THE FUND PROVIDES SPANISH TRANSLATIONS IN CONNECTION WITH THE PUBLIC OFFERING
AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR AND ACCURATE ENGLISH
TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS FOR THE FUND.
/s/ Vincent P. Corti
Vincent P. Corti
Secretary
<PAGE>
PROSPECTUS
for Eligible Retirement Plans
LOGO OF THE INVESTMENT COMPANY OF AMERICA(R)
An opportunity for long-term
growth of capital and income
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
FEBRUARY 28, 1996
THE INVESTMENT COMPANY OF AMERICA
333 South Hope Street
Los Angeles, CA 90071
The fund's investment objectives are long-term growth of capital and income.
The fund strives to accomplish these objectives through constant supervision,
careful selection and broad diversification of a portfolio which ordinarily
consists principally of common stocks.
This prospectus relates only to shares of the fund offered without a sales
charge through eligible retirement plans. For a prospectus regarding shares of
the fund to be acquired otherwise, contact the Secretary of the fund at the
address indicated above.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information for the fund, dated
February 28, 1996, which contains the fund's financial statements, without
charge, by writing to the Secretary of the fund at the above address or
telephoning 800/421-0180. These requests will be honored within three business
days of receipt.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR
GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY, ENTITY OR PERSON. THE
PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
04-010-0296
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY This table is designed to help you understand costs of
OF EXPENSES investing in the fund. These are historical expenses;
your actual expenses may vary.
Average annual SHAREHOLDER TRANSACTION EXPENSES
expenses paid over Certain retirement plans may purchase shares of the
a 10-year period fund with no sales charge./1/ The fund also has no
would be sales charge on reinvested dividends, redemption fees
approximately $8 or exchange fees.
per year, assuming
a $1,000 ANNUAL FUND OPERATING EXPENSES (as a percentage of
investment and a average net assets)
5% annual return
with no sales
charge.
<TABLE>
<S> <C>
Management fees......................................... 0.26%
12b-1 expenses.......................................... 0.21%/2/
Other expenses (including audit, legal, shareholder
services, transfer agent and custodian expenses)....... 0.13%
Total company operating expenses........................ 0.60%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
cumulative expenses on a $1,000
investment, assuming $6 $19 $33 $75
a 5% annual return./3/
</TABLE>
/1/ Retirement plans of organizations with $100 million or more in
collective retirement plan assets may purchase shares of the
fund with no sales charge. In addition, any employer-sponsored
403(b) plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or any other
plan that invests at least $1 million in shares of the fund
(or in combination with shares of other funds in The American
Funds Group other than the money market funds) may purchase
shares at net asset value; however, a contingent deferred
sales charge of 1% applies on certain redemptions made within
12 months following such purchases. (See "Redeeming Shares--
Contingent Deferred Sales Charge.")
/2/ These expenses may not exceed 0.25% of the company's average
net assets annually. (See "Fund Organization and Management--
Plan of Distribution.") Due to these distribution expenses,
long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/3/ Use of this assumed 5% return is required by the Securities
and Exchange Commission; it is not an illustration of past or
future investment results. THIS EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL
EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses....................... 2
Financial Highlights...................... 3
Investment Objectives and Policies........ 3
Investment Techniques..................... 4
Investment Results........................ 7
Dividends, Distributions and Taxes........ 7
Fund Organization and Management.......... 8
Purchasing Shares......................... 9
Shareholder Services...................... 11
Redeeming Shares.......................... 11
</TABLE>
2
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information has been audited by Price
HIGHLIGHTS Waterhouse LLP, independent accountants, whose unquali-
fied report relating to the most recent five years is
(For a share included in the statement of additional information.
