INVESTMENT IN
THE FUND.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO APPROVE THESE PROPOSALS.
* * *
We are sure that you, like most people, lead a busy life and are tempted to
put this Proxy aside for another day. Please don't delay. When shareholders
do not return their Proxies, additional expenses are incurred to pay for
follow-up mailings and telephone calls.
PLEASE TAKE A FEW MINUTES TO REVIEW THIS PROXY STATEMENT AND SIGN AND RETURN
THE ENCLOSED PROXY CARD TODAY. YOU MAY ALSO VOTE YOUR PROXY BY TELEPHONE OR
THE INTERNET BY FOLLOWING INSTRUCTIONS THAT APPEAR ON THE ENCLOSED PROXY
INSERT. Please be sure to vote each Proxy card regardless of how many you
receive.
If you have any questions regarding the issues to be voted on or need
assistance in completing your Proxy card, please contact at (800) 421-0180.
Thank you for investing with us and for your continuing support.
Walter P. Stern
Chairman of the Board
<PAGE>
AMERICAN BALANCED FUND, INC.
________
NOTICE OF MEETING OF SHAREHOLDERS
December 1, 1999
________
To the Shareholders of
American Balanced Fund, Inc.:
A Meeting of Shareholders of American Balanced Fund, Inc. (the "Fund") will be
held at the offices of the Corporation, One Market, Steuart Tower (Suite 1800),
San Francisco, California, on Wednesday, December 1, 1999 at 1:00 p.m., local
time, to consider and vote on the following matters described under the
corresponding numbers in the accompanying Proxy Statement:
(1) election of a Board of 10 Directors;
(2) approval of amendment to the Fund's Articles of Incorporation reducing the
par value per share of the Fund's capital stock from $1.00 to $0.001;
(3) approval of the elimination or revision of certain of the Fund's
fundamental investment policies;
(4) ratification of the selection of Deloitte & Touche LLP as independent
accountant for the Fund for the fiscal year 1999;
(5) such other matters as may properly come before the meeting.
You are entitled to vote if you held shares of the Fund at the close of
business on September 14, 1999.
THE PROPOSED BUSINESS CANNOT BE CONDUCTED AT THE MEETING UNLESS THE HOLDERS OF
A MAJORITY OF THE SHARES OF THE FUND OUTSTANDING ON THE RECORD DATE ARE PRESENT
IN PERSON OR BY PROXY. THEREFORE, PLEASE MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS. THE PROXY IS
REVOCABLE, AND YOUR SIGNING WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ATTEND THE MEETING.
By Order of the Board of Directors,
Patrick F. Quan
Secretary
October 6, 1999
IMPORTANT
You can help the Fund avoid the necessity and expense of sending follow-up
letters to ensure a quorum by promptly returning the enclosed Proxy. Please
mark, date, sign and return the enclosed Proxy so that the necessary quorum may
be represented at the meeting. The enclosed envelope requires no postage if
mailed in the United States. You may also vote by telephone or the Internet by
following instructions that appear on the enclosed Proxy insert.
<PAGE>
AMERICAN BALANCED FUND, INC.
ONE MARKET, STEUART TOWER, SAN FRANCISCO, CALIFORNIA
----------------
PROXY STATEMENT
MEETING OF SHAREHOLDERS
DECEMBER 1, 1999
----------------
The enclosed Proxy is solicited by the Board of Directors of the Fund in
connection with the Meeting of Shareholders to be held on Wednesday, December
1, 1999. Every Proxy returned in time to be voted at the meeting will be voted
and, if a specification is made with respect to any proposal, the Proxy will be
voted accordingly. If no specification is made, the Proxy will be voted in
favor of the proposal. You can revoke a Proxy prior to its exercise, either by
filing with the Fund a written notice of revocation, by delivering a duly
executed Proxy bearing a later date, or by attending the meeting and voting in
person. This Proxy was first mailed to shareholders on or about October 6,
1999.
