TAX EXEMPT BOND FUND OF AMERICA INC, DEF 14A, 1999-09-10

TAX EXEMPT BOND FUND OF AMERICA INC
DEF 14A, 1999-09-10

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<PAGE>

THE TAX-EXEMPT BOND FUND OF AMERICA, INC.

333 South Hope Street, Los Angeles, California 90071

------------------------------

September 7, 1999

Fellow Shareholders:

We are writing to inform you of the upcoming meeting of the shareholders of
The Tax-Exempt Bond Fund of America, Inc. (the "Fund") to be held at the offices
of The Capital Group Companies, Inc., 11100 Santa Monica Boulevard, 15th Floor,
Los Angeles, California, on Wednesday, October 27, 1999 at 10:00 a.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
UNANIMOUSLY 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 authorizing
the Board of Directors to create new classes and series of capital
stock (Proposal 2).

3. 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 3).

4. A proposal to eliminate or revise certain of the Fund's investment
restrictions (Proposal 4).

5. The ratification of the selection, by the Board of Directors, of
PricewaterhouseCoopers LLP as independent accountant for the Fund for
the fiscal year 2000 (Proposal 5).

6. 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. Each of the
proposals is described in more detail in the full text of the Proxy Statement
which you should read before you vote.

[19-TEBF]

<PAGE>

ABOUT PROPOSAL 2:

In Proposal 2, we are asking you to approve amendments to the Fund's
Articles of Incorporation to authorize the Board of Directors to create new
classes and series of capital stock. The Board believes that the ability to
create additional classes of shares will provide investors with greater choice
in distribution arrangements and maintain the Fund's competitive position in
relation to other funds with similar arrangements. Any new class of shares would
share pro rata (based on net asset value) in the Fund's investment portfolio and
income and in the Fund's expenses, except for differences in expenses resulting
from different distribution arrangements and possibly other class-specific
expenses. THE INTRODUCTION OF A NEW CLASS OF SHARES WOULD NOT LEAD TO AN
INCREASE IN EXPENSES PAID BY HOLDERS OF EXISTING SHARES, OR A REDUCTION IN
EARNINGS ON SUCH SHARES.

ABOUT PROPOSAL 3:

In Proposal 3, 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 4:

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 that certain
restrictions be reclassified as non-fundamental, requiring only Board approval
to change. You may vote for any or all of the changes which are the subject of
Proposal 4 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 UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE
THESE PROPOSALS.

* * *

<PAGE>

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 sign and return 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 us at (800) 421-0180.
Thank you for investing with us and for your continuing support.

Sincerely,

[LOGO]
Paul G. Haaga, Jr.
Chairman of the Board
[LOGO]
Neil L. Langberg
President

<PAGE>

THE TAX-EXEMPT BOND OF AMERICA, INC.
------------------------------

NOTICE OF MEETING OF SHAREHOLDERS
OCTOBER 27, 1999
------------------------------

TO THE SHAREHOLDERS OF
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.:

A Meeting of Shareholders of The Tax-Exempt Bond Fund of America, Inc. (the
"Fund") will be held at the offices of The Capital Group Companies, Inc., 11100
Santa Monica Boulevard, 15th floor, Los Angeles, California, on Wednesday,
October 27, 1999 at 10:00 a.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
authorizing the Board of Directors to create new classes and series of
shares of capital stock;

(3) 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;

(4) approval of the elimination or revision of certain of the Fund's
fundamental investment policies;

(5) ratification of the selection of PricewaterhouseCoopers LLP as
independent accountant for the Fund for the fiscal year 2000;

(6) 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 August 23, 1999.

<PAGE>

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,

JULIE F. WILLIAMS
Secretary

September 7, 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>

THE TAX-EXEMPT BOND FUND OF AMERICA, INC.

333 South Hope Street, Los Angeles, California
------------------------------

PROXY STATEMENT
MEETING OF SHAREHOLDERS
OCTOBER 27, 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, October 27,
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 September 7, 1999.

At the close of business on August 23, 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 161,658,054 shares of capital
stock, $1.00 par value, the only authorized class of 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 Items 2 and 3 is the affirmative vote of more than 50% of all
outstanding voting Shares on the record date. The vote required to approve Item
4 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
5 is the affirmative vote of a majority of the Shares present 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

<PAGE>

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
their resignation or removal 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 Richard G. Capen, Jr., Don R. Conlan, Diane C. Creel, Leonard R. Fuller,
and Frank M. Sanchez were elected by the shareholders at the meeting held on
February 23, 1994. Diane C. Creel and Leonard R. Fuller were elected by the
directors on September 22, 1994; Don R. Conlan was elected by the directors on
December 16, 1996. Richard G. Capen, Jr. and Frank M. Sanchez have been
nominated by the Board of Directors. Herbert Hoover III, a director since 1979,
has reached the Fund's retirement age and is not seeking re-election.

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.

