THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
333 South Hope Street, Los Angeles, California 90071
September 7, 1999
Dear Shareholder:
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, 11100 Santa Monica Boulevard, 15/th/ 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 accountants for the Fund for the
fiscal year 2000 (Proposal 5).
6. Any other business that may come before the Meeting, although 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.
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. The 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 re-classified as non-fundamental, requiring only Board approval
to change. You may vote for any or all of the changes that are the subject of
Proposal 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.
* * *
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. 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. 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 [
]. Thank you for investing with us and for your continuing support.
PAUL G. HAAGA, JR.
Chairman of the Board
NEIL L. LANGBERG
President
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. PROXY
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.
[ ] TO VOTE AGAINST THE PROPOSED CHANGES TO ONE OR
MORE OF THE SPECIFIC FUNDAMENTAL
INVESTMENT RESTRICTIONS, BUT TO APPROVE THE
OTHERS, PLACE AN "X" IN THE BOX AT THE
LEFT AND INDICATE THE LETTER(S) (AS SET FORTH
IN THE PROXY STATEMENT) OF THE INVESTMENT
RESTRICTIONS YOU DO NOT WANT TO CHANGE ON THIS
LINE (FOR EXAMPLE, A, B, OR C):
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.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 27, 1999
----------------
To the Shareholders of
The Tax-Exempt Bond Fund of America, Inc.:
An Annual 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, 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, by the Board of Directors, 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.
The Board of Directors has fixed the close of business on August 23, 1999 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
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 IN THE
EVENT THAT YOU ATTEND THE MEETING.
By Order of the Board of Directors,
Julie F. Williams
Secretary
September 7, 1999
IMPORTANT
SHAREHOLDERS 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 IN ORDER THAT THE
NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED ENVELOPE
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
333 SOUTH HOPE STREET, LOS ANGELES, CALIFORNIA
----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 27, 1999
----------------
The enclosed Proxy is solicited by the Board of Directors of the Fund in
connection with the Annual 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. Anyone having submitted a Proxy may revoke it
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
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 shall be deemed to be elected. The vote required to
approve Items 2, 3, 4 and 5 is the affirmative vote of the lesser of (a) 67% or
more of all Shares present and entitled to vote at the meeting, provided the
holders of more than 50% of all outstanding Shares are present or represented
by proxy, or (b) more than 50% of all outstanding Shares on the record date.
In the event that sufficient votes are not received by the meeting date, a
person named as proxy may propose one or more adjournments of the meeting for a
period or periods of not more than 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
below nominated directors and in favor of all proposals. Shareholders who
return Proxies marked as abstaining from voting on one or more proposals are
treated as being present at the meeting for purposes of obtaining the quorum
necessary to hold the meeting, but are not counted as part of the vote
necessary to approve the proposal(s). Where brokers holding Fund 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 it is not anticipated that meetings of shareholders will 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 1977, has reached the Fund's retirement age and is not standing for
re-election.
Each of the nominees has agreed to serve as director if elected. If, due to
presently unforeseen circumstances, any nominee should not be available for
election, the persons named as proxies will vote the signed but unmarked
Proxies and those marked for the nominated directors for such other nominee as
the present directors may recommend. The table below sets forth certain
information regarding the nominees.
<TABLE>
<CAPTION>
NAME OF NOMINEE CURRENT YEAR FIRST MEMBERSHIPS ON BOARD SHARES OF THE
(POSITION WITH PRINCIPAL ELECTED A OF OTHER REGISTERED FUND
FUND) AND AGE OCCUPATION AND DIRECTOR OF INVESTMENT COMPANIES BENEFICIALLY
PRINCIPAL THE FUND AND PUBLICLY HELD OWNED, DIRECTLY
EMPLOYMENT COMPANIES OR INDIRECTLY,
DURING PAST AT AUGUST 23,
FIVE YEARS # 1999
<S> <C> <C> <C> <C>
Richard G. Corporate Nominee The American Funds
Capen, Jr. Director and Group:(Director/Trustee of
(Nominee) author; former 5 other funds)
63 United States
Ambassador to
Spain; former
Vice Chairman
of the Board,
Knight Ridder,
Inc.; former
Chairman and
Publisher, The
Miami Herald
H.Frederick Private 1979 The American Funds
Christie investor. Group:
/2 3/ Former (Director/Trustee of
(Director) President and 16 other funds)
66 Chief Executive The American Variable
Officer, the Insurance Series
Mission Group
(non-utility
holding
company,
subsidiary of
Southern
California
Edison
Company)
Don R. Conlan * President 1996 The American Funds
(Director) (retired), The Group:
63 Capital Group (Director/Trustee of
Companies, 11 other funds)
Inc.
Diane C. Creel CEO and 1994 The American Funds
/1 2 3/ President, The Group:
(Director) Earth (Director/Trustee of
50 Technology 11 other funds)
Corporation
(international
consulting
engineering)
Martin Fenton Chairman, 1989 The American Funds
/1 2 3/ Senior Group:
(Director) Resource (Director/Trustee of
64 Group, LLC 13 other funds)
(management of The American Variable
senior living Insurance Series
centers)
Leonard R. President, 1994 The American Funds
Fuller Fuller Group:
/ 2 3/ Consulting (Director/Trustee of
(Director) (financial 11 other funds)
52 management The American Variable
consulting Insurance Series
firm)
Abner D. Capital 1979 The American Funds
Goldstine * Research and Group:
(Vice Chairman Management (Director/Trustee of
and Director) Company, 11 other funds)
69 Senior Vice
President and
Director
Paul G. Haaga, Capital 1992 The American Funds
Jr. * Research and Group:
(Chairman of the Management (Director/Trustee of 13
Board) 50 Company, other funds)
Executive Vice
President and
Director
Richard G. Chairman, 1991 The American Funds
Newman President and CEO AECOM Group:
/1 2 3/ Technology (Director/Trustee of 12
(Director) Corporation other funds)
64 (architectural
engineering)
Frank M. Sanchez Principal, The Nominee The American Funds
(Nominee) Sanchez Family Group:
55 Corporation (Director/Trustee of 3
dba McDonald's other funds)
Restaurants
(McDonald's
licensee)
</TABLE>
The American Funds Group consists 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..
* 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).
# Corporate positions, in some instances, may have changed during this period.
/1/The Fund has an Audit Committee composed of the above-designated directors.
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.
/2/The Fund has a Nominating Committee which is composed of the
above-designated directors. 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.
/3/The Fund has a Contracts Committee which is 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 proposed to enter into, renew or
continue prior to voting thereon, 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 meeting 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.
The Fund pays no salaries or other compensation to its directors other than
directors fees, which are paid to those directors who are unaffiliated with the
Investment Adviser as described below.
DIRECTOR COMPENSATION
<TABLE>
<CAPTION>
Director or Nominee Aggregate Total Compensation Total Number of
Compensation (including Voluntarily und Boards
(including Deferred Compensation) on which
Voluntarily from all Funds Managed Director
Deferred by Capital Research and serves
Compensation/1/) Management Company
from the Fund during during the Fiscal Year
Fiscal Year ended ended 8/31/98
8/31/98
<S> <C> <C> <C>
Richard G. Capen, Jr. none/3/ $30,250 5
H. Frederick Christie $4,200/4/ 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 20,883/4/ 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 as such have not received any remuneration from the Fund as of
this time.
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, accordingly, receive no remuneration from
the Fund.
Other Executive Officers
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name Principal Occupation (1) Officer
(Position with Fund) Continuously
and Age Since (2)
Neil L. Langberg 46 Capital Research and Management Company, 1985
(President and CEO) Vice President - Investment Management Group
Michael J. Downer 44 Capital Research and Management Company, 1994
(Vice President) Secretary
Brenda S. Ellerin 35 Capital Research Company, 1999
(Vice President) Vice President
David A. Hoag 33 Capital Research Company, 1999
(Vice President) Director and Vice President
Mark R. Macdonald 40 Capital Research and Management Company, 1982
(Vice President) Vice President - Investment Management Group
Julie F. Williams 51 Capital Research and Management Company, 1982
(Secretary) Vice President, Fund Business Management Group
Anthony W. Hynes, Jr. 36 Capital Research and Management Company, 1993
(Treasurer) Vice President, Fund Business Management Group
</TABLE>
(2) Officers are elected to 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.
2. APPROVAL OF AMENDMENT TO THE FUND'S ARTICLES OF INCORPORATION (SHARE
CLASSIFICATION)
On August 10, 1999, the Fund's Board of Directors unanimously voted to approve
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.
At its meeting on August 10, 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 hereto 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 Shares except that they would be subject to (i) a
different level of fees payable to 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 dealer 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.
* * *
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, with each share of a series, regardless of class, sharing 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 distribution arrangements and possibly other class-specific expenses.
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.
Approval of the proposed amendment to the Articles of Incorporation requires
the affirmative vote of more than 50% of the outstanding shares of the Fund.
The effect of an abstention or broker non-vote is the same as a vote against
this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION TO PERMIT MULTIPLE CLASSES
OF SHARES
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 in the
text of the amendment attached as Exhibit A.
Under Maryland law, the par value of shares determines the amount of a
corporation's stated capital. Stated capital has little meaning in the case of
an investment company like the Fund. However, when the Fund's 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.
Approval of the proposed amendment to the Articles of Incorporation requires
the affirmative vote of more than 50% of the outstanding shares of the Fund.
The effect of an abstention or broker non-vote is the same as a vote against
this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION TO REDUCE THE PAR VALUE OF
THE FUND'S SHARES
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 the Fund's 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 the Fund's 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 ought to be revised, eliminated or re-classified as
non-fundamental.
The Board of Directors, together with the Fund's senior officers, have analyzed
the current fundamental investment restrictions, and have concluded that 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 re-classified as non-fundamental.
The proposed investment restrictions have been drafted to maintain important
investor protections while providing flexibility to respond to future legal,
regulatory and market changes. By reducing the number of policies that can be
changed only by shareholder vote, the Board of Directors and the Fund will have
greater flexibility to modify Fund policies, as appropriate, in response to
changing markets and in light of new investment opportunities and instruments.
The Fund will then be able to avoid the costs and delays associated with a
shareholder meeting when making changes to the non-fundamental investment
policies that the Board may consider desirable.
IMPORTANTLY, THE PROPOSED AMENDMENTS DO NOT AFFECT THE INVESTMENT 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 that are the
subject of Proposal 4. For ease of reading and due to limited space on the
proxy card, we have organized the proposed changes as part of a single proposal
but shareholders are asked to review each change. A shareholder wishing to
vote against a particular change need only list the letter corresponding to the
change on the proxy card. If the proposed changes are approved by the Fund's
shareholders, the Fund's prospectus and statement of additional information
will be revised, as appropriate, 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, 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 different types of
eligible security issuers will appear from time to time, the clarifying
language regarding separate issuers 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$] with respect to 75% of the Fund's total assets, purchase
the security of any issuer (other than securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities) if, as a result, (a) more
than 5% of the Fund's total assets would be invested in securities of that
issuer, or (b) the Fund would hold more than 10% of the outstanding voting
securities of that issuer.
RESTRICTIONS PROPOSED TO BE ELIMINATED
None of the following investment restrictions are required under the 1940 Act.
Many were originally adopted in response to state law restrictions or
interpretations which no longer apply to the Fund. Therefore, in order to
increase the ability of Fund management to manage the Funds' assets effectively
and efficiently in response to market and regulatory change, it is proposed
that these investment restrictions, which are currently listed as fundamental,
be eliminated. Further explanations pertaining to specific restrictions are
set forth below.
4B. PLEDGING ASSETS
In certain circumstances this restriction could interfere with the Fund's
ability to borrow temporarily for extraordinary or emergency purposes. The
Fund's current borrowing limit of 5% of total assets would remain unchanged.
CURRENT TEXT
[The Fund may not$] 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$] purchase the securities of a company which has an officer
or director who is an officer or director of the fund, or an officer or
director of its investment adviser, if, to the knowledge of the Fund, one or
more of such persons own beneficially more than 1/2 of 1% of the shares of the
company and in the aggregate more than 5% of the outstanding securities of such
company.
4D. UNSEASONED ISSUERS
Retaining unseasoned issuer restrictions could, among other things, preclude
the Fund from making otherwise attractive investments in newly-formed companies
issuing asset-backed securities.
CURRENT TEXT
[The Fund may not$] 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 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 existing
regulation, which provides that non-money market mutual funds (including the
Fund) are prohibited from acquiring illiquid securities in excess of 15% of net
assets.
CURRENT TEXT
[The Fund may not$] acquire securities subject to restrictions on disposition,
except for repurchase obligations.
RESTRICTION PROPOSED TO BE REVISED AND RECLASSIFIED AS NON-FUNDAMENTAL
4F. PURCHASING SECURITIES OF OTHER INVESTMENT COMPANIES
This restriction deals with certain anti-pyramiding concerns addressed by the
1940 Act. Revising this restriction in the manner proposed would allow the Fund
to invest to a limited degree in entities falling within the technical
definition of investment company. On occasion, certain issuers in various
lines of business, primarily financial, fall within this definition but
otherwise represent attractive investment opportunities, consistent with the
Fund's investment objective. Current industry practice is to rely on the 1940
Act for investor protection./1/
CURRENT TEXT
[The Fund may not$] purchase securities of other investment companies, except
in connection with a merger, consolidation, acquisition, or reorganization.
/1/Section 12(d)(1)(A) of the 1940 Act makes it unlawful for a fund to acquire
more than (i) 3% of the outstanding voting stock of another investment company
(open- or closed-end), (ii) securities of another investment company valued at
more than 5% of the fund's total assets, or (iii) securities of all other
investment companies valued at more than 10% of the fund's total assets.
Section 12(d)(1)(C) of the Act makes it unlawful for a fund to acquire the
securities of a registered closed-end investment company if, immediately after
the acquisition, the fund and other funds managed by the same investment
adviser own more than 10% of the total outstanding voting stock of the
closed-end investment company.
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
Pursuant to the 1940 Act, a majority of the entire 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) have selected 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 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 DIRECTOR UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
ITS SELECTION OF PRICEWATERHOUSECOOPERS LLP.
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, it is not anticipated that the Fund will 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 solicitation of the enclosed Proxy is made by and on behalf of the Board
of Directors of the Fund.. The cost of soliciting proxies, consisting of
printing, handling and mailing of the Proxies and related materials, will be
paid by the Fund. 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. ALL SHAREHOLDERS
ARE URGED TO MARK, DATE, SIGN, AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES
The management is not aware of any matters that will be presented for action at
the meeting other than the matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the proxies in the accompanying form
will confer upon the person or persons entitled to vote the shares represented
by such Proxy 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.
A COPY OF THE FUND'S MOST RECENT ANNUAL REPORT MAY BE OBTAINED, 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.
V.
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 Aseries@ of shares represents
interests in the same assets, liabilities, income, earnings and profits of the
Corporation; each Aclass@ 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 Acommon 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
Adetermination 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.