At the close of business on September 14, 1999, the record date fixed by the
Board of Directors for the determination of shareholders entitled to notice of
and to vote at the meeting, there were outstanding
shares of capital stock, $1.00 par value per share, the only authorized class
of voting securities of the Fund (the "Shares"). Each Share is entitled to one
vote. There is no provision for cumulative voting. No person owned of record or
was known by the Fund to own beneficially 5% or more of the outstanding Shares
of the Fund.
With respect to the election of directors (Item 1), the 10 nominees receiving
the highest number of votes will be elected. The vote required to approve Item
2 is the affirmative vote of more than 50% of all outstanding voting Shares on
the record date. The vote required to approve Item 3 is the affirmative vote
of the lesser of (a) 67% or more of all Shares present in person or by proxy,
provided the holders of more than 50% of all outstanding voting Shares are
present or represented by proxy, or (b) more than 50% of all outstanding voting
Shares on the record date. The vote required to approve Item 4 is the
affirmative vote of a majority of Shares present in person or represented by
proxy.
If sufficient votes are not received by the meeting date, a person named as
proxy may propose one or more adjournments of the meeting for up to 120 days in
the aggregate to permit further solicitation of Proxies. The persons named as
proxies may vote all Proxies in favor of such adjournment. Signed but unmarked
Proxies will be voted for the directors nominated below and in favor of all
proposals. Shareholders who return Proxies marked as abstaining from voting on
one or more proposals are treated as being present at the meeting for purposes
of obtaining the quorum necessary to hold the meeting, but are not counted as
part of the vote necessary to approve the proposal(s). If brokers holding
Shares for their customers in Street Name have not received instructions and
are not authorized to vote without instruction, those Shares also will be
treated as abstentions.
1. ELECTION OF DIRECTORS
Ten directors are to be elected at the meeting, each to hold office until the
next meeting of shareholders and until a successor is elected and qualified.
Because we do not expect meetings of shareholders to be held each year, the
directors' terms will be indefinite in length. All of the nominees for
director except Robert G. O'Donnell, James K. Peterson and Walter P. Stern were
elected by shareholders at the last shareholders meeting on June 22, 1993. Mr.
Stern and Mr. O'Donnell were elected by directors effective August 11, 1994
and December 12, 1997, respectively. The Board of Directors nominated Mr.
Peterson on August 12, 1999 for election by shareholders at this meeting.
Each of the nominees has agreed to serve as director if elected. If, due to
presently unforeseen circumstances, any nominee is not available for election,
the persons named as proxies will vote the signed but unmarked Proxies and
those marked for the nominated directors for such other nominee as the present
directors may recommend. The table below sets forth certain information
regarding the nominees.
<TABLE>
<CAPTION>
NAME OF NOMINEE CURRENT PRINCIPAL YEAR FIRST MEMBERSHIPS ON BOARD SHARES
(POSITION WITH OCCUPATION AND ELECTED A OF OTHER REGISTERED BENEFICIALLY
FUND) PRINCIPAL DIRECTOR INVESTMENT COMPANIES OWNED,
AND AGE EMPLOYMENT DURING AND PUBLICLY HELD DIRECTLY OR
PAST FIVE YEARS # COMPANIES INDIRECTLY,
AT SEPTEMBER
14, 1999
<S> <C> <C> <C> <C>
Robert A. Fox President and 1976-1978, The American Funds
(Director) Chief Executive 1982 Group:
62 Officer, Foster
Farms, Inc. (Director/Trustee -
6 other funds)
Crompton & Knowles
Corporation
Roberta L. Consultant; Rear 1993 The American Funds
Hazard Admiral, United Group:
(Director) States Navy
64 (Retired) (Director - 3 other
funds)
Leonade D. Management 1993 The American Funds
Jones consultant; former Group:
(Director) Treasurer, The
51 Washington Post (Director/Trustee -
Company 5 other funds)
John G. The IBJ Professor 1975-1978, The American Funds
McDonald of Finance, 1988 Group:
(Director) Graduate School of
62 Business, Stanford (Director/Trustee -
University 7 other funds)
Emerging Markets
Growth Fund
Plum Creek Timber Co.
Scholastic Corporation
TriNet Corp.