MEMBERSHIPS ON BOARD
NAME OF NOMINEE CURRENT PRINCIPAL OCCUPATION AND YEAR FIRST OF OTHER REGISTERED INVESTMENT
(POSITION WITH FUND) PRINCIPAL EMPLOYMENT ELECTED A COMPANIES AND PUBLICLY
AND AGE DURING PAST FIVE YEARS# DIRECTOR HELD COMPANIES
-------------------- -------------------------------- ---------- ------------------------------
<S> <C> <C> <C>
Richard G. Capen, Jr. Corporate Director and author; former Nominee The American Funds Group:
(Nominee) United States Ambassador to Spain; (Director/Trustee -- 5 other funds)
63 former Vice Chairman of the Board,
Knight Ridder, Inc.; former Chairman
and Publisher, The Miami Herald
H. Frederick Christie Private investor. Former President 1979 The American Funds Group:
(Director) and Chief Executive Officer, the (Director/Trustee -- 18 other funds)
66 Mission Group (non-utility holding The American Variable Insurance
company, subsidiary of Southern Series
California Edison Company)
Don R. Conlan* President (retired), The Capital 1996 The American Funds Group:
(Director) Group Companies, Inc. (Director/Trustee -- 11 other funds)
63
Diane C. Creel CEO and President, The Earth 1994 The American Funds Group:
(Director) Technology Corporation (Director/Trustee -- 11 other funds)
50 (international consulting Allegheny Teledyne Incorporated
engineering) B. F. Goodrich
Martin Fenton Chairman, Senior Resource Group, LLC 1989 The American Funds Group:
(Director) (development and management of (Director/Trustee -- 13 other funds)
64 senior living communities) The American Variable Insurance
Series
Raintree Healthcare Corporation
Leonard R. Fuller President, Fuller Consulting 1994 The American Funds Group:
(Director) (financial management consulting (Director/Trustee -- 11 other funds)
52 firm) The American Variable Insurance
Series
Abner D. Goldstine* Senior Vice President and Director, 1979 The American Funds Group:
(Vice Chairman and Capital Research and Management (Director/Trustee -- 11 other funds)
Director) Company
69

<CAPTION>
SHARES BENEFICIALLY
OWNED, DIRECTLY
OR INDIRECTLY, AT
AUGUST 23, 1999
--------------------
NAME OF NOMINEE THE
(POSITION WITH FUND) AMERICAN
AND AGE FUND FUNDS GROUP
-------------------- ---- -----------
<S> <C> <C>
Richard G. Capen, Jr. 85 33,192
(Nominee)
63
H. Frederick Christie 10,001 382,158
(Director)
66
Don R. Conlan* 84 1,754,110
(Director)
63
Diane C. Creel 85 2,759
(Director)
50
Martin Fenton 253 28,733
(Director)
64
Leonard R. Fuller 85 5,019
(Director)
52
Abner D. Goldstine* 75,940 2,832,470
(Vice Chairman and
Director)
69
</TABLE>

<CAPTION>
SHARES BENEFICIALLY
OWNED, DIRECTLY
OR INDIRECTLY, AT
AUGUST 23, 1999
--------------------
NAME OF NOMINEE THE
(POSITION WITH FUND) AMERICAN
AND AGE FUND FUNDS GROUP
-------------------- ---- -----------
<S> <C> <C>
Paul G. Haaga, Jr.* 23,319 461,667
(Chairman of the Board)
50
Richard G. Newman 2,698 43,391
(Director)
64
Frank M. Sanchez 168 8,838
(Nominee)
55
</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).

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., managed by Capital Research and
Management Company. 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.

<PAGE>

The Fund has an Audit Committee composed of Diane C. Creel, Martin Fenton
and Richard G. Newman. 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 all directors who are not
considered to be "interested persons" of the Fund within the meaning of the 1940
Act. 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.

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.

Each director is paid a fee of $2,500 per annum plus $200 for each Board of
Directors meeting attended and $200 for each meeting attended as a member of a
committee of the Board of Directors.

There were four Board of Directors, two Audit Committee, two Nominating
Committee, and one Contracts Committee meetings during the year ended August 31,
1998. All incumbent directors attended at least 75% of all Board meetings and
meetings of the committees of which they were members.

<PAGE>

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>
TOTAL COMPENSATION
(INCLUDING VOLUNTARILY
AGGREGATE COMPENSATION DEFERRED COMPENSATION) FROM TOTAL NUMBER
(INCLUDING VOLUNTARILY ALL FUNDS MANAGED BY CAPITAL OF FUND
DEFERRED COMPENSATION(1)) RESEARCH AND MANAGEMENT BOARDS ON
FROM THE FUND DURING FISCAL COMPANY DURING THE FISCAL WHICH
DIRECTOR OR NOMINEE YEAR ENDED 8/31/98 YEAR ENDED 8/31/98 DIRECTOR SERVES
------------------- ------------------ ------------------ ---------------
<S> <C> <C> <C>
Richard G. Capen,
Jr. ................. none(3) $30,250 5
H. Frederick
Christie............. $4,211(4) 171,100 19
Don R. Conlan.......... none(5) none(5) 12
Diane C. Creel......... 3,900(4) 44,650 12
Martin Fenton.......... 4,625(4) 121,084 15
Leonard R. Fuller...... 4,266(4) 51,850 13
Abner D. Goldstine..... none(5) none(5) 12
Paul G. Haaga, Jr...... none(5) none(5) 14
Richard G. Newman...... 4,654(4) 102,650 13
Frank M. Sanchez....... none(3) none(3) 3
</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) Richard G. Capen, Jr. and Frank M. Sanchez have been nominated as
directors of the Fund and had not received any remuneration from the Fund
as of its 8/31/98 fiscal year end.

(4) Since the plan's adoption, the total amount of deferred compensation
accrued by the Fund (plus earnings thereon) for participating directors is
as follows: H. Frederick Christie ($8,475), Diane C. Creel ($1,104),
Martin Fenton ($10,732), Leonard R. Fuller ($5,591) and Richard G. Newman
($24,683).

