SEC. File Nos. 2-49291
811-3624
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 21
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 21
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
JULIE F. WILLIAMS
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Cary I. Klafter, Esq.
MORRISON & FOERSTER
345 California Street
San Francisco, California 94104
(Counsel for the Registrant)
The Registrant has filed a declaration pursuant to rule 24f-2
registering an indefinite number of shares under the Securities Act of 1933.
On October 16, 1995, it filed its 24f-2 notice for fiscal 1995.
Approximate date of proposed public offering:
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NUMBER OF CAPTIONS IN PROSPECTUS (PART "A")
PART "A" OF FORM N-1A
<S> <C> <C>
1. COVER PAGE COVER PAGE
2. SYNOPSIS SUMMARY OF EXPENSES
3. CONDENSED FINANCIAL INFORMATION FINANCIAL HIGHLIGHTS
4. GENERAL DESCRIPTION OF REGISTRANT INVESTMENT OBJECTIVE AND POLICIES
5. MANAGEMENT OF THE FUND SUMMARY OF EXPENSES: FUND ORGANIZATION AND
MANAGEMENT
6. CAPITAL STOCK AND OTHER SECURITIES INVESTMENT OBJECTIVE AND POLICIES; CERTAIN
SECURITIES AND INVESTMENT TECHNIQUES;
FUND ORGANIZATION AND MANAGEMENT;
DIVIDENDS, DISTRIBUTIONS AND TAXES
7. PURCHASE OF SECURITIES BEING OFFERED PURCHASING SHARES
8. REDEMPTION OR REPURCHASE REDEEMING SHARES
9. LEGAL PROCEEDINGS N/A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
ITEM NUMBER OF CAPTIONS IN STATEMENT OF
PART "B" OF FORM N-1A ADDITIONAL INFORMATION (PART "B")
10. COVER PAGE COVER
11. TABLE OF CONTENTS TABLE OF CONTENTS
12. GENERAL INFORMATION AND HISTORY GENERAL INFORMATION; INVESTMENT RESTRICTIONS
13. INVESTMENT OBJECTIVES AND POLICIES DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES;
INVESTMENT RESTRICTIONS
14. MANAGEMENT OF THE REGISTRANT FUND OFFICERS AND DIRECTORS; MANAGEMENT
15. CONTROL PERSONS AND PRINCIPAL HOLDERS FUND OFFICERS AND DIRECTORS
OF SECURITIES
16. INVESTMENT ADVISORY AND OTHER SERVICES MANAGEMENT
17. BROKERAGE ALLOCATION AND OTHER PRACTICES EXECUTION OF PORTFOLIO TRANSACTIONS
18. CAