[THE AMERICAN FUNDS GROUP(R)]
AMERICAN BALANCED FUND
[cover: illustration of wheat field]
1999 SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED JUNE 30
American Balanced Fund(r) seeks conservation of capital, current income, and
long-term growth of both capital and income by investing in stocks and
fixed-income securities. It is managed as though it constitutes the complete
investment program of the prudent investor.
American Balanced Fund is one of the 29 mutual funds in The American Funds
Group,(r) the nation's third-largest mutual fund family. For more than six
decades, Capital Research and Management Company, the American Funds adviser,
has invested with a long-term focus based on thorough research and attention to
risk.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
returns with all distributions reinvested for periods ended June 30, 1999,
assuming payment of the 5.75% maximum sales charge at the beginning of the
stated periods - 10 years: +220.35%, or +12.35% a year; 5 years: +105.10%, or
+15.45% a year; 12 months: +7.47%. Sales charges are lower for accounts of
$50,000 or more. The fund's 30-day yield as of July 31, 1999, calculated in
accordance with the Securities and Exchange Commission formula, was 3.50%.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY.
FELLOW SHAREHOLDERS:
The stock market continued to register strong gains during the first six months
of 1999. Bond prices, which in recent years have followed stocks higher, had a
different fate. The prices of fixed-income securities fell as fears of possible
inflation pushed interest rates higher.
In this mixed environment, American Balanced Fund earned a total return of 8.9%
for the six months ended June 30, outpacing the Lipper Balanced Funds Index,
which had a 6.2% return. The fund's results assume you reinvested your income
dividends of 28 cents a share as well as the capital gain distribution of 19.1
cents a share paid during the period. The U.S. stock market, as measured by the
unmanaged Standard & Poor's 500 Stock Composite Index, rose 12.4% while
investment-grade bonds, as measured by the unmanaged Lehman Brothers Aggregate
Bond Index, declined 1.4%.
[Begin pull quote]
DURING THE SECOND QUARTER OF 1999, THE SOURCES OF THE INDEX'S STRENGTH
BROADENED AND MORE STOCKS ROSE IN PRICE.
[End pull quote]
A BROADENING MARKET
In recent reports we have noted that the S&P 500's gains have been powered by a
small number of very large, highly valued stocks with low yields. During the
second quarter of 1999, the sources of the index's strength broadened and more
stocks rose in price. In the first quarter 221 stocks in the S&P 500 rose and
167 beat the index itself, while in the second quarter 389 stocks had positive
results and 299 outperformed the index.
As the market broadened, some sectors which had previously lagged gained
ground. The stocks of oil, metals and paper products companies rose in price.
The fund had significant exposure in these areas and benefited from their
gains. A year ago, many of these same industries were suffering from the
economic slowdown in Asia that caused exports to the region to drop sharply. As
the Asian economies have regained momentum in recent months, demand has picked
up and commodity prices have firmed.
Other stocks benefited greatly from the market's continued upward movement. Two
of the fund's largest holdings at the beginning of the period, Hewlett-Packard,
the largest, and IBM, the 10th-largest, registered substantial gains during the
six months. Hewlett-Packard gained 47.1% and IBM rose 40.0%. Nokia, the Finnish
telecommunications company, also rose sharply, up 52.1%, and Alcoa was up
65.9%.
While cyclical stocks were strong, stocks less tied to the growth of the
economy, such as health care and food companies, lagged the overall market. The
fund took advantage of this weakness to increase its holdings in the food
industry from 0.9% of assets to 2.1% at period-end.
THE BOND MARKET SLIPS
The U.S. economy's continued growth, while good for stocks, wasn't welcome news
in the bond market. Investors, concerned that inflationary pressures were
building, began anticipating higher interest rates. Amid these concerns, bond
prices, which move counter to interest rates, fell. Similar concerns about the
strong economy caused the Federal Reserve Board to raise short-term interest
rates 0.25% on June 30, the last day of this reporting period.
While all segments of the bond market suffered as interest rates rose, the
prices of high-quality corporate securities declined more slowly than the
prices of comparable U.S. Treasuries. This reversed last year's pattern when
Treasuries, which make up the largest portion of American Balanced Fund's
fixed-income holdings, far outpaced virtually all parts of the bond market. The
Asian economic crisis had prompted investors around the globe to move their
assets into U.S. Treasury bonds, considered by many to be the world's safest
investment. During this "flight to quality," investors bid up the prices of
Treasury bonds. As the Asian crisis subsided and U.S. economic growth
continued, sentiment shifted again. For example, demand for corporate
fixed-income securities, which make up 12% of the fund's portfolio and 39% of
the fund's bond holdings, increased relative to demand for Treasuries. As a
result, the difference in yields between corporate securities and Treasuries
moved close to its 1998 level.
It is American Balanced Fund's policy to maintain at all times between 50% and
75% of its assets invested in equities. At the end of this fiscal period, 58%
of the fund's portfolio was invested in stocks and 32% in bonds, with the
remainder in cash and equivalents. This position is essentially unchanged from
the beginning of the year and reflects our moderately cautious outlook due to
continued high equity valuations. Common stocks, as measured by the S&P 500,
have compounded at 27.8% annually for the past five years. We believe this
level of return is not sustainable over the long term.
During the period the number of shareholder accounts grew by almost 7%. We
welcome all our new shareholders and look forward to reporting to you again in
six months.
Cordially,
/s/Walter P. Stern /s/Robert G. O'Donnell
Walter P. Stern Robert G. O'Donnell
Chairman of the Board President
August 12, 1999
<TABLE>
American Balanced Fund, Inc.