outstanding This information should be read in conjunction with the
throughout the financial statements and accompanying notes which are
fiscal year) also included in the statement of additional informa-
tion.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------- ------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $ 17.67 $ 18.72 $ 17.89 $ 17.48 $ 14.52 $15.24 $12.94 $12.61 $13.19 $13.51
------- ------- ------- ------- ------- ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income... .52 .51 .54 .49 .51 .57 .61 .51 .46 .45
Net realized and
unrealized gain (loss)
on investments......... 4.83 (.48) 1.51 .71 3.27 (.48) 3.13 1.14 .23 2.12
------- ------- ------- ------- ------- ------ ------ ------ ------ ------
Total from Investment
Operations........... 5.35 .03 2.05 1.20 3.78 .09 3.74 1.65 .69 2.57
------- ------- ------- ------- ------- ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net in-
vestment
income................ (.50) (.48) (.47) (.47) (.44) (.59) (.59) (.56) (.52) (.44)
Distributions from net
realized gains........ (.91) (.60) (.75) (.32) (.38) (.22) (.85) (.76) (.75) (2.45)
------- ------- ------- ------- ------- ------ ------ ------ ------ ------
Total Distributions... (1.41) (1.08) (1.22) (.79) (.82) (.81) (1.44) (1.32) (1.27) (2.89)
------- ------- ------- ------- ------- ------ ------ ------ ------ ------
Net Asset Value, End
of Year.............. $ 21.61 $ 17.67 $ 18.72 $ 17.89 $ 17.48 $14.52 $15.24 $12.94 $12.61 $13.19
======= ======= ======= ======= ======= ====== ====== ====== ====== ======
Total Return/1/........ 30.63% .16% 11.62% 6.99% 26.54% .68% 29.41% 13.34% 5.44% 21.74%
RATIOS/SUPPLEMENTAL DA-
TA:
Net Assets, End of Year
(in millions)......... $25,678 $19,280 $19,005 $15,428 $10,526 $5,923 $5,376 $4,119 $3,889 $3,730
Ratios of Expenses to
Average Net
Assets................ .60% .60% .59% .58% .59% .55% .52% .48% .42% .41%
Ratio of Net Income to
Average Net Assets.... 2.70% 2.83% 3.03% 3.06% 3.29% 3.95% 4.11% 3.78% 3.14% 3.47%
Portfolio Turnover Rate
--common stocks...... 20.91% 17.94% 19.57% 7.23% 5.79% 7.48% 14.47% 10.39% 10.76% 10.80%
--investment securi-
ties.................. 20.37% 31.08% 17.57% 9.73% 6.21% 10.94% 18.22% 16.41% 11.47% 10.31%
</TABLE>
--------
/1/ Calculated with no sales charge.
INVESTMENT The fund's investment objectives are long-term growth
OBJECTIVES of capital and income. The fund strives to accomplish
AND POLICIES these objectives through constant supervision, careful
selection and broad diversification. In the selection
The fund aims to of securities for investment, the possibilities of
provide you with appreciation and potential dividends are given more
long-term growth weight than current yield. The fund ordinarily invests
of capital and principally in common stocks. However, assets may also
income. be held in securities convertible into common stocks,
straight debt securities (rated in the top three
quality categories by Standard & Poor's Corporation or
Moody's Investors Service, Inc. or determined to be of
equivalent quality by Capital Research and Management
Company), cash
3
<PAGE>
- -------------------------------------------------------------------------------
or cash equivalents, U.S. Government securities, or
nonconvertible preferred stocks. (See the statement of
additional information for a description of cash
equivalents.)
Additionally, the fund may from time to time invest in
common stocks and other securities of issuers domiciled
outside the U.S. (See "Investment Techniques--Investing
in Various Countries.")
The fund's investments are limited to securities in-
cluded on its eligible list, which consists of securi-
ties deemed suitable investment media in light of the
fund's investment objectives and policies. Securities
are added to, or deleted from, the eligible list by the
board of directors, reviewing and acting upon the rec-
ommendations of Capital Research and Management Compa-
ny.
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tives cannot be changed without shareholder approval.
All other investment practices may be changed by the
fund's board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVES CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
INVESTMENT RISKS OF INVESTING Because the fund invests in stocks,
TECHNIQUES it is subject to market risks, including, for example,
the possibility that stock prices in general may de-
Investing in cline over short or even extended periods. The fund may
stocks involves also invest in fixed-income securities, including
certain risks. bonds, which have market values which tend to vary in-
versely with the level of interest rates--when interest
rates rise, their values will tend to decline and vice
versa. Although under normal market conditions longer
term securities yield more than shorter term securities
of similar quality, they are subject to greater price
fluctuations. These fluctuations in the value of the
investments will be reflected in the fund's net asset
value per share.
INVESTING IN VARIOUS COUNTRIES Generally, the fund will
invest no more than approximately 10% of its assets in
securities of issuers that are not included in the
Standard & Poor's 500 Composite Index (a broad measure
of the U.S. stock market) and that are domiciled
outside the U.S. Of course, investing internationally
involves special risks caused by, among other things:
fluctuating currency values; different accounting,
auditing, and financial reporting regulations and
practices in some countries; changing local and
regional economic, political, and social conditions;
differing securities market structures; and occasional
administrative difficulties such as delays in clearing
and settling portfolio transactions or in receiving
payment of dividends.
4
<PAGE>
- -------------------------------------------------------------------------------
However, in the opinion of Capital Research and
Management Company, global investing also can reduce
certain portfolio risks due to greater diversification
opportunities.
Additional costs could be incurred in connection with
the fund's investment activities outside the U.S.
Brokerage commissions are generally higher outside the
U.S., and the fund will bear certain expenses in
connection with its currency transactions. The fund may
enter into currency exchange contracts for the purpose
of fixing the dollar cost or proceeds for a
transaction. Furthermore, increased custodian costs may
be associated with the maintenance of assets in certain
jurisdictions.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into
segments which are managed by individual counselors.
Each counselor decides how their segment will be
invested (within the limits provided by the fund's
objectives and policies and by Capital Research and
Management Company's investment committee). In
addition, Capital Research and Management Company's
research professionals make investment decisions with
respect to a portion of the fund's portfolio. The
primary individual portfolio counselors for the fund
are listed on the next page.
5
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
YEARS OF EXPERIENCE
AS INVESTMENT
PROFESSIONAL
(APPROXIMATE)
YEARS OF EXPERIENCE
AS PORTFOLIO
PORTFOLIO COUNSELOR (AND
COUNSELORS FOR THE RESEARCH
INVESTMENT COMPANY PRIMARY TITLE(S) PROFESSIONAL IF WITH CAPITAL
OF AMERICA APPLICABLE) FOR RESEARCH AND
THE INVESTMENT MANAGEMENT
COMPANY OF AMERICA COMPANY OR ITS TOTAL
(APPROXIMATE) AFFILIATES YEARS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jon B. Lovelace, Chairman of the Board of 38 years (plus 5 44 years 44 years
Jr. the Fund. Vice Chairman years as a research
of the Board of Directors professional prior
and Chairman of the to becoming
Executive Committee, portfolio counselor
Capital Research and for the fund)
Management Company
William C. Newton President and Director of 34 years 37 years 43 years
the Fund. Senior Partner,
The Capital Group
Partners L.P.*
William R. Grimsley Senior Vice President of 24 years 26 years 33 years
the Fund. Senior Vice
President and Director,
Capital Research and
Management Company
R. Michael Shanahan Senior Vice President of 5 years (plus 13 31 years 31 years
the Fund. Chairman years as an
of the Board and investment
Principal Executive professional prior
Officer, Capital to becoming a
Research and Management portfolio counselor
Company for the fund)
Gregg E. Ireland Vice President of the 4 years (plus 10 23 years 23 years
Fund. Vice President, years as a research
Capital Research and professional prior
Management Company to becoming a
portfolio counselor
for the fund)
James B. Lovelace Vice President of the 4 years (plus 4 14 years 14 years
Fund. Vice President, years as a research
Capital Research and professional prior
Management Company to becoming a
portfolio counselor
for the fund)
Donald D. O'Neal Vice President of the 4 years (plus 4 11 years 11
Fund. Vice President, years as a research years
Capital Research and professional prior
Management Company to becoming a
portfolio counselor
for the fund)
Dina N. Perry Vice President, Capital 2 years (plus 2 4 years 29
Research and Management years as a research years
Company professional prior
to becoming a
portfolio counselor
for the fund)
- ---------------------------------------------------------------------------------------------
* Company affiliated with Capital Research and Management Company
- ---------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
- -------------------------------------------------------------------------------
INVESTMENT RESULTS The fund may from time to time compare its investment
results to various unmanaged indices or other mutual
The fund has funds in reports to shareholders, sales literature and
averaged a total advertisements. The results may be calculated on a to-
return (at no tal return, yield and/or distribution rate basis for
sales charge) of various periods, with or without sales charges. Results
13.20% a year over calculated without a sales charge will be higher. Total
its lifetime returns assume the reinvestment of all dividends and
(January 1, 1934 capital gain distributions.
through December
31, 1995). The fund's yield and the average annual total returns
are calculated with no sales charge in accordance with
Securities and Exchange Commission requirements. The
fund's distribution rate is calculated by dividing the
dividends paid by the fund over the last 12 months by
the sum of the month-end price and the capital gains
paid over the last 12 months. For the 30-day period
ended December 31, 1995, the fund's SEC yield was 2.49%
and the distribution rate was 2.22% with no sales
charge. The SEC yield reflects income earned by the
fund, while the distribution rate reflects dividends
paid by the fund. The fund's total return over the past
12 months and average annual total returns over the
past five-year and ten-year periods, as of December 31,
1995, were 30.63%, 14.60%, and 14.12%, respectively. Of
course, past results are not an indication of future
results. Further information regarding the fund's
investment results is contained in the fund's annual
report which may be obtained without charge by writing
to the Secretary of the fund at the address indicated
on the cover of this prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS Dividends are usually paid
DISTRIBUTIONS AND in March, June, September and December. Capital gains,
TAXES if any, are usually distributed in December. When a
dividend or capital gain is distributed, the net asset
Income value per share is reduced by the amount of the pay-
distributions are ment.
usually made in
March, June, The terms of your plan will govern how your plan may
September and receive distributions from the fund. Generally, peri-
December. odic distributions from the fund to your plan are rein-
vested in additional fund shares, although your plan
may permit fund distributions from net investment in-
come to be received by you in cash while reinvesting
capital gains distributions in additional shares or all
fund distributions to be received in cash. Unless you
select another option, all distributions will be rein-
vested in additional fund shares.
FEDERAL TAXES The fund intends to operate as a
"regulated investment company" under the Internal
Revenue Code. In any fiscal year in which the fund so
qualifies and distributes to shareholders all of its
net investment income and net capital gains, the fund
itself is relieved of federal income tax. The tax
treatment of redemptions from a retirement plan may
differ from redemptions from an ordinary shareholder
account.
Please see the statement of additional information and
your tax adviser for further information.
7
<PAGE>
- -------------------------------------------------------------------------------
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, diversified management investment company, was or-
AND ganized as a Delaware corporation in 1933. The fund's
MANAGEMENT board supervises fund operations and performs duties
required by applicable state and federal law. Members
The fund is a of the board who are not employed by Capital Research
member of The and Management Company or its affiliates are paid cer-
American Funds tain fees for services rendered to the fund as de-
Group, which is scribed in the statement of additional information.