Varian, Inc.
Robert G. Senior Vice 1997 The American Funds
O'Donnell* President and Group:
(President and Director, Capital
Director) Research and (Director - 1 other
55 Management Company fund)
James K. Managing Director, Nominee The American Funds
Peterson Oak Glen Group:
58 Consultancy, LLC
(Nominee for
Director - 1 other
fund)
RS Funds
James W. Senior Partner, 1982 The American Funds
Ratzlaff* The Capital Group Group:
(Director) Partners, L.P.;
63 former Vice (Director - 6 other
Chairman of the funds)
Board, Capital
Research and
Management Company
Henry E. Riggs President, Keck 1989 The American Funds
(Director) Graduate Institute Group:
64 of Applied Life
Sciences at (Director - 3 other
Claremont; former funds)
President and
Professor of
Engineering,
Harvey Mudd
College
Walter P. Vice Chairman, 1994 The American Funds
Stern* Capital Group Group:
(Chairman of International,
the Board) Inc.; Chairman, (Director - 2 other
71 Capital funds)
International,
Inc.; Director,
Temple-Inland Inc.
(forest products).
Patricia K. Private investor; 1988 The American Funds
Woolf lecturer, Group:
(Director) Department of
65 Molecular Biology, (Director/Trustee -
Princeton 5 other funds)
University; Crompton & Knowles
Corporate Director Corporation General
Public Utilities
Corporation
National Life Holding
Co.
</TABLE>
__________
# Corporate positions, in some instances, may have changed during this period.
* Is considered an interested person of the Fund within the meaning of the
Investment Company Act of 1940 (the "1940 Act"), on the basis of his
affiliation with Capital Research and Management Company (the "Investment
Adviser"). The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.
+ Includes Shares beneficially held under a master retirement plan.
Capital Research and Management Company manages The American Funds Group
consisting of 29 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., New World 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 vehicles for
certain variable insurance contracts and Endowments, whose shareholders are
limited to (i) any entity exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended ("501(c)(3) organization"), (ii) any
trust, the present or future beneficiary of which is a 501(c)(3) organization,
and (iii) any other entity formed for the primary purpose of benefiting a
501(c)(3) organization. An affiliate of Capital Research and Management
Company, Capital International, Inc., manages Emerging Markets Growth Fund,
Inc.
The Fund has an Audit Committee composed of Robert A. Fox, Roberta L. Hazard,
Leonade D. Jones and John G. McDonald. The function of the Committee includes
such specific matters as recommending the independent accountant to the Board
of Directors, reviewing the audit plan and results of the audits and
considering other matters deemed appropriate for consideration by the Board of
Directors and/or the Committee.
The Fund has a Nominating Committee composed of Robert A. Fox, Leonade D.
Jones, John G. McDonald and Patricia K. Woolf. The Committee's functions
include selecting and recommending to the Board of Directors nominees for
election as directors of the Fund. While the Committee normally is able to
identify from its own resources an ample number of qualified candidates, it
will consider shareholder suggestions of persons to be considered as nominees
to fill future vacancies on the board. Such suggestions must be sent in
writing to the Nominating Committee of the Fund, c/o the Fund's Secretary, and
must be accompanied by complete biographical and occupational data on the
prospective nominee, along with a written consent of the prospective nominee to
consideration of his or her name by the Committee. See also "Shareholder
Proposals."
The Fund has a Contracts Committee composed of all directors who are not
considered to be "interested persons" of the Fund within the meaning of the
1940 Act. The Contracts Committee's function is to request, review and
consider the information deemed necessary to evaluate the terms of the
investment advisory and principal underwriting agreements and the Plan of
Distribution under rule 12b-1 that the Fund proposes to enter into, renew or
continue and to make its recommendations to the full Board of Directors on
these matters.
The Fund has a Proxy Committee composed of Leonade D. Jones, John G. McDonald,
Henry E. Riggs and Patricia K. Woolf. The Committee's functions include
reviewing and voting portfolio proxies of the Fund and discussing related
current issues.