<S> <C>
TEN LARGEST EQUITY HOLDINGS Percent of Net Assets
U S WEST 1.34
Sara Lee 1.25
Bank of America 1.24
Phillips Petroleum 1.22
May Department Stores 1.22
York International 1.14
Allstate 1.13
Kerr-McGee 1.10
Genuine Parts 1.10
J.C. Penney 1.07
[begin pie chart]
INVESTMENT MIX BY SECURITY TYPE
Common Stocks 58%
Government Bonds 19%
Corporate Bonds 12%
Convertible Debentures & Preferred Stock 1%
Short-Term Securities & Cash Equivalents 10%
[end pie chart]
</TABLE>
<TABLE>
American Balanced Fund, Inc.
<S> <C> <C> <C>
Investment Portfolio, June 30, 1999 unaudited
Number of Market ValuPercent of
COMMON STOCKS Shares (000)Net Assets
- -------------------------------------------- ------------------------------------
Energy
Energy Sources - 5.53%
Ashland Inc. 1,000,000 40,125 .63
Kerr-McGee Corp. 1,400,000 70,262 1.10
Murphy Oil Corp. 1,067,400 52,102 .82
Phillips Petroleum Co. 1,550,000 77,984 1.22
Texaco Inc. 650,000 40,625 .64
Ultramar Diamond Shamrock Corp. 1,800,000 39,262 .62
Valero Energy Corp. 1,500,000 32,156 .50
Utilities: Electric & Gas - 2.59%
Carolina Power & Light Co. 750,000 32,109 .50
Central and South West Corp. 2,000,000 46,750 .73
Constellation Energy Group, Inc. (formerly Baltimore 1,800,000 53,325 .84
Gas and Electric Co.)
FPL Group, Inc. 600,000 32,775 .52
---------------------
517,475 8.12
---------------------
Materials
Chemicals - 3.38%
Hercules Inc. 575,000 22,605 .35
Mallinckrodt Inc. 1,150,000 41,831 .66
Millennium Chemicals Inc. 2,250,000 53,016 .83
Monsanto Co. 1,000,000 39,437 .62
PPG Industries, Inc. 635,800 37,552 .59
Witco Corp. 1,050,000 21,000 .33
Forest Products & Paper - 2.92%
Georgia-Pacific Corp., Timber Group 700,000 17,675 .28
International Paper Co. 1,150,000 58,075 .91
Louisiana-Pacific Corp. 1,086,000 25,793 .40
Sonoco Products Co. 1,000,000 29,938 .47
Weyerhaeuser Co. 800,000 55,000 .86
Metals: Nonferrous - 0.57%
Alcoa Inc. (formerly Aluminum Co. of America) 583,300 36,092 .57
Metals: Steel - 0.32%
Allegheny Teledyne Inc. 900,000 20,363 .32
---------------------
458,377 7.19
---------------------
Capital Equipment
Aerospace & Military Technology - 0.76%
Boeing Co. 600,000 26,513 .42
United Technologies Corp. 300,000 21,506 .34
Data Processing & Reproduction - 2.33%
Computer Associates International, Inc. 500,000 27,500 .43
Hewlett-Packard Co. 625,000 62,812 .99
International Business Machines Corp. 450,000 58,162 .91
Electrical & Electronic - 2.10%
Emerson Electric Co. 400,000 25,150 .39
Nokia Corp., Class A (ADR) 400,000 36,625 .57
York International Corp. 1,700,000 72,781 1.14
Electronic Components - 0.85%
Corning Inc. 600,000 42,075 .66
Intel Corp. 200,000 11,900 .19
Energy Equipment - 1.00%
Schlumberger Ltd. 1,000,000 63,687 1.00
Industrial Components - 2.69%
Dana Corp. 900,000 41,456 .65
Eaton Corp. 650,000 59,800 .94
Genuine Parts Co. 2,000,000 70,000 1.10
Machinery & Engineering - 1.14%
Caterpillar Inc. 550,000 33,000 .52
Deere & Co. 1,000,000 39,625 .62
---------------------
692,592 10.87
---------------------
Consumer Goods
Automobiles - 0.91%
Nissan Motor Co., Ltd. 5,749,000 27,469 .43
Suzuki Motor Corp. 1,900,000 30,235 .48
Beverages & Tobacco - 3.06%
Imperial Tobacco Ltd. 3,500,000 38,171 .60
Nabisco Group Holdings Corp. (formerly RJR Nabisco 1,800,000 35,213 .55
Holdings Corp.)
Philip Morris Companies Inc. 1,450,000 58,272 .91
R.J. Reynolds Tobacco Holdings, Inc. 950,000 29,925 .47
UST Inc. 1,150,000 33,638 .53
Food & Household Products - 2.13%
General Mills, Inc. 700,000 56,262 .88
Sara Lee Corp. 3,500,000 79,406 1.25
Health & Personal Care - 1.96%
AstraZeneca PLC (ADR) (formerly Astra AB) 1,009,000 39,540 .62
Eli Lilly and Co. 400,000 28,650 .45
Pfizer Inc 200,000 21,950 .34
Warner-Lambert Co. 500,000 34,688 .55
Recreation & Other Consumer Products - 0.87%
Pennzoil-Quaker State Co. 2,122,600 31,839 .50
Stanley Works 725,000 23,336 .37
Textiles & Apparel - 0.72%
NIKE, Inc., Class B 725,000 45,901 .72
---------------------
614,495 9.65
---------------------
Services
Broadcasting & Publishing - 1.46%
Gannett Co., Inc. 787,900 56,236 .88
New York Times Co., Class A 1,000,000 36,812 .58
Business & Public Services - 2.61%
Browning-Ferris Industries, Inc. 700,000 30,100 .47
Electronic Data Systems Corp. 450,000 25,453 .40
IKON Office Solutions, Inc. 3,200,000 48,000 .75
United HealthCare Corp. 600,000 37,575 .59
Waste Management, Inc. 475,000 25,531 .40
Merchandising - 3.31%
Albertson's, Inc. 1,260,000 64,969 1.02
J.C. Penney Co., Inc. 1,400,000 67,987 1.07
May Department Stores Co. 1,900,000 77,662 1.22
Telecommunications - 1.88%
AT&T Corp. 115,400 6,441 .10
GTE Corp. 369,800 28,012 .44
U S WEST, Inc. 1,450,000 85,187 1.34
Transportation: Rail & Road - 0.85%
Norfolk Southern Corp. 1,800,000 54,225 .85
---------------------
644,190 10.11
---------------------
Finance
Banking - 2.50%
Bank of America Corp. (formerly BankAmerica Corp.) 1,075,000 78,811 1.24
Bank of Tokyo-Mitsubishi, Ltd. (ADR) 1,300,000 18,931 .30
Fleet Financial Group, Inc. 650,000 28,844 .45
Sakura Bank, Ltd. 3,000,000 11,383 .18
Washington Mutual, Inc. 600,000 21,225 .33
Financial Services - 1.00%
Household International, Inc. 1,350,000 63,956 1.00
Insurance - 3.73%
Aetna Inc. 550,000 49,191 .77
Allstate Corp. 2,000,000 71,750 1.13
American General Corp. 650,000 48,994 .77
Enhance Financial Services Group Inc. 367,306 7,254 .11
Lincoln National Corp. 600,000 31,388 .49
Royal & Sun Alliance Insurance Group PLC 3,300,000 29,593 .46
Real Estate - 1.44%
Apartment Investment and Management Co., Class A 550,000 23,513 .37
Equity Residential Properties Trust 600,000 27,038 .42
Spieker Properties, Inc. 1,050,000 40,819 .65
---------------------
552,690 8.67
---------------------
Miscellaneous
Multi-Industry - 0.38%
Dover Corp. 700,000 24,500 .38
---------------------
Miscellaneous - 2.81%
Other common stocks in initial period of acquisition 179,196 2.81
---------------------
Total Common Stocks 3,683,515 57.80
---------------------
Shares or
CONVERTIBLE SECURITIES AND PREFERRED STOCK Principal Amount
------------------------------------
Services
Transportation: Rail & Road - 0.02%
Union Pacific Capital Trust TIDES 6.25% convertible 30,000 1,541 .02
preferred (1)
---------------------
Finance
Banking - 0.12%
NB Capital Corp. 8.35% exchangeable depositary 300,000 7,594 .12
Financial Services - 0.92%
Bell Atlantic Financial Services, Inc. 5.75%, convertible $ 10,000,00 10,050 .16
debentures, 2003 (1)
Bell Atlantic Financial Services, Inc. 4.25% convertible 8,000,000 8,180 .13
debentures 2005 (1)
BNP U.S. Funding LLC, Series A, 7.738% noncumulative 15,000,000 shar 14,108 .22
preferred (1)
Fuji JGB Investment LLC, Series A, 9.87% noncumulative 6,500,000 5,688 .09
preferred (1)
IBJ Preferred Capital Co. LLC, Series A, 8.79% noncumulative3,150,000 share 2,630 .04
preferred (1)
Tokai Preferred Capital Co. LLC, Series A, 9.98% noncumulati 19,425,000 17,920 .28
preferred (1)
Insurance - 0.14%
Aetna Inc., Class C, 6.25% convertible preferred 125,000 9,281 .14
Real Estate - 0.19%
ProLogis Trust, Series D, 7.92% preferred 500,000 12,000 .19
---------------------
87,451 1.37
---------------------
Miscellaneous
Multi-Industry - 0.13%
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed 370,000 7,770 .13
perpetual capital securities (1)
---------------------
Total Convertible Securities and Preferred Stock 96,762 1.52
---------------------
Total Equity Securities (cost: $2,989,822,000) 3,780,277 59.32
---------------------
Principal Amount
BONDS AND NOTES (000)
----------------
Industrials - 3.62%
Ceridian Corp. 7.25% 2004 (1) 4,750 4,747 .07
Columbia/HCA Healthcare Corp. 7.15% 2004 4,000 3,770 .06
Conoco Inc. 6.35% 2009 5,000 4,799 .08
Deere & Co. 8.95% 2019 7,330 8,014 .13
Delphi Automotive Systems Corp. 7.125% 2029 5,000 4,619 .07