managed by one of They may elect to defer all or a portion of these fees
the largest and through a deferred compensation plan in effect for the
most experienced fund. All shareholders have one vote per share owned
investment and, at the request of the holders of at least 10% of
advisers. the shares, the fund will hold a meeting at which any
member of the board could be removed by a majority
vote.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los
Angeles, CA 90071 and at 135 South State College
Boulevard, Brea, CA 92621. Capital Research and
Management Company manages the investment portfolio and
business affairs of the fund and receives a fee at the
annual rate of 0.39% on the first $1.0 billion of the
fund's net assets, plus 0.336% on net assets over
$1 billion to $2 billion, plus 0.30% on net assets over
$2 billion to $3 billion, plus 0.276% on net assets
over $3 billion to $5 billion, plus 0.258% on net
assets over $5 billion to $8 billion, plus 0.246% on
net assets over $8 billion to $13 billion, plus 0.24%
on net assets over $13 billion to $21 billion, plus
0.235% on net assets over $21 billion to $34 billion,
plus 0.231% on net assets in excess of $34 billion.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.) This policy has also been incorporated
into the fund's "code of ethics" which is available
from the fund's Secretary upon request.
8
<PAGE>
- -------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. In the over-the-counter
market, purchases and sales are transacted directly
with principal market-makers except in those
circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or of other
funds served by Capital Research and Management
Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors, Inc. is
located at 333 South Hope Street, Los Angeles, CA
90071, 135 South State College Boulevard, Brea, CA
92621, 8000 IH-10 West, San Antonio, TX 78230, 8332
Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513. Telephone
conversations with American Funds Distributors may be
recorded or monitored for verification, recordkeeping
and quality assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of
distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided
these expenses are approved in advance by the board and
the expenses paid under the plan were incurred within
the last 12 months and accrued while the plan is in
effect. Expenditures by the fund under the plan may not
exceed 0.25% of its average net assets annually (all of
which may be for service fees).
TRANSFER AGENT American Funds Service Company, 800/421-
0180, a wholly owned subsidiary of Capital Research and
Management Company, is the transfer agent and performs
shareholder service functions. American Funds Service
Company is located at 333 South Hope Street, Los
Angeles, CA 90071, 135 South State College Boulevard,
Brea, CA 92621, 8000 IH-10 West, San Antonio, TX 78230,
8332 Woodfield Crossing Boulevard, Indianapolis, IN
46240, and 5300 Robin Hood Road, Norfolk, VA 23513. It
was paid a fee of $19,172,000 for the fiscal year ended
December 31, 1995. Telephone conversations with
American Funds Service Company may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PURCHASING ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
SHARES RETIREMENT PLAN. FOR MORE INFORMATION ABOUT HOW TO PUR-
CHASE SHARES OF THE FUND THROUGH YOUR EMPLOYER'S PLAN
OR LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED,
PLEASE CONSULT WITH YOUR EMPLOYER. Shares are
9
<PAGE>
- -------------------------------------------------------------------------------
sold to eligible retirement plans at the net asset
value per share next determined after receipt of an or-
der by the fund or American Funds Service Company. Or-
ders must be received before the close of regular trad-
ing on the New York Stock Exchange in order to receive
that day's net asset value. Plans of organizations with
collective retirement plan assets of $100 million or
more may purchase shares at net asset value. In addi-
tion, any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees or any other plan that
invests at least $1 million in shares of the fund (or
in combination with shares of other funds in The Ameri-
can Funds Group other than the money market funds) may
purchase shares at net asset value; however, a contin-
gent deferred sales charge of 1% is imposed on certain
redemptions made within twelve months of such purchase.
(See "Redeeming Shares--Contingent Deferred Sales
Charge.") Plans may also qualify to purchase shares at
net asset value by completing a statement of intention
to purchase $1 million in fund shares subject to a com-
mission over a maximum of 13 consecutive months. Cer-
tain redemptions of such shares may also be subject to
a contingent deferred sales charge as described above.
(See the statement of additional information.)
The minimum initial investment is $250, except that the
money market funds have a minimum of $1,000 for indi-
vidual retirement accounts (IRAs). Minimums are reduced
to $50 for purchases through "Automatic Investment
Plans" (except for the money market funds) or to $25
for purchases by retirement plans through payroll de-
ductions and may be reduced or waived for shareholders
of other funds in The American Funds Group.