(5) Don R. Conlan, Abner D. Goldstine and Paul G. Haaga, Jr. are affiliated
with the Fund's Investment Adviser and, therefore, receive no remuneration
from the Fund.

<PAGE>

OTHER EXECUTIVE OFFICERS

<TABLE>
<CAPTION>
OFFICER
NAME (POSITION WITH CONTINUOUSLY
FUND) AND AGE PRINCIPAL OCCUPATION(1) SINCE(2)
------------- ----------------------- --------
<S> <C> <C>
Neil L. Langberg Vice President - Investment 1985
(President and CEO) Management Group, Capital
46 Research and Management
Company

Michael J. Downer Senior Vice President - 1994
(Vice President) Fund Business Management
44 Group, Capital Research and
Management Company

Brenda S. Ellerin Vice President, Capital 1999
(Vice President) Research Company
35

David A. Hoag Director and Vice 1999
(Vice President) President, Capital Research
33 Company

Mark R. Macdonald Vice President - Investment 1996
(Vice President) Management Group, Capital
40 Research and Management
Company

Julie F. Williams Vice President - Fund 1982
(Secretary) Business Management Group,
51 Capital Research and
Management Company

Anthony W. Hynes, Jr. Vice President - Fund 1993
(Treasurer) Business Management Group,
36 Capital Research and
Management 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 AUGUST 23, 1999.

<PAGE>

2. APPROVAL OF AMENDMENT TO THE FUND'S ARTICLES OF INCORPORATION (SHARE
CLASSIFICATION)

On August 10, 1999, the Fund's Board of Directors unanimously approved an
amendment to the Fund's Articles of Incorporation to give the Fund's Board of
Directors the power to classify the Fund's shares into classes and series. The
Board of Directors unanimously voted to submit the amendment to the Fund's
shareholders with the Board's recommendation that it be approved. The full text
of the proposed amendment is attached to the Proxy Statement as Exhibit A.

* * *

Until the 1990's, mutual funds with front-end sales charges dominated the
market for dealer-distributed funds. Over time, competition grew from funds with
alternative sales charge structures which are now widely accepted by investors
and broker-dealers. Although the front-end sales charge structure is appealing
due to its simplicity, the combination of significantly increased competition
and pricing experimentation has led a large number of fund complexes to consider
alternative distribution arrangements.

Capital Research and Management Company has advised the Fund's Board of
Directors that in the future it may recommend that the Board authorize the Fund
to issue an additional class of shares ("New Shares"). If authorized, the New
Shares are expected to be sold without any front-end sales charge and otherwise
would be similar to the existing Shares except that they would be subject to (i)
a different level of fees payable to the Fund's distributor, American Funds
Distributors, Inc. ("AFD"), a wholly-owned subsidiary of Capital Research and
Management Company, under a separate plan of distribution, and (ii) a contingent
deferred sales charge ("CDSC") payable to AFD if such shares are redeemed prior
to the expiration of a specified holding period. A portion of the distribution
fees and CDSC received by AFD would be available to finance the payment of
commissions on initial sales and ongoing service fees to eligible dealers of New
Shares.

IMPORTANTLY, THE DISTRIBUTION FEES FOR THE NEW SHARES WOULD BE IMPOSED ONLY
ON NEW SHARES AND WOULD NOT AFFECT THE EXPENSE LEVEL OF THE EXISTING SHARES.
MOREOVER, ANY OTHER EXPENSES UNIQUE TO THE NEW SHARES (E.G., ADDITIONAL TRANSFER
AGENT OR SHAREHOLDER ACCOUNT MAINTENANCE COSTS) ALSO WOULD BE BORNE ONLY BY THE
NEW SHARES. AS A RESULT, NEW SHARES WOULD HAVE A DIFFERENT (GENERALLY HIGHER)
LEVEL OF EXPENSES THAN THE EXISTING SHARES AND WOULD NOT RESULT IN ADDITIONAL
COSTS FOR THE EXISTING SHARES.

<PAGE>

* * *

The Fund's Articles of Incorporation currently provide for only one class
of shares of capital stock, and do not authorize the Board of Directors to
create additional classes or series. The Board of Directors believes that the
Fund's best interests would be served if the Articles of Incorporation were
amended to enable the Board to create new series of shares and classes of shares
within a series. Each share of a series, regardless of class, would share pro
rata (based on net asset value) in the investment portfolio and income of the
series and in the series' expenses, except for differences in expenses resulting
from different class-specific distribution arrangements and possibly other
class-specific expenses. Although the proposed Articles would permit the Board
to create additional series of shares (representing interests in separate
investment portfolios), there is no current intention to do so.

Shares of all classes would vote together on all matters affecting the
Fund, except for matters, such as approval of a plan of distribution or related
service plan, affecting only a particular class or series thereof. All shares
voting on a matter would have identical voting rights. All issued shares would
be fully paid and non-assessable, and shareholders would have no pre-emptive or
other right to subscribe for any additional shares. All shares within a series
(including, if issued, the New Shares) would have the same rights and be subject
to the same limitations set forth in the Articles of Incorporation with respect
to dividends, redemptions and liquidation, except for differences resulting from
class-specific distribution plans and related service plans and certain other
class-specific expenses.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS
PROPOSAL

3. APPROVAL OF AMENDMENT TO THE FUND'S ARTICLES OF INCORPORATION (REDUCTION IN
PAR VALUE)

On August 10, 1999, the Fund's Board of Directors unanimously voted to
approve 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 included as part
of Exhibit A.

<PAGE>

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 UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS
PROPOSAL

4. 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 Investment
Company Act of 1940 (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 reclassified 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 six restrictions should be amended. One restriction would be revised but
remain fundamental, four restrictions would be eliminated and one restriction
would be revised and reclassified 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.

<PAGE>

IMPORTANTLY, THE PROPOSED AMENDMENTS DO NOT AFFECT THE INVESTMENT OBJECTIVE
OF YOUR FUND, WHICH REMAINS 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 which are
the subject of Proposal 4. 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

4A. DIVERSIFICATION

The Fund is "diversified" for purposes of the 1940 Act. This means that,
with respect to 75% of the Fund's total assets, the Fund may not purchase a
security if (i) more than 5% of such assets would be invested in the securities
of a single issuer, or (ii) the Fund would own more than 10% of the outstanding
voting securities of a single issuer. Under the proposed language, which
conforms to this statutory standard, the Fund would have the flexibility to
invest, with respect to a portion (up to 25%) of its total assets, more than 5%
of such assets in a single issuer. In addition, because it is not possible to
describe every case in which a securities issuer will be treated as separate,
especially for securities not yet issued, the current clarifying language would
be removed.

Current Text

[The Fund may not...] purchase any security (other than securities issued
or guaranteed by the U.S. government or its agencies or instrumentalities),
if immediately after and as a result of such investment more than 5% of the
value of the Fund's total assets would be invested in securities of the
issuer. For the purpose of this restriction, the Fund will regard each
state, each political subdivision, agency or instrumentality of such state,
each multi-state agency of which such state is a member, and each public
authority which issues industrial development bonds on behalf of a private
entity as a separate issuer.

Proposed Text

[The Fund may not...] with respect to 75% of the Fund's total assets,
purchase the security of any issuer (other than securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities) if,
as a result, (a) more than 5% of the Fund's total assets would be invested
in securities of that issuer, or (b) the Fund would hold more than 10% of
the outstanding voting securities of that issuer.

<PAGE>

RESTRICTIONS PROPOSED TO BE ELIMINATED

None of the following investment restrictions is required under the 1940
Act. Many were originally adopted in response to state law restrictions or
interpretations which no longer apply to the Fund. Therefore, in order to
increase the ability of Fund management to manage the Funds' assets effectively
and efficiently in response to market and regulatory change, it is proposed that
these investment restrictions, which are currently listed as fundamental, be
eliminated. Further explanations pertaining to specific restrictions are set
forth below.

4B. PLEDGING ASSETS

In certain circumstances this restriction could interfere with the Fund's
ability to borrow temporarily for extraordinary or emergency purposes. The
Fund's current borrowing limit of 5% of total assets would remain unchanged.

Current Text

[The Fund may not...] mortgage, pledge, or hypothecate its assets, except
in an amount up to 10% of the value of its total assets, but only to secure
borrowings for temporary or emergency purposes.

4C. 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 the securities of a company which has an
officer or director who is an officer or director of the fund, or an
officer or director of its investment adviser, if, to the knowledge of the
Fund, one or more of such persons own beneficially more than 1/2 of 1% of
the shares of the company and in the aggregate more than 5% of the
outstanding securities of such company.

4D. UNSEASONED ISSUERS

This restriction was adopted in response to state regulation which no
longer applies. Because newly formed companies have no proven track record in
business, their prospects may be uncertain. Their securities may fluctuate in
price more widely than securities of established companies. Elimination of this
restriction will provide the Fund with greater investment flexibility, subject
to its investment objective and policies. Retaining such a restriction could,
among other things, preclude the Fund from making otherwise attractive
investments in newly-formed companies issuing asset-backed securities.
12

<PAGE>

Current Text

[The Fund may not...] invest more than 5% of the value of the Fund's total
assets in securities of any issuer with a record of less than three years
continuous operation, including predecessors, except those issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, or
municipal bonds rated at least "A" by either Moody's Investors Service,
Inc. or Standard & Poor's Corporation.

4E. RESTRICTED SECURITIES

The Fund has a fundamental policy prohibiting the acquisition of
"restricted securities" (i.e., securities with legal or contractual limitations
on transfer). This restriction is not required to be classified as fundamental
by the 1940 Act. Historically, there has been a concern that restricted
securities, which typically cannot be resold to the public, may be difficult for
a mutual fund to sell at approximately the value at which the fund is carrying
the investment. Restricted securities may or may not be illiquid, however. Some
restricted securities are actively traded among institutional investors and thus
highly liquid in the marketplace. Investor protection is afforded by the Fund's
existing, non-fundamental investment restriction which prohibits the Fund from
acquiring illiquid securities in excess of 15% of net assets.

Current Text

[The Fund may not...] acquire securities subject to restrictions on
disposition, except for repurchase obligations.

RESTRICTION PROPOSED TO BE REVISED AND RECLASSIFIED AS NON-FUNDAMENTAL

4F. 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.

<PAGE>

Current Text

[The Fund may not...] purchase securities of other investment companies,
except in connection with a merger, consolidation, acquisition, or
reorganization.

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 UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THESE
PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS.

5. RATIFICATION OF THE SELECTION BY THE BOARD OF DIRECTORS OF
PRICEWATERHOUSECOOPERS 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
PricewaterhouseCoopers LLP as independent accountant for the Fund for the fiscal
year 2000. In addition to the normal audit services, PricewaterhouseCoopers LLP
provides services in connection with the preparation and review of federal and
state tax returns for the Fund. PricewaterhouseCoopers LLP has served as the
Fund's independent accountant since the Fund's inception 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
PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP is expected
to attend the Meeting of Shareholders.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
ITS SELECTION OF PRICEWATERHOUSECOOPERS LLP.

<PAGE>

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 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, 333 South Hope Street, Los Angeles, CA
90071. 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

<PAGE>

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 333 SOUTH HOPE STREET, LOS
ANGELES, LOS ANGELES, CA 90071 OR BY TELEPHONING 800/421-0180. THESE REQUESTS
WILL BE HONORED WITHIN THREE BUSINESS DAYS OF RECEIPT.

By Order of the Board of Directors

JULIE F. WILLIAMS
Secretary

September 7, 1999

EXHIBIT A

PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION OF THE FUND
AUTHORIZING THE BOARD OF DIRECTORS TO CREATE NEW CLASSES AND SERIES
OF CAPITAL STOCK, AND REDUCING THE PAR VALUE

The following text shows those provisions of the Articles of Incorporation of
the Fund that are to be amended; the text that is lined through shows deletions
and the text that is double underlined indicates additions.

CAPITAL STOCK

(1) The total number of shares of stock of all classes and series which the
Corporation has authority to issue is two hundred million (200,000,000) shares
of capital stock (par value $0.001 per share), amounting in aggregate par value
to two hundred thousand dollars ($200,000).

(2) Unless otherwise prohibited by law, so long as the Corporation is
registered as an open-end company under the Investment Company Act, the Board
of Directors shall have full power and authority, without the approval of the
holders of any outstanding shares, to increase or decrease the number of shares
of capital stock or the number of shares of capital stock of any class or
series that the Corporation has authority to issue.

(3) As used in these Articles of Incorporation, a "series" of shares represents
interests in the same assets, liabilities, income, earnings and profits of the
Corporation; each "class" of shares of a series represents interests in the
same underlying assets, liabilities, income, earnings and profits, but may
differ from other classes of such series with respect to fees and expenses or
such other matters as shall be established by the Board of Directors. The
Board of Directors of the Corporation shall have full power and authority, from
time to time, to classify and reclassify any authorized but unissued shares of
stock of the Corporation, including, without limitation, the power to classify
or reclassify unissued shares into series, and to classify and reclassify a
series into one or more classes of stock that may be invested together in the
common investment portfolio in which the series is invested, by setting or
changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such shares of stock. All shares of stock of a
series shall represent the same interest in the Corporation and have the same
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption as the other shares of stock of that series, except to the extent
that the Board of Directors provides for differing preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of shares of stock of
classes of such series as determined pursuant to Articles Supplementary filed
for record with the State Department of Assessments and Taxation of Maryland,
as otherwise determined pursuant to these Articles or by the Board of Directors
in accordance with law.

(4) Initially, the shares of capital stock of the Corporation shall be all of
one class and series designated as "common stock." Notwithstanding any other
provision of these Articles, upon the first classification of unissued shares
of stock into additional series, the Board of Directors shall specify a legal
name for the outstanding series, as well as for the new series, in appropriate
charter documents filed for record with the State Department of Assessments and
Taxation of Maryland providing for such name change and classification, and
upon the first classification of a series into additional classes, the Board of
Directors shall specify a legal name for the outstanding class, as well as for
the new class or classes, in appropriate charter documents filed for record
with the State Department of Assessments and Taxation of Maryland providing for
such name change and classification.

(5) The following is a description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of all series of capital
stock of the Corporation and classes of such series (unless provided otherwise
by the Board of Directors with respect to any such additional series (or class
thereof) at the time it is established and designated):

(a) Assets Belonging to Series. All consideration received by the Corporation
from the issue or sale of shares of a particular series, together with all
assets in which such consideration is invested or reinvested, all income,
earnings, profits and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any investment or reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that series for all purposes, subject only
to the rights of creditors, and shall be so recorded upon the books of account
of the Corporation. Such consideration, assets, income, earnings, profits and
proceeds, including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, together with any General Items (as
defined below) allocated to that series as provided in the following sentence,
are herein referred to collectively as "assets belonging to" that series. In
the event that there are any assets, income, earnings, profits or proceeds of
the Corporation which are not readily identifiable as belonging to any
particular series (collectively, "General Items"), such General Items shall be
allocated by or under the supervision of the Board of Directors to and among
any one or more of the series established and designated from time to time in
such manner and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable; and any General Items so allocated to a
particular series shall belong to that series. Each such allocation by the
Board of Directors shall be conclusive and binding for all purposes.

(b) Liabilities of Series. The assets belonging to each particular series
shall be charged with the liabilities of the Corporation in respect of that
series, including any class thereof, and all expenses, costs, charges and
reserves attributable to that series, including any such class, and any general
liabilities, expenses, costs, charges or reserves of the Corporation which are
not readily identifiable as pertaining to any particular series, shall be
allocated and charged by or under the supervision of the Board of Directors to
and among any one or more of the series established and designated from time to
time in such manner and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable. The liabilities, expenses, costs,
charges and reserves allocated and so charged to a series are herein referred
to collectively as "liabilities of" that series. Each allocation of
liabilities, expenses, costs, charges and reserves by or under the supervision
of the Board of Directors shall be conclusive and binding for all purposes.

(c) Dividends and Distributions. Dividends and capital gains distributions on
shares of a particular series may be paid with such frequency, in such form and
in such amount as the Board of Directors may determine by resolution adopted
from time to time, or pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities of that series. All dividends on
shares of a particular series shall be paid only out of the income belonging to
that series and all capital gains distributions on shares of a particular
series shall be paid only out of the capital gains belonging to that series.
Such dividends and distributions may vary between or among classes of a series
to reflect differing allocations of liabilities and expenses of such series
between or among such classes to such extent as may be provided in or
determined pursuant to Articles Supplementary filed for record with the State
Department of Assessments and Taxation of Maryland or as may otherwise be
determined by the Board of Directors. All dividends and distributions on
shares of a particular series (or class thereof) shall be distributed pro rata
to the holders of that series (or class thereof) in proportion to the number of
shares of that series (or class thereof) held by such holders at the date and
time of record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure, the Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the stockholder's purchase
order and/or payment have not been received by the time or times established by
the Board of Directors under such program or procedure.

Dividends and distributions may be paid in cash, property or additional shares
of the same or another class or series or a combination thereof, as determined
by the Board of Directors or pursuant to any program that the Board of
Directors may have in effect at the time for the election by stockholders of
the form in which dividends or distributions are to be paid. Any such dividend
or distribution paid in shares shall be paid at the current net asset value
thereof.

(d) Voting. On each matter submitted to a vote of the stockholders, each
holder of shares shall be entitled to one vote for each share standing in his
name on the books of the Corporation, irrespective of the series or class
thereof, and all shares of all series and classes shall vote as a single class
("Single Class Voting"); provided, however, that (i) as to any matter with
respect to which a separate vote of any series or class is required by the
Investment Company Act or by the Maryland General Corporation Law, such
requirement as to a separate vote by that series or class shall apply in lieu
of Single Class Voting; (ii) in the event that the separate vote requirements
referred to in clause (i) above apply with respect to one or more (but less
than all) series or classes, then, subject to clause (iii) below, the shares of
all other series and classes shall vote as a single class; and (iii) as to any
matter which does not affect the interest of a particular series or class,
including liquidation of another series as described in subsection (g) below,
only the holders of shares of the one or more affected series shall be entitled
to vote.

Notwithstanding any provision of law requiring the authorization of any action
by a greater proportion than a majority of the total number of shares of all
classes and series of capital stock or of the total number of shares of any
class or series of capital stock entitled to vote as a separate class, such
action shall be valid and effective if authorized by the affirmative vote of
the holders of a majority of the total number of shares of all classes and
series outstanding and entitled to vote thereon, or of the class or series
entitled to vote thereon as a separate class, as the case may be, except as
otherwise provided in the charter of the Corporation.

(e) Redemption by Stockholders. Each holder of shares of a particular series
shall have the right at such times as may be permitted by the Corporation to
require the Corporation to redeem all or any part of his shares of that series,
at a redemption price per share equal to the net asset value per share of that
series next determined after the shares are properly tendered for redemption,
less such redemption fee or sales charge, if any, as may be established by the
Board of Directors in its sole discretion. Payment of the redemption price
shall be in cash; provided, however, that if the Board of Directors determines,
which determination shall be conclusive, that conditions exist which make
payment wholly in cash unwise or undesirable, the Corporation may, to the
extent and in the manner permitted by the Investment Company Act, make payment
wholly or partly in securities or other assets belonging to the series of which
the shares being redeemed are a part, at the value of such securities or assets
used in such determination of net asset value.

Notwithstanding the foregoing, the Corporation may postpone payment of the
redemption price and may suspend the right of the holders of shares of any
series to require the Corporation to redeem shares of that series during any
period or at any time when and to the extent permissible under the Investment
Company Act.

(f) Redemption by Corporation. The Board of Directors may cause the
Corporation to redeem at their net asset value the shares of any series (or
class thereof) held in an account having, because of redemptions or exchanges,
a net asset value on the date of the notice of redemption less than the minimum
initial investment in that series (or class thereof) specified by the Board of
Directors from time to time in its sole discretion, provided that at least 60
days prior written notice of the proposed redemption has been given to the
holder of any such account by mail, postage prepaid, at the address contained
in the books and records of the Corporation and such holder has been given an
opportunity to purchase the required value of additional shares.

(g) Liquidation. In the event of the liquidation of a particular series as
herein contemplated, the stockholders of the series that is being liquidated
shall be entitled to receive, as a class, when and as declared by the Board of
Directors, the excess of the assets belonging to that series over the
liabilities of that series. The holders of shares of any particular series
shall not be entitled thereby to any distribution upon liquidation of any other
series. The assets so distributable to the stockholders of any particular
series shall be distributed among such stockholders in proportion to the number
of shares of that series held by them and recorded on the books of the
Corporation. The liquidation of any particular series in which there are
shares then outstanding may be authorized by vote of a majority of the Board of
Directors then in office, without any action by the holders of the outstanding
voting securities of that series, as defined in the Investment Company Act, and
without the vote of the holders of shares of any other series. The liquidation
of a particular series may be accomplished, in whole or in part, by the
transfer of assets of such series to another series or by the exchange of
shares of such series for the shares of another series.

(h) Net Asset Value Per Share. For the purposes referred to in these Articles
of Incorporation, the net asset value of shares of the capital stock of the
Corporation of each series and class as of any particular time (a
"determination time") shall be determined by or pursuant to the direction of
the Board of Directors as follows:

(i) At times when a series is not classified into multiple classes, the net
asset value of each share of stock of a series, as of a determination time,
shall be the quotient obtained by dividing the net value of the assets of the
Corporation belonging to that series (determined as hereinafter provided) as of
such determination time by the total number of shares of that series then
outstanding, including all shares of that series which the Corporation has
agreed to sell for which the price has been determined, and excluding shares of
that series which the Corporation has agreed to purchase or which are subject
to redemption for which the price has been determined.

The net value of the assets of the Corporation belonging to a series shall be
determined in accordance with sound accounting practice by deducting from the
gross value of the assets of the Corporation belonging to that series
(determined as hereinafter provided), the amount of all liabilities of that
series, in each case as of such determination time.

The gross value of the assets of the Corporation belonging to a series as of
such determination time shall be an amount equal to all cash, receivables, the
market value of all securities for which market quotations are readily
available and the fair value of other assets of the Corporation belonging to
that series at such determination time, all determined in accordance with sound
accounting practice and giving effect to the following:

(ii) At times when a series is classified into multiple classes, the net asset
value of each share of stock of a class of such series shall be determined in
accordance with subsections (i) and (iii) of this Section (h) with appropriate
adjustments to reflect differing allocations of liabilities and expenses of
such series between or among classes to such extent as may be provided in or
determined pursuant to Articles Supplementary filed for record with the State
Department of Assessments and Taxation of Maryland or as may otherwise be
determined by the Board of Directors.

(iii) The Board of Directors is empowered, in its discretion, to establish
other methods for determining such net asset value whenever such other methods
are deemed by it to be necessary or desirable, including, without limiting the
generality of the foregoing, any method deemed necessary or desirable in order
to enable the Corporation to comply with any provision of the Investment
Company Act or any rule or regulation thereunder. Subject to the applicable
provisions of the Investment Company Act, the Board of Directors, in its sole
discretion, may prescribe and shall set forth in the By-Laws of the Corporation
or in a duly adopted resolution of the Board of Directors such bases and times
for determining the value of the assets belonging to, and the net asset value
per share of outstanding shares of, each series, or the net income attributable
to such shares, as the Board of Directors deems necessary or desirable. The
Board of Directors shall have full discretion, to the extent not inconsistent
with the Maryland General Corporation Law and the Investment Company Act, to
determine which items shall be treated as income and which items as capital and
whether any item of expense shall be charged to income or capital.

(i) Equality. All shares of each particular series shall represent an equal
proportionate interest in the assets belonging to that series (subject to the
liabilities of that series), and each share of any particular series shall be
equal to each other share of that series. The Board of Directors may from time
to time divide or combine the shares of any particular series into a greater or
lesser number of shares of that series without thereby changing the
proportionate interest in the assets belonging to that series or in any way
affecting the rights of holders of shares of any other series.

(j) Conversion or Exchange Rights. (i) Subject to compliance with the
requirements of the Investment Company Act, the Board of Directors shall have
the authority to provide that holders of shares of any class or series shall
have the right to exchange said shares into shares of one or more other class
or series of shares in accordance with such requirements and procedures as may
be established by the Board of Directors.

(ii) At such times (which may vary among shares of a class) as may be
determined by the Board of Directors, shares of a particular class of a series
may be automatically converted into another class of such series based on the
relative net asset value of such classes at the time of conversion, subject,
however, to any conditions of the conversion that may be imposed by the Board
of Directors.

(6) (a) Shares of the various classes of each series of capital stock shall
represent the same interest in the Corporation and have, except as provided to
the contrary in any subsequently filed charter document, identical voting,
dividend, liquidation, and other rights, terms and conditions with any other
shares of capital stock of that series; provided however, that notwithstanding
anything in the charter of the Corporation to the contrary, shares of the
various classes of a series shall be subject to such differing front-end sales
loads, contingent deferred sales charges, fees or expenses under a plan of
distribution or other arrangement related to distribution of shares issued by
the Corporation, and administrative, recordkeeping, or service fees, each as
may be established from time to time by the Board of Directors in accordance
with the Investment Company Act and any rules or regulations promulgated
thereunder and applicable rules and regulations of self-regulatory
organizations and as shall be set forth in the applicable prospectus for the
shares; and provided further that expenses related solely to a particular class
of a particular series of capital stock (including, without limitation, fees or
expenses under a plan of distribution and administrative expenses under an
administration or service agreement, plan or other arrangement, however
designated) shall be borne solely by such class and shall be appropriately
reflected (in the manner determined by the Board of Directors) in the net asset
value, dividends, distribution and liquidation rights of the shares of the
class in question.

(b) As to any matter with respect to which a separate vote of any class of a
series is required by the Investment Company Act or by the Maryland General
Corporation Law (including, without limitation, approval of any plan, agreement
or other arrangement referred to in subsection (a) above), such requirement as
to a separate vote by that class shall apply in lieu of Single Class Voting,
and if permitted by the Investment Company Act or the Maryland General
Corporation Law, the classes of more than one series shall vote together as a
single class on any such matter which shall have the same effect on each such
class. As to any matter which does not affect the interest of a particular
class of a series, only the holders of shares of the affected classes of that
series shall be entitled to vote.

(c) In furtherance but not in limitation of this Article SIXTH, and without
limiting the ability of the Corporation to effect a transaction contemplated by
this paragraph under authority of applicable law or any other independent
provision of the charter, the assets belonging to a particular class or series
of shares of capital stock may be invested partially or entirely in the shares
of a registered or unregistered investment company formed to implement a
"master-feeder" or similar structure operated in conformity with the Investment
Company Act and orders issued pursuant thereto, or in any similar structure
however designated. The Corporation shall also be authorized to exchange the
assets belonging to a class or series for shares in such a registered or
unregistered investment company formed to be a master portfolio upon the
approval of the Board of Directors and without further authorization by the
shareholders of the class or series in question or any other class or classes
or series of capital stock of the Corporation.

(7) The Corporation may issue and sell fractions of shares of capital stock
having pro rata all the rights of full shares, including, without limitation,
the right to vote and to receive dividends, and wherever the words "share" or
"shares" are used in the charter or By-Laws of the Corporation, they shall be
deemed to include fractions of shares where the context does not clearly
indicate that only full shares are intended.

(8) The Corporation shall not be obligated to issue certificates representing
shares of any class or series of capital stock. At the time of issue or
transfer of shares without certificates, the Corporation shall provide the
stockholder with such information as may be required under the Maryland General
Corporation Law.

(9) Any determination as to any of the following matters made by or pursuant to
the direction of the Board of Directors consistent with these Articles of
Incorporation and in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of duties, shall be final and conclusive and
shall be binding upon the Corporation and every holder of shares of capital
stock of the Corporation, of any series or class, namely, the amount of the
assets, obligations, liabilities and expenses of the Corporation or belonging
to any series or with respect to any class; the amount of the net income of the
Corporation from dividends and interest for any period and the amount of assets
at any time legally available for the payment of dividends with respect to any
series or class; the amount of paid-in surplus, annual or other net profits, or
net assets in excess of capital, undivided profits, or excess of profits over
losses on sales of securities belonging to the Corporation or any series or
class; the amount, purpose, time of creation, increase or decrease, alteration
or cancellation of any reserves or charges and the propriety thereof (whether
or not any obligation or liability for which such reserves or charges shall
have been created shall have been paid or discharged) with respect to the
Corporation or any series or class; the market value, or any sale, bid or asked
price to be applied in determining the market value, of any security owned or
held by the Corporation; the fair value of any other asset owned or held by the
Corporation; the number of shares of stock of any series or class issued or
issuable; the existence of conditions permitting the postponement of payment of
the repurchase price of shares of stock of any series or class or the
suspension of the right of redemption as provided by law; any matter relating
to the acquisition, holding and disposition of securities and other assets by
the Corporation; any question as to whether any transaction constitutes a
purchase of securities on margin, a short sale of securities, or an
underwriting of the sale of, or participation in any underwriting or selling
group in connection with the public distribution of any securities; and any
matter relating to the issue, sale, repurchase or other acquisition or
disposition of shares of stock of any series or class.

* * *

VII.

VIII.

PROXY CARD THE TAX-EXEMPT BOND FUND OF AMERICA, INC. PROXY CARD

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION
FOR THE MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 27, 1999

The undersigned hereby appoints Michael J. Downer, Paul G. Haaga, Jr., Anthony
W. Hynes, Jr., and Julie F. Williams, 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 Office of The Capital Group
Companies, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, California,
on Wednesday, October 27, 1999 at 10:00 a.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, 4 AND 5.
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

THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: []

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. Election of Directors: FOR WITHHOLD FOR ALL
ALL ALL EXCEPT

01 RICHARD G. CAPEN 06 LEONARD R. FULLER [] [] []
02 H. FREDERICK CHRISTIE 07 ABNER D. GOLDSTINE
03 DON R. CONLAN 08 PAUL G. HAAGA, JR.
04 DIANE C. CREEL 09 RICHARD G. NEWMAN
05 MARTIN FENTON 10 FRANK M. SANCHEZ
</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>
FOR AGAINST ABSTAIN

<S> <C> <C> <C> <C>
2. APPROVAL OF AMENDMENTS TO ARTICLES OF INCORPORATION [] [] []
AUTHORIZING THE BOARD TO CREATE

NEW CLASSES AND SERIES OF CAPITAL STOCK:

3. APPROVAL OF AN AMENDMENT TO THE ARTICLES OF
INCORPORATION REDUCING THE PAR VALUE

PER SHARE: [] [] []

4. APPROVAL OF THE PROPOSED CHANGES TO THE FUND'S
INVESTMENT RESTRICTIONS.

4A. AMEND RESTRICTION REGARDING DIVERSIFICATION [] [] []

4B. ELIMINATE RESTRICTION ON PLEDGING ASSETS [] [] []

4C. ELIMINATE RESTRICTION REGARDING AFFILIATED OWNERSHIP [] [] []

4D. ELIMINATE RESTRICTION REGARDING INVESTMENTS IN UNSEASONED [] [] []
ISSUERS

5. RATIFICATION OF SELECTION OF PRICEWATERHOUSECOOPERS [] [] []
LLP AS INDEPENDENT ACCOUNTANT:

</TABLE>

IN THEIR DISCRETION, UPON OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.

IMPORTANT

SHAREHOLDERS CAN HELP THE CORPORATION AVOID THE NECESSITY AND EXPENSE OF
SENDING FOLLOW-UP LETTERS BY PROMPTLY RETURNING THE ENCLOSED PROXY.
THE TAX-EXEMPT BOND OF AMERICA, INC.