Freeport-McMoRan Copper & Gold Inc. 7.50% 2006 4,000 2,992
Freeport-McMoRan Copper & Gold Inc. 7.20% 2026 12,500 9,390 .20
Hearst-Argyle Television, Inc. 7.00% 2018 7,500 6,823 .11
Hutchison Whampoa Finance (CI) Ltd., Series D, 10,000 9,389 .15
6.988% 2037 (1)
Hyundai Semiconductor America, Inc. 8.625% 2007 (1) 11,025 8,796 .14
Inco Ltd. 9.60% 2022 5,000 4,857 .08
J. C. Penney Co., Inc. 7.60% 2007 3,200 3,250
J. C. Penney Co., Inc. 7.95% 2017 11,000 11,195 .28
J. C. Penney Co., Inc. 8.25% 2022 3,000 3,006
Koninklijke Philips Electronics NV 7.20% 2026 7,500 7,690 .12
Liberty Media Corp., 7.875% 2009 (1) 6,000 5,964 .09
Magma Copper Co. 8.70% 2005 4,000 4,177 .07
May Department Stores Co. 9.875% 2021 6,500 7,114 .11
News America Holdings Inc. 7.43% 2026 10,000 9,998 .16
Norcen Energy Resources Ltd. 7.375% 2006 5,000 4,889 .08
OXYMAR 7.50% 2016 (1) 6,000 4,987 .08
Pan Pacific Industrial Investments PLC 0% 2007 (1) 25,000 12,387 .19
PDVSA Finance Ltd. 9.75% 2010 (1) 2,500 2,439
PDVSA Finance Ltd. 7.40% 2016 12,000 9,168 .18
Petrozuata Finance, Inc., Series B, 8.22% 2017 (1) 4,000 3,090 .05
Pioneer Natural Resources Co. 7.20% 2028 4,075 2,938 .05
Reliance Industries Ltd. 10.50% 2046 (1) 1,500 1,275
Reliance Industries Ltd., Series B, 10.25% 2097 5,000 4,003 .08
Royal Caribbean Cruises Ltd. 7.00% 2007 7,000 6,775 .11
Samsung Electronics Co., Ltd. 7.45% 2002 (1) 2,000 1,928 .03
Scotia Pacific Co. LLC, Timber Collateralized Notes, 6,524 6,002
Series B, Class A-1, 6.55% 2028
Scotia Pacific Co. LLC, Timber Collateralized Notes, 3,750 2,756 .13
Series B, Class A-3, 7.71% 2028
Sotheby's Holdings, Inc. 6.875% 2009 3,000 2,795 .04
TCI Communications, Inc. 8.75% 2015 4,000 4,532 .07
Time Warner Inc. 9.125% 2013 3,000 3,396
Time Warner Inc. 7.25% 2017 5,000 4,813 .21
Time Warner Inc. 6.85% 2026 4,825 4,797
TRW Inc. 7.125% 2009 (1) 9,000 8,741 .14
Union Pacific Resources Group, Inc. 7.30% 2009 6,200 5,967 .09
USX Corp. 6.65% 2006 2,500 2,401 .04
Wharf International Finance Ltd., Series A, 7.625% 2007 11,500 10,096 .13
---------------------
230,765 3.62
---------------------
Electric Utilities - 0.63%
Commonwealth Edison Co. 9.875% 2020 11,000 12,511 .20
Edison Mission Energy 7.73% 2009 (1) 3,000 3,033 .05
Israel Electric Corp. Ltd. 7.75% 2009 (1) 13,500 13,358
Israel Electric Corp. Ltd. 7.75% 2027 (1) 7,500 6,690 .31
Transener SA 9.25% 2008 (1) 3,050 2,581 .04
United Utilities PLC 6.875% 2028 2,000 1,751 .03
---------------------
39,924 .63
---------------------
Gas Utilities - 0.04%
Energen Corp., Series B, 7.125% 2028 2,500 2,259 .04
---------------------
Telephone - 0.33%
Cable & Wireless Communications PLC 6.625% 2005 7,000 6,884
Cable & Wireless Communications PLC 6.75% 2008 5,000 4,837 .18
Sprint Capital Corp. 6.875% 2028 2,500 2,267 .04
U S WEST Capital Funding, Inc. 6.50% 2018 8,250 7,392 .11
---------------------
21,380 .33
---------------------
Transportation - 1.07%
Airplanes Pass Through Trust, pass-through certificates, 7,331 7,092 .11
Series 1, Class C, 8.15% 2019 (2)
Alameda Corridor Transportation Authority, Series D, 7,220 6,919 .11
5.67% 2005
Continental Airlines, Inc., pass-through certificates, 3,000 2,978
Series 1998-3, Class C-2, 7.25% 2005 (2)
Continental Airlines, Inc., pass-through certificates, 5,000 4,698
Series 1998-3, Class A-2, 6.32% 2008 (2)
Continental Airlines, Inc., pass-through certificates, 1,860 1,917 .29
Series 1996-2B, 8.56% 2014 (2)
Continental Airlines, Inc., pass-through certificates, 2,500 2,450
Series 1997-4A, 6.90% 2018 (2)
Continental Airlines, Inc., pass-through certificates, 7,000 6,648
Series 1999-1, Class B, 6.795% 2020 (2)
Delta Air Lines, Inc., pass-through certificates, 1,500 1,688
Series 1992-A2, 9.20% 2014 (2)
Delta Air Lines, Inc., pass-through certificates, 5,000 6,091 .13
Series 1993-A2, 10.50% 2016 (2)
Jet Equipment Trust, Series 1995-B, Class B, 7.83% 7,268 7,277
2015 (1) (2)
Jet Equipment Trust, Series 1995-A, Class B, 8.64% 4,562 4,836 .18
2015 (1) (2)
United Air Lines, Inc. 10.67% 2004 5,000 5,647
United Air Lines, Inc., pass-through certificates, 5,965 6,330 .26
Series 1995-A1, 9.02% 2012 (2)
United Air Lines, Inc., pass-through certificates, 4,000 4,321
Series 1995-A2, 9.56% 2018 (2)
USAir, Inc., Class A, 6.76% 2009 6,894 6,562 .10
---------------------
75,454 1.18
---------------------
Financial - 2.35%
AB Spintab 7.50% (undated) (1,3) 2,600 2,532 .04
Abbey National PLC 6.70% (undated) (3) 5,000 4,749 .07
Ahmanson Capital Trust I capital securities, Series A, 4,000 4,065 .06
8.36% 2026 (1)
Bank of Nova Scotia 5.25% Eurodollar Note (undated) (3) 4,000 3,120 .05
Bank of Scotland 7.00% 2049 (1,3) 4,225 4,039 .06
BankAmerica Corp. 5.875% 2009 7,500 6,886 .11
Bankers Trust New York Corp. 6.70% 2007 4,000 3,862 .06
Banque Nationale de Paris 5.7987% (undated) (3) 3,000 2,886 .05
BHP Finance Ltd. 8.50% 2012 2,500 2,716
BHP Finance Ltd. 6.75% 2013 10,000 9,318 .19
Canadian Imperial Bank of Commerce 5.25% Eurodollar 1,600 1,236 .02
Note (undated) (3)
Capital One Bank 7.15% 2006 10,000 9,796 .15
Chase Capital I, Capital Securities, Series A, 7.67% 2026 2,500 2,413 .04
Den Norske CreditBank 5.3125% (undated) (3) 3,000 2,280 .04
Dime Bancorp, Inc. 6.375% 2001 2,500 2,497 .04
Fleet Capital Trust 6.1763% 2028 (3) 3,500 3,516 .06
Ford Motor Credit Company 5.80% 2009 5,850 5,346 .08
Fuji International Finance (Bermuda) Trust, Fuji Bank, Ltd. 8,000 6,680 .10
7.30% Eurodollar Note (undated) (3)
Household Finance Corp. 6.40% 2008 7,000 6,652 .10
HSBC Holdings PLC 7.50% 2009 6,000 6,033
HSBC Americas Inc. 7.808% 2026 (1) 2,500 2,410 .14
J.P. Morgan & Co. Inc., Series A, 6.00% 2009 850 786 .01
Lindsey Morden Group Inc., Series B, 7.00% 2008 (1) C$ 8,00 5,063 .08
MBNA Corp., MBNA Capital A, Series A, 8.278% 2026 11,600 10,710 .17
Midland Bank PLC 5.75% Eurodollar Note (undated) (3) 4,000 3,243 .05
National Westminster Bank PLC 7.75% (undated) (3) 10,000 9,933 .16
Newcourt Credit Group 6.875% 2005 (1) 6,000 5,872 .09
Providian National Bank 6.65% 2004 5,000 4,834 .08
Riggs National Corp. 8.875% 2027 (1) 2,000 1,939 .03
Washington Mutual Capital I, subordinated capital 4,050 4,093 .06
income securities 8.375% 2027
Zurich Capital Trust I, Capital Securities 8.376% 2037 (1) 10,000 10,172 .16
---------------------
149,677 2.35
---------------------
Real Estate - 0.63%
EOP Operating LP 6.625% 2005 4,500 4,341
EOP Operating LP 7.25% 2018 2,000 1,835 .12
ERP Operating LP 7.95% 2002 1,500 1,542
Irvine Apartment Communities, LP 7.00% 2007 2,500 2,273 .04
ProLogis Trust 7.05% 2006 4,000 3,852 .06
SocGen Real Estate Co. LLC, Series A, 7.64%/8.406% 28,000 26,422 .41
(undated) (1,4)
---------------------
40,265 .63
---------------------
Collateralized Mortgage/Asset-Backed Obligations (2)
- - 3.12%
Chase Commercial Mortgage Securities Corp., Series 1998-2, 6,000 5,780
Class A-2, 6.39% 2030
Chase Commercial Mortgage Securities Corp., Series 1998-2, 2,500 2,135 .12
Class E, 6.39% 2030
ComEd Transitional Funding Trust, Transitional Funding Trust 7,500 7,038 .11
Note, Series 1998-1, Class A-6, 5.63% 2009
Commercial Mortgage Acceptance Corp., Series 1998-C1, 4,686 4,611 .07
Class A-1, 6.23% 2007
CS First Boston Mortgage Securities Corp., Series 1998-C1, 3,262 3,216 .05
Class A-1A, 6.26% 2040
Deutsche Mortgage & Asset Receiving Corp., Series 1998-C1, 9,318 9,091 .14
Class A-1, 6.22% 2031
DLJ Mortgage Acceptance Corp., Series 1997-CF1, 2,615 2,634
Class A1A, 7.40% 2006 (1)
DLJ Mortgage Acceptance Corp., Series 1996-CF2, 6,000 6,120 .23
Class A1B, 7.29% 2021 (1)
DLJ Mortgage Acceptance Corp., Series 1995-CF2, 6,000 6,038
Class A1B, 6.85% 2027 (1)
First Consumer Master Trust, Series 1999-A, 5,000 4,750 .07
Class A, 5.80% 2005 (1)
FIRSTPLUS Home Loan Owner Trust, Series 1997-1, 12,500 12,466 .20
Class A-6, 6.95% 2015
GMAC Commercial Mortgage Securities, Inc., Series 1997-C1, 3,405 3,440
Class A1, 6.83% 2003
GMAC Commercial Mortgage Securities, Inc., Series 1997-C1, 5,000 4,892 .13
Class A3, 6.869% 2007
Green Tree Financial Corp., pass-through certificates, 10,000 10,013 .16
Series 1995-9, Class A-5, 6.80% 2027
Grupo Financiero Banamex Accival, SA de CV 0% 2002 (1) 3,114 2,770 .04
GS Mortgage Securities Corp. II, mortgage pass-through 10,000 9,130 .14
certificates, Series 1998-C1, Class D, 7.45% 2030 (3)
H.S. Receivables Corp., Series 1999-1, Class A, 7,500 7,575 .12
8.13% 2004 (1)
J.P. Morgan Commercial Mortgage Finance Corp., 3,638 3,652 .06
Series 1996-C3, Class A-1, 7.33% 2028
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026 (1) 6,500 6,062 .10
MBNA Master Credit Card Trust, Series 1998-E, Class C, 2,500 2,373 .04
6.60% 2010 (1)
Merrill Lynch Mortgage Investors, Inc., Seller Manufactured 2,307 2,309
Housing Contracts, Series 1995-C2, Class A-1,
7.1752% 2021 (3)
Merrill Lynch Mortgage Investors, Inc., Series 1995-C3, 7,000 7,050 .15
Class A-3, 7.0593% 2025 (3)
Morgan Stanley Capital I, Inc., Series 1998-WF1, 18,855 18,509 .29
Class A-1, 6.25% 2030 (3)