Each director is paid a fee of $10,000 per annum plus $1,000 for each Board of
Directors meeting attended and $500 for each meeting attended as a member of a
committee of the Board of Directors. Members of the Proxy Committee receive an
annual retainer fee of $4,000 per annum from the Fund if they serve as a member
of three other proxy committees, or $5,500 if they serve as a member of one
other proxy committee, meeting jointly.
There were four Board of Directors, two Audit Committee, no Nominating
Committee, two Contracts Committee, and four Proxy Committee meetings during
the year ended December 31, 1998. All incumbent directors attended at least
90% of all Board meetings and meetings of the committees of which they were
members.
The Fund pays no salaries or other compensation to its directors other than
directors fees, which are paid to those directors who are unaffiliated with the
Investment Adviser as described below.
DIRECTOR COMPENSATION
<TABLE>
<CAPTION>
Director or Nominee Aggregate Compensation Total Compensation Total Number
(including Voluntarily (including of Fund
Deferred Compensation/1/) Voluntarily Deferred Boards on
from the Fund during Compensation) which
Fiscal Year ended from all Funds Director
12/31/98 Managed by Capital Serves /2/
Research and
Management Company or
its affiliates during
the Fiscal Year ended
12/31/98
<S> <C> <C> <C>
Robert A. Fox $12,950 (deferred)/4/ $106,817 7
Roberta L. Hazard $12,950 $66,317 4
Leonade D. Jones $16,533/4/ $107,967 6
John G. McDonald $16,950 (deferred)/4/ $201,867 9
Robert G. O'Donnell none/5/ none/5/ 2
James K. Peterson /3/ none none none
James W. Ratzlaff none/5/ none/5/ 7
Henry E. Riggs $15,150 (deferred)/4/ $81,900 4
Walter P. Stern none/5/ none/5/ 3
Patricia K. Woolf $16,150 $109,217 6
</TABLE>
/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/ Includes funds managed by Capital Research and Management Company and
affiliates.
/3/ James K. Peterson has been nominated as a director of the Fund and had not
received any remuneration from the Fund as of its 12/31/98 fiscal year end.
/4/ Since the deferred compensation plan's adoption in 1993, the total amount
of deferred compensation accrued by the Fund (plus earnings thereon) as of the
fiscal year ended December 31, 1998 for participating directors is as follows:
Robert A. Fox ($141,230), Leonade D. Jones ($50,498), John G. McDonald
($75,799) and Henry E. Riggs ($85,286). Amounts deferred and accumulated
earnings thereon are not funded and are general unsecured liabilities of the
Fund until paid to the director.
/5/ Robert G. O'Donnell, James W. Ratzlaff and Walter P. Stern are affiliated
with the Fund's Investment Adviser and, therefore, receive no remuneration from
the Fund.
OTHER EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION /1/ OFFICER
(POSITION WITH FUND) CONTINUOUSLY
AND AGE SINCE /2/
<S> <C> <C>
ABNER D. GOLDSTINE SENIOR VICE PRESIDENT AND DIRECTOR, 1990
(SENIOR VICE PRESIDENT) CAPITAL RESEARCH AND MANAGEMENT COMPANY
69
PAUL G. HAAGA, JR. EXECUTIVE VICE PRESIDENT AND DIRECTOR, 1994
(SENIOR VICE PRESIDENT) CAPITAL RESEARCH AND MANAGEMENT COMPANY;
50 DIRECTOR, AMERICAN FUNDS SERVICE COMPANY;
DIRECTOR, AMERICAN FUNDS DISTRIBUTORS,
INC.
HILDA L. APPLBAUM VICE PRESIDENT, CAPITAL RESEARCH COMPANY 1999
(VICE PRESIDENT)
38
J. DALE HARVEY VICE PRESIDENT, CAPITAL RESEARCH COMPANY 1997
(VICE PRESIDENT)
34
ERIC S. RICHTER SENIOR VICE PRESIDENT AND DIRECTOR, 1995
(VICE PRESIDENT) CAPITAL RESEARCH COMPANY
39
PATRICK F. QUAN VICE PRESIDENT - FUND BUSINESS MANAGEMENT 1986
(SECRETARY) GROUP, CAPITAL RESEARCH AND MANAGEMENT
41 COMPANY
ANTHONY W. HYNES, JR. VICE PRESIDENT - FUND BUSINESS MANAGEMENT 1998
(TREASURER) GROUP, CAPITAL RESEARCH AND MANAGEMENT
36 COMPANY
</TABLE>
________________________
/1/ THE OCCUPATIONS SHOWN REFLECT THE PRINCIPAL EMPLOYMENT OF EACH INDIVIDUAL
DURING THE PAST FIVE YEARS. CORPORATE POSITIONS, IN SOME INSTANCES, MAY HAVE
CHANGED DURING THIS PERIOD.
/2/ OFFICERS HOLD OFFICE UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED, OR
UNTIL THEY RESIGN OR ARE REMOVED.
NO OFFICER, DIRECTOR OR EMPLOYEE OF THE INVESTMENT ADVISER RECEIVES ANY
REMUNERATION FROM THE FUND. ALL DIRECTORS AND OFFICERS AS A GROUP OWNED
BENEFICIALLY FEWER THAN 1% OF THE SHARES OUTSTANDING ON SEPTEMBER 14, 1999.
2. APPROVAL OF AMENDMENT TO THE FUND'S ARTICLES OF INCORPORATION (REDUCTION IN
PAR VALUE)
On August 12, 1999, the Fund's Board of Directors approved an amendment to
the Fund's Articles of Incorporation to reduce the par value of shares of
capital stock of the Fund from $1.00 to $0.001 per share, and to submit such
amendment to the Fund's shareholders with the Board's recommendation that it be
approved. This proposed amendment is attached to the Proxy Statement as
Exhibit A.
Under Maryland law, the par value of shares determines the amount of a
corporation's stated capital. Stated capital has little meaning for an
investment company like the Fund. However, when the Fund increases its
authorized capital stock, it must pay a registration fee to the State of
Maryland based on the aggregate par value of the new shares. This change will
have no effect on the value of your shares. The Board of Directors therefore
recommends that the par value of the Fund's shares of capital stock be reduced
in order to save the Fund some expense in connection with the proposed increase
in authorized capital stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS PROPOSAL.
3. APPROVAL OF THE ELIMINATION OR REVISION OF CERTAIN OF THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES
INTRODUCTION AND SUMMARY
The Fund is subject to investment restrictions which establish percentage and
other limits that govern its investment activities. Under the 1940 Act,
investment restrictions relating to certain activities are required to be
"fundamental," which means that any changes require shareholder approval.
Investment companies, including the Fund, are permitted to designate additional
restrictions as fundamental. They may also adopt "non-fundamental" investment
restrictions, which may be changed by the Fund's Board of Directors without
shareholder approval.
Some of its existing fundamental investment restrictions reflect regulatory,
business or industry conditions, practices or requirements that have changed or
no longer exist. With the passage of time, the development of new practices,
and changes in regulatory standards, management believes certain fundamental
restrictions should be revised, eliminated or re-classified as non-fundamental.
The Board of Directors, together with the Fund's senior officers, have
analyzed the current fundamental investment restrictions, and have concluded
that five restrictions should be amended. One restriction would be revised but
remain fundamental, three restrictions would be eliminated and one restriction
would be revised and re-classified as non-fundamental.
The proposed investment restrictions have been drafted to maintain important
investor protections while providing flexibility to respond to future legal,
regulatory and market changes. By reducing the number of policies that can be
changed only by shareholder vote, the Board of Directors and the Fund will have
greater flexibility to modify Fund policies, as appropriate, in response to
changing markets and in light of new investment opportunities and instruments.
The Fund will then be able to avoid the costs and delays associated with a
shareholder meeting when making changes to the non-fundamental investment
policies that the Board may consider desirable.
IMPORTANTLY, THE PROPOSED AMENDMENTS DO NOT AFFECT THE INVESTMENT OBJECTIVES
OF YOUR FUND, WHICH REMAIN UNCHANGED. MOREOVER, THE BOARD DOES NOT ANTICIPATE
THAT THE CHANGES, INDIVIDUALLY OR IN THE AGGREGATE, WILL CHANGE TO A MATERIAL
DEGREE THE LEVEL OF INVESTMENT RISK ASSOCIATED WITH AN INVESTMENT IN THE FUND.
The text of each proposed change to the Fund's fundamental restrictions is set
forth below. Shareholders may vote for any or all of the changes that are the
subject of Proposal 3. If the proposed changes are approved by the Fund's
shareholders, the Fund's prospectus and statement of additional information
will be revised to reflect those changes.
RESTRICTION PROPOSED TO BE REVISED BUT REMAIN FUNDAMENTAL
3A. BORROWING
The 1940 Act permits mutual funds generally to borrow up to 33 1/3% of the
value of their total assets. Under the Fund's current policy, it may borrow up
to 5% of total assets, taken at lower of cost or market, for extraordinary or
emergency purposes. It is proposed that the restriction be modified to permit
the Fund to grant a lender a security interest in its assets, since mutual fund
borrowings are often undertaken on such terms. It is also proposed that the
maximum borrowing level be calculated using current market values. This will
facilitate the mechanics of borrowing in an emergency situation. The Fund would
continue to have authority to borrow only temporarily for extraordinary or
emergency purposes.
CURRENT TEXT
[The Fund may not] 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.
PROPOSED TEXT
[The Fund may not] borrow money, except temporarily for extraordinary or
emergency purposes, in an amount not exceeding 5% of the fund's total assets at
the time of such borrowing.
RESTRICTIONS PROPOSED TO BE ELIMINATED
None of the following investment restrictions are required by the 1940 Act.
Many were originally adopted in response to state law restrictions or
interpretations which no longer apply. Therefore, in order to increase the
ability of Fund management to manage the Fund's assets effectively and
efficiently in response to market and regulatory change, it is proposed that
the following investment restrictions, which are currently listed as
fundamental, be eliminated. Further explanations pertaining to specific
restrictions are set forth below.
3B. JOINT TRADING ACCOUNT
The restriction below is derived from a provision of the 1940 Act that
generally prohibits the Fund from participating on a joint or a joint and
several basis in any trading account in securities. However, the 1940 Act does
not require that this limitation be stated as a fundamental restriction.
Elimination of this restriction would permit the Fund to participate in such
accounts (or engage in similar activities) to the extent permitted by the
federal securities laws or exemptions therefrom issued by the Securities and
Exchange Commission (the "SEC").
CURRENT TEXT
[The Fund may not] 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.)
3C. SECURITIES TRANSACTIONS WITH AFFILIATES
The following restriction is similar to a provision of the 1940 Act that
generally prohibits the Fund from engaging in securities transactions with
affiliates acting as principal. It is not required to be stated as a
fundamental restriction. Elimination of this restriction would permit the Fund
to engage in such transactions to the extent permitted by the federal
securities laws or exemptions therefrom issued by the SEC.
CURRENT TEXT
[The Fund may not] 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.
3D. AFFILIATED OWNERSHIP
The purposes intended to be served by this restriction are covered by the
Fund's Code of Ethics and by separate provisions of the 1940 Act.
CURRENT TEXT
[The Fund may not] 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.
RESTRICTION PROPOSED TO BE REVISED AND RECLASSIFIED AS NON-FUNDAMENTAL
The following investment restriction is not required by current law to be
"fundamental" (I.E, subject to amendment only with shareholder approval). It
is proposed that it be restated and changed from fundamental to
non-fundamental. This will provide the Board with the ability to revise the
restriction in the future should conditions warrant and will enable the Fund to
avoid the additional expense of a shareholder solicitation in connection with
future revisions.
3E. PURCHASING SECURITIES OF OTHER INVESTMENT COMPANIES
This restriction deals with certain anti-pyramiding concerns addressed by the
1940 Act. The proposed revision would allow the Fund to invest to a limited
degree in entities falling within the technical definition of an investment
company. On occasion, certain issuers in various lines of business, primarily
financial, fall within this definition but otherwise represent attractive
investment opportunities, consistent with the Fund's investment objective.