American Funds Distributors, at its expense (from a
designated percentage of its income), will, during cal-
endar year 1996, provide additional promotional incen-
tives to dealers. Currently these incentives are lim-
ited to the top one hundred dealers who have sold
shares of the fund or other funds in The American Funds
Group. Such incentive payments will be based on a pro
rata share of a qualifying dealer's sales. American
Funds Distributors will, on an annual basis, determine
the advisability of continuing these payments.
Qualified dealers currently are paid a continuing serv-
ice fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for providing certain services. (See "Fund Organi-
zation and Management--Plan of Distribution.") These
services include processing purchase and redemption
transactions, establishing shareholder accounts and
providing certain information and assistance with re-
spect to the fund.
Shares of the fund are offered to other shareholders
pursuant to another prospectus at public offering
prices that may include an initial sales charge.
10
<PAGE>
- -------------------------------------------------------------------------------
SHARE PRICE Shares are offered to eligible retirement
plans at the net asset value next determined after the
order is received by the fund or American Funds Service
Company. In the case of orders sent directly to the
fund or American Funds Service Company, an investment
dealer MUST be indicated. Dealers are responsible for
promptly transmitting orders. (See the statement of
additional information under "Purchase of Shares--Price
of Shares.")
The fund's net asset value per share is determined as
of the close of trading (currently 4:00 p.m., New York
time) on each day the New York Stock Exchange is open.
The current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share.
SHAREHOLDER Subject to any restrictions contained in your plan, you
SERVICES can exchange your shares for shares of other funds in
The American Funds Group which are offered through the
plan at net asset value. In addition, again depending
on any restrictions in your plan, you may be able to
exchange shares automatically or cross-reinvest
dividends in shares of other funds. Contact your plan
administrator/trustee regarding how to use these
services. Also, see the fund's statement of additional
information for a description of these and other
services that may be available through your plan. These
services are available only in states where the fund to
be purchased may be legally offered and may be
terminated or modified at any time upon 60 days'
written notice.
REDEEMING Subject to any restrictions imposed by your plan, you
SHARES can sell your shares through the plan any day the New
York Stock Exchange is open. For more information about
how to sell shares of the fund through your retirement
plan, including any charges that may be imposed by the
plan, please consult with your employer.
By contacting Your plan administrator/trustee must
your plan send a letter of instruction
administrator/ specifying the name of the fund, the
trustee number of shares or dollar amount to
be sold, and, if applicable, your
name and account number. For your
protection, if you redeem more than
$50,000, the signatures of the
registered owners or their legal
representatives must be guaranteed by
a bank, savings association, credit
union, or member firm of a domestic
stock exchange or the National
Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. Your plan
administrator/trustee should verify
with the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required to redeem shares from
certain accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By contacting Shares may also be redeemed through
your an investment dealer; however you or
investment your plan may be charged for this
dealer service. SHARES HELD FOR YOU IN AN
INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE
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RECEIVED BY THE FUND OR AMERICAN FUNDS SERVICE COMPANY.
(SEE "PURCHASING SHARES--SHARE PRICE.")
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions made
within 12 months of purchase on investments of $1
million or more and on any investment made with no
initial sales charge by any employer-sponsored 403(b)
plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The
charge is 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this charge.
The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions from
qualified retirement plans and other employee benefit
plans; for redemptions resulting from participant-
directed switches among investment options within a
participant-directed employer-sponsored retirement
plan; and for redemptions in connection with loans made
by qualified retirement plans.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because the fund's
net asset value fluctuates, reflecting the market value
of the portfolio, the amount you receive for shares
redeemed may be more or less than the amount paid for
them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency.
THIS PROSPECTUS RELATES ONLY TO SHARES OF THE FUND
OFFERED WITHOUT A SALES CHARGE TO ELIGIBLE RETIREMENT
PLANS. FOR A PROSPECTUS REGARDING SHARES OF THE FUND
TO BE ACQUIRED OTHERWISE, CONTACT THE SECRETARY OF
THE FUND AT THE ADDRESS INDICATED ON THE FRONT.
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