Nomura Asset Securities Corp., Series 1998-D6, 13,679 13,530 .21
Class A-A1, 6.28% 2030 (3)
Norwest Asset Securities Corp., Series 1998-31, 13,339 13,106 .21
Class A-1, 6.25% 2014
PNC Mortgage Securities Corp., Series 1998-10, 5,956 5,443 .09
Class 1-B1, 6.50% 2028 (1)
Puerto Rico Public Financing Corp., Series 1999-1, 9,663 9,450 .15
Class A, 6.15% 2008
Sears Credit Account Master Trust II, Series 1998-2, 5,000 4,775 .07
Class A, 5.25% 2008
Structured Asset Securities Corp., Series 1998-RF2, 10,738 11,128 .17
Class A, 8.5669% 2027 (1,3)
---------------------
199,086 3.12
---------------------
Governments (excluding U.S. Government) and Governmental
Authorities - 0.09%
Canadian Government 4.4990% 2026 (5) C$ 7,50 5,568 .09
---------------------
Federal Agency Obligations - Mortgage Pass-Throughs(2)
- 5.48%
Fannie Mae 6.00%-12.00% 2008-2028 121,272 119,888 1.88
Freddie Mac 5.125%-10.00% 2008-2024 64,552 60,325 .95
Government National Mortgage Assn. 6.00%-10.50% 2009-2029 169,133 168,688 2.65
---------------------
348,901 5.48
---------------------
Federal Agency Obligations - Other - 0.08%
Fannie Mae, Series 1997-28, Class C, 7.00% 2027 5,000 4,880 .08
---------------------
U.S. Treasury Obligations - 13.15%
5.50% February 2000 50,000 50,117 .79
7.125% February 2000 20,000 20,253 .32
8.75% August 2000 7,500 7,771 .12
6.125% December 2001 50,000 50,602 .79
14.25% February 2002 2,000 2,414 .04
6.50% May 2002 70,000 71,586 1.12
3.6818% July 2002 (3,5) 120,000 123,216 1.93
10.75% February 2003 7,300 8,471 .13
10.75% May 2003 5,000 5,852 .09
11.125% August 2003 1,000 1,193 .02
11.875% November 2003 15,000 18,436 .29
7.25% May 2004 53,050 56,332 .88
7.25% August 2004 25,000 26,594 .42
6.50% May 2005 60,000 61,837 .97
7.00% July 2006 50,000 52,961 .83
3.465% January 2007 (3,5) 5,000 5,029 .08
6.625% May 2007 20,000 20,828 .33
3.6498% January 2008 (3,5) 50,000 49,979 .78
10.375% November 2009 15,000 17,916 .28
10.00% May 2010 2,000 2,382 .04
10.375% November 2012 42,000 53,517 .84
7.25% May 2016 60,000 65,990 1.04
7.50% November 2016 5,000 5,635 .09
8.875% August 2017 38,425 49,088 .77
7.625% November 2022 8,500 9,909 .16
---------------------
837,908 13.15
---------------------
Total Bonds and Notes (cost: $1,996,997,000) 1,956,067 30.70
---------------------
Market Percent
Principal Amoun Value Of Net
SHORT TERM SECURITIES (000) (000) Assets
- -------------------------------------------- ------------------------------------
Corporate Short-Term Notes - 7.56%
American Home Products Corp. 4.82%-4.94% due 43,750 43,617 .68
7/6-8/3/1999 (1)
Associates First Capital Corp. 4.87%-5.60% 43,710 43,516 .68
due 7/1-8/16/1999
BellSouth Capital Funding Corp. 4.92% due 8/2/1999 (1) 36,500 36,337 .57
Chevron Transport Corp. 4.85% due 07/12/1999 (1) 21,000 20,966 .33
Ciesco L.P. 4.87%-4.94% due 7/8-8/2/1999 60,220 60,031 .95
Coca-Cola Co. 4.81%-5.06% due 7/27-9/20/1999 43,200 42,841 .67
Eastman Kodak Co. 4.91% due 8/25/1999 10,000 9,920 .16
Electronic Data Systems Corp. 4.81%-4.94% 25,500 25,441 .40
due 7/14-7/19/1999 (1)
Ford Motor Credit Co. 4.83%-4.86 due 7/8-7/9/1999 50,000 49,942 .78
H.J. Heinz Co. 4.86%-4.91% due 7/22-8/3/1999 50,000 49,806 .78
Monsanto Co. 4.92%-4.94% due 7/27-8/6/1999 (1) 20,800 20,716 .33
National Rural Utilities Cooperative Finance Corp. 54,500 53,936 .85
4.84%-5.09% due 7/13-9/16/1999
PACCAR Financial Corp. 4.84%-5.04% due 7/7-7/20/1999 25,000 24,941 .38
---------------------
482,010 7.56
---------------------
Federal Agency Short-Term Obligations - 3.36%
Fannie Mae 4.86%-5.06% due 8/5-9/10/1999 46,830 46,450 .73
Freddie Mac 4.87%-5.13% due 7/8-10/7/1999 168,700 167,324 2.63
---------------------
213,774 3.36
---------------------
Total Short-Term Securities (cost: $695,872,000) 695,784 10.92
---------------------
Total Investment Securities (cost: $5,682,691,000) 6,432,128 100.94
Excess of payables over cash and receivables 60,24 0.94
---------------------
NET ASSETS 6,371,880 100.00
(1) Purchased in a private placement transaction; resale
may be limited to qualified institutional buyers; resale
to the public may require registration.
(2) Pass-through securities backed by a pool of mortgages
or other loans on which principal payments are periodically
made. Therefore, the effective maturities are shorter
than the stated maturities.
(3) Coupon rate may change periodically.
(4) Step bond; coupon rate will increase at a later date.
(5) Index-linked bond whose principal amount moves with a
government retail price index.