Current industry practice is to rely on the 1940 Act for investor protection.
CURRENT TEXT
[The Fund may not] 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.
PROPOSED TEXT
[The Fund may not] invest in securities of other investment companies, except
as permitted by the Investment Company Act of 1940, as amended.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THESE PROPOSED
CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS.
4. RATIFICATION OF THE SELECTION BY THE BOARD OF DIRECTORS OF DELOITTE & TOUCHE
LLP AS INDEPENDENT PUBLIC ACCOUNTANT
Shareholders are requested to ratify the selection by the Board of Directors
(including a majority of the directors who are not "interested persons" of the
Fund as that term is defined in the 1940 Act) of the firm of Deloitte & Touche
LLP as independent accountant for the Fund for the fiscal year 1999. In
addition to the normal audit services, Deloitte & Touche LLP provides services
in connection with the preparation and review of federal and state tax returns
for the Fund. Deloitte & Touche LLP has served as the Fund's independent
accountant since 1991 and has advised the Fund that it has no material direct
or indirect financial interest in the Fund or its affiliates. The Fund's Audit
Committee recommended that Deloitte & Touche LLP be selected as the Fund's
independent accountant for the current fiscal year. The employment of the
accountant is conditioned upon the right of the Fund to terminate such
employment forthwith without any penalty. No representative of the firm of
Deloitte & Touche LLP is expected to attend the Meeting of Shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
ITS SELECTION OF DELOITTE & TOUCHE LLP.
OTHER MATTERS
Neither the persons named in the enclosed Proxy nor the Board of Directors are
aware of any matters that will be presented for action at the meeting other
than the matters described above. If any other matters properly requiring a
vote of shareholders arise, the proxies will confer upon the person or persons
entitled to vote the Shares they represent a discretionary authority to vote
the Shares in respect to any such other matters in accordance with their best
judgment in the interest of the Fund and its shareholders.
SHAREHOLDER PROPOSALS
Any shareholder proposals for inclusion in proxy solicitation material for a
shareholders meeting should be submitted to the Secretary of the Fund, at the
Fund's principal executive offices, One Market, Steuart Tower, Suite 1800, San
Francisco, CA 94105. Any such proposals must comply with the requirements of
rule 14a-8 under the Securities Exchange Act of 1934.
Under the laws of Maryland, where the Fund is incorporated, and the Fund's
Articles of Incorporation and By-Laws, the Fund is not required to hold regular
meetings of shareholders. Under the 1940 Act, a vote of shareholders is
required from time to time for particular matters but not necessarily on an
annual basis. As a result, the Fund does not expect to hold shareholders
meetings on a regular basis, and any shareholder proposal received may not be
considered until such a meeting is held.
GENERAL INFORMATION
Capital Research and Management Company is the investment adviser to the Fund
and is located at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821. American Funds Distributors, Inc. is
the principal underwriter of the Fund's shares and is located at the Los
Angeles and Brea addresses above and also at 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513.
The enclosed Proxy is solicited by and on behalf of the Board of Directors of
the Fund. The Fund will pay the cost of soliciting proxies, consisting of
printing, handling and mailing of the Proxies and related materials. In
addition to solicitation by mail, certain officers and directors of the Fund,
who will receive no extra compensation for their services, may solicit by
telephone, telegram or personally. WE URGE ALL SHAREHOLDERS TO MARK, DATE,
SIGN, AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY ALSO VOTE YOUR PROXY BY
TELEPHONE OR THE INTERNET BY FOLLOWING INSTRUCTIONS THAT APPEAR ON THE ENCLOSED
PROXY INSERT.
YOU MAY OBTAIN A COPY OF THE FUND'S MOST RECENT ANNUAL REPORT, WITHOUT CHARGE,
BY WRITING TO THE SECRETARY OF THE FUND AT ONE MARKET, STEUART TOWER, SUITE
1800, SAN FRANCISCO, CA 94105 OR BY TELEPHONING 800/421-0180. THESE REQUESTS
WILL BE HONORED WITHIN THREE BUSINESS DAYS OF RECEIPT.