ADR = American Depositary Receipts
See Notes to Financial Statements
</TABLE>
<TABLE>
American Balanced Fund
<S> <C> <C>
Financial Statements (unaudited)
- --------------------------------------------------------- ------------
Statement of Assets and Liabilities (dollars in
at June 30, 1999 thousands)
- --------------------------------------------------------- ------------
Assets:
Investment securities at market
(cost: $5,682,691) $6,432,128
Cash 1,202
Receivables for -
Sales of investments $ 187
Sales of fund's shares 18,470
Dividends and accrued interest 32,138 50,795
---------------- ------------
6,484,125
Liabilities:
Payables for -
Purchases of investments 48,757
Repurchases of fund's shares 60,461
Management services 1,511
Accrued expenses 1,516 112,245
---------------- ------------
Net Assets at June 30, 1999 -
Equivalent to $16.66 per share on
382,424,337 shares of $1 par value
capital stock outstanding (authorized
capital stock--500,000,000 shares) $6,371,880
============
</TABLE>
<TABLE>
Statement of Operations
<S> <C> <C>
for the period ended June 30, 1999 (dollars in
thousands)
- --------------------------------------------------------- ------------
Investment Income:
Income:
Dividends $ 42,692
Interest 81,744 $124,436
----------------
Expenses:
Management services fee 8,727
Distribution expenses 7,563
Transfer agent fee 2,095
Reports to shareholders 125
Registration statement and prospectus 335
Postage, stationery and supplies 358
Directors' fees 61
Auditing and legal fees 50
Custodian fee 72
Taxes other than federal income tax 2
Other expenses 101 19,489
---------------- ------------
Net investment income 104,947
------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 391,886
Increase in unrealized appreciation on
investments:
Beginning of period 720,225
End of period 749,430 29,205
---------------- ------------
Net realized gain and increase in unrealized
appreciation on investments 421,091
------------
Net Increase in Net Assets Resulting
from Operations $526,038
============
See Notes to Financial Statements
- --------------------------------------------------------- ------------
Statement of Changes in Net Assets
(dollars in thousands)
Six months Year ended
ended 6/30/1999* 12/31/1998
- --------------------------------------------------------- ----------------
Operations:
Net investment income $ 104,947 $ 196,891
Net realized gain on investments 391,886 455,951
Net change in unrealized appreciation
on investments 29,205 (74,388)
---------------- ----------------
Net increase in net assets
resulting from operations 526,038 578,454
---------------- ----------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (105,950) (191,659)
Distributions from net realized gain on
investments (71,433) (366,100)
---------------- ----------------
Total dividends and distributions (177,383) (557,759)
---------------- ----------------
Capital Share Transactions:
Proceeds from shares sold: 47,402,156
and 87,886,110 shares, respectively 759,753 1,414,201
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 10,785,358 and 34,076,376 shares,
respectively 168,673 531,997
Cost of shares repurchased: 49,010,182
and 69,903,643 shares, respectively (786,598) (1,121,345)
---------------- ----------------
Net increase in net assets resulting from
capital share transactions 141,828 824,853
---------------- ----------------
Total Increase in Net Assets 490,483 845,548
Net Assets:
Beginning of period 5,881,397 5,035,849
---------------- ----------------
End of period (including undistributed net
investment income: $29,437 and $30,440, $6,371,880 $5,881,397
respectively) ================ ================
*Unaudited
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
AMERICAN BALANCED FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates. The following is a summary of the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
SECURITY VALUATION - Equity securities, including depositary receipts, are
valued at the last reported sale price on the exchange or market on which such
securities are traded, as of the close of business on the day the securities
are being valued or, lacking any sales, at the last available bid price. In
cases where equity securities are traded on more than one exchange, the
securities are valued on the exchange or market determined by the investment
adviser to be the broadest and most representative market, which may be either
a securities exchange or the over-the-counter market. Fixed-income securities
are valued at prices obtained from a pricing service, 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 quoted bid and
asked prices or at prices for securities of comparable maturity, quality and
type. The ability of the issuers of the debt securities held by the fund to
meet their obligations may be affected by economic developments in a specific
industry, state or region. Short-term securities maturing within 60 days are
valued at amortized cost, which approximates market value. Securities and
assets for which representative market quotations are not readily available are
valued at fair value as determined in good faith by a committee appointed by
the Board of Directors.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities initially expressed
in terms of non-U.S. currencies are translated into U.S. dollars at the
prevailing market rates at the end of the reporting period. Purchases and
sales of securities and income and expenses are translated into U.S. dollars at
the prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities and other
assets and liabilities are included with the net realized and unrealized gain
or loss on investment securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security
transactions are accounted for as of the trade date. Realized gains and losses
from securities transactions are determined based on specific identified cost.
In the event securities are purchased on a delayed delivery or "when-issued"
basis, the fund will instruct the custodian to segregate liquid assets
sufficient to meet its payment obligations in these transactions. Dividend
income is recognized on the ex-dividend date, and interest income is recognized
on an accrual basis. Market discounts, premiums and original issue discounts
on securities purchased are amortized daily over the expected life of the
security.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions
paid to shareholders are recorded on the ex-dividend date.
2. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable
to regulated investment companies and intends to distribute all of its net
taxable income and net capital gains for the fiscal year. As a regulated
investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of June 30, 1999, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $749,437,000, of which $867,458,000
related to appreciated securities and $118,021,000 related to depreciated
securities. During the six months ended June 30, 1999, the fund realized, on a
tax basis, a net capital gain of $391,927,000 on securities transactions. Net
losses related to non-U.S. currency transactions of $41,000 are treated as an
adjustment to ordinary income for federal income tax purposes. The cost of
portfolio securities for book and federal income tax purposes was
$5,682,691,000 at June 30, 1999.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $8,727,000 for management services
was incurred 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; 0.262% of such assets in excess of $4 billion but not
exceeding $6.5 billion; 0.255% of such assets in excess of $6.5 billion but not
exceeding $10.5 billion; and 0.25% of such assets in excess of $10.5 billion.
DISTRIBUTION EXPENSES - 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 six months
ended June 30, 1999, distribution expenses under the Plan were limited to
$7,563,000. Had no limitation been in effect, the fund would have paid
$9,307,000 in distribution expenses under the Plan. As of June 30, 1999,
accrued and unpaid distribution expenses were $1,083,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $1,880,000 (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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer
agent for the fund, was paid a fee of $2,095,000.
DEFERRED DIRECTORS' FEES - Directors 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 June 30, 1999, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1993), net of any payments to
Directors, were $409,000.
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. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,598,476,000 and $1,554,531,000, respectively,
during the six months ended June 30, 1999.
As of June 30, 1999, accumulated undistributed net realized gain on
investments was $399,053,000 and additional paid-in capital was $4,811,577,000.
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 $72,000 includes $37,000 that was paid by these credits
rather than in cash.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Per-Share Data and Ratios Six Months
ended June 30, Year EndeDecember 31
1999 (1) 1998 1997 1996 1995 1994
Net Asset Value, Beginning of Period $15.76 $15.68 $14.55 $14.15 $12.00 $12.57
---------------------------------------------------------
Income From Investment Operations:
Net investment income .28 .56 .58 .57 .57 .57
Net gains or losses on securities (both
realized and unrealized) 1.09 1.13 2.41 1.24 2.61 (.53)
---------------------------------------------------------
Total from investment operations 1.37 1.69 2.99 1.81 3.18 .04
----------- ---------------------------------------------
Less Distributions:
Dividends (from net investment income) (.28) (.56) (.56) (.56) (.56) (.56)
Distributions (from capital gains) (.19) (1.05) (1.30) (.85) (.47) (.05)
----------- ---------------------------------------------
Total distributions (.47) (1.61) (1.86) (1.41) (1.03) (.61)
----------- ---------------------------------------------
Net Asset Value, End of Period $16.66 $15.76 $15.68 $14.55 $14.15 $12.00
========== ================== ======== ======= =======
Total Return (2) 8.91%(3) 11.13% 21.04% 13.17% 27.13% 0.34%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $6,372 $5,881 $5,036 $3,941 $3,048 $2,082
Ratio of expenses to average net assets 0.32%(3) .63% .65% .67% .67% .68%
Ratio of net income to average net asse 1.73%(3) 3.57% 3.74% 4.01% 4.38% 4.76%
Portfolio turnover rate 29.44%(3) 54.05% 44.01% 43.85% 39.03% 32.05%
(1) Unaudited.
(2) Excludes maximum sales charge of 5.75%.
(3) Based on operations for the period shown
and, accordingly, not representative of
a full year.
</TABLE>
AMERICAN FUNDS
SHAREHOLDER SERVICES
AMERICAN FUNDSLINE(R)
[graphic: telephone]
Use our 24-hour automated phone service for fund information and transactions.
FUNDSLINE ONLINE(R) INTERNET ACCESS
[graphic: personal computer]
Visit our Web site when you want to obtain information about your account or
the funds, sell shares, exchange shares or download a prospectus.
AMERICAN FUNDSLINK(SM) FOR SPEEDY TRANSACTIONS
[graphic: financial institution]
For direct transfers between bank and fund accounts and to purchase shares
using American FundsLine or FundsLine OnLine.
RETIREMENT PLANS
[graphic: cross path road sign]
A wide range of fund choices for individual and company-sponsored retirement
plans.
REDUCED SALES CHARGE ON LARGER PURCHASES
[graphic: coin currency]
To reach a sales charge breakpoint on your next purchase, combine all your
household accounts and include purchases you intend to make over the next 13
months.
AUTOMATIC TRANSACTIONS PER YOUR INSTRUCTIONS
[graphic: calendar page]
Use this service for regularly scheduled purchases, sales and exchanges.
FLEXIBLE DIVIDEND OPTIONS ACCOMMODATE YOUR CHANGING NEEDS
[graphic: person selecting among choices]
* Reinvest dividends
* Diversify by investing dividends into another fund
* Take dividends in cash
* Have dividends paid directly to someone else
WOULD YOU LIKE MORE INFORMATION?
Your financial adviser will be happy to explain these services in greater
detail, or you may contact American Funds Service Company.
TO CONTACT AMERICAN FUNDS SERVICE COMPANY:
Shareholder Services Representative - 8 a.m. to 8 p.m. Eastern time -
800/421-0180
American FundsLine - 24-hour automated telephone service - 800/325-3590
FundsLine OnLine - Web site - www.americanfunds.com
By mail - Write to the service center nearest you.
(If you live outside the United States, please write to the western service
center.)
[graphic: United States map broken into four service center regions]
WESTERN
AMERICAN FUNDS
SERVICE COMPANY
P.O. Box 2205
Brea, CA
92822-2205
WEST CENTRAL
AMERICAN FUNDS
SERVICE COMPANY
P.O. Box 659522
San Antonio, TX 78265-9522
EAST CENTRAL
AMERICAN FUNDS
SERVICE COMPANY
P.O. Box 6007
Indianapolis, IN 46206-6007
EASTERN
AMERICAN FUNDS
Service Company
P.O. Box 2280
Norfolk, VA
23501-2280
Please obtain the applicable prospectuses from your financial adviser or our
Web site and read them carefully before investing or sending money. American
Funds reserves the right to terminate or modify these services.
[The American Funds Group(r)]
AMERICAN BALANCED FUND
OFFICE OF THE FUND
One Market
Steuart Tower, Suite 1800
Mailing address: P.O. Box 7650
San Francisco, California 94120-7650
INVESTMENT ADVISER
Capital Research and
Management Company
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
This report is for the information of shareholders of American Balanced Fund,
but it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
September 30, 1999, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
PREPARING FOR THE YEAR 2000
The fund's key service providers - Capital Research and Management Company, the
investment adviser, and American Funds Service Company, the transfer agent -
have updated all significant computer systems to process date-related
information properly following the turn of the century. Testing of these and
other systems with business partners, vendors and other service providers will
continue through much of 1999. We will continue to keep you up to date in our
regular publications. If you'd like more detailed information, call Shareholder
Services at 800/421-0180, ext. 21, or visit our Web site at
www.americanfunds.com.
Printed on recycled paper
Litho in USA WG/CG/4235
Lit. No. AMBAL-013-0899