By Order of the Board of Directors
PATRICK F. QUAN
Secretary
October 6, 1999
<PAGE>
EXHIBIT A
AMERICAN BALANCED FUND, INC.
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION OF THE FUND
REDUCING THE PAR VALUE
The following text shows the provision of the Articles of Incorporation of the
Fund that is to be amended; the text that is lined through shows deletions and
the text that is underlined indicates additions.
VI.
CAPITAL STOCK
(a) The total number of shares of capital stock which the Corporation shall
have the authority to issue is Five Hundred Million (500,000,000) shares (par
value $0.001 per share), amounting in aggregate par value to Five Hundred
Thousand Dollars ($500,000). The Board of Directors of the Corporation is
hereby empowered to increase or decrease, from time to time, the total number
of shares of capital stock or the number of shares of capital stock of any
class or series that the Corporation shall have authority to issue without any
action by the shareholders.
THIS NOTICE OF MEETING OF SHAREHOLDERS AND PROXY STATEMENT
HAS BEEN PRINTED ON RECYCLED PAPER THAT MEETS THE
GUIDELINES OF THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY.
<PAGE>
PROXY CARD AMERICAN BALANCED FUND, INC. PROXY CARD
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND
FOR THE MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 1, 1999
The undersigned hereby appoints Robert G. O'Donnell, Patrick F. Quan and Walter
P. Stern, and each of them, his/her true and lawful agents and proxies with
full power of substitution to represent the undersigned at the Meeting of
Shareholders to be held at the offices of the Fund, One Market, Steuart Tower
(Suite 1800), San Francisco, California, on Wednesday, December 1, 1999, at
1:00 P.M., on all matters coming before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER YOU DIRECTED. IF
NO DIRECTION IS GIVEN, WITH RESPECT TO ANY PARTICULAR ITEM, THIS PROXY WILL BE
VOTED FOR THE NOMINEES IN ITEM 1 AND FOR ITEMS 2, 3 AND 4.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS CARD. JOINT OWNERS
SHOULD EACH SIGN INDIVIDUALLY. CORPORATE PROXIES SHOULD BE SIGNED IN FULL
CORPORATE NAME BY AN AUTHORIZED OFFICER. FIDUCIARIES SHOULD GIVE FULL TITLES.
Signature
Signature of joint owner, if any
Date
AMERICAN BALANCED FUND, INC.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: []
<TABLE>
<CAPTION>
1. Election of FOR ALL WITHHOLD ALL EXCEPT
Directors:
<S> <C> <C> <C> <C> <C>
01 Robert A. 05 Robert G. 08 Henry E.
Fox O'Donnell Riggs
02 Roberta L. 06 James K. 09 Walter P. [] [] []
Hazard Peterson Stern
03 Leonade D. 07 James W. 10 Patricia K.
Jones Ratzlaff Woolf
04 John G.
McDonald
</TABLE>
To withhold your vote for any individual nominee, mark the "For All Except" box
and write the nominee's number on the line provided below.
_____________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. Approval of an amendment to the Articles of [] [] []
Incorporation reducing the par value per share:
3. Approval of the proposed changes to the Fund's
investment restrictions.
3A. Amend restriction regarding borrowing [] [] []
3B. Eliminate restriction on joint trading account [] [] []
3C. Eliminate restriction on securities transactions [] [] []
with affiliates
3D. Eliminate restriction on affiliated ownership [] [] []
3E. Amend and reclassify as non-fundamental [] [] []
restriction regarding purchasing securities of other
investment companies
4. Ratification of selection of Deloitte & Touche LLP as [] [] []
independent accountant:
</TABLE>
In their discretion, upon other matters as may properly come before the
meeting.
IMPORTANT
SHAREHOLDERS CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF
SENDING FOLLOW-UP LETTERS BY PROMPTLY RETURNING THIS PROXY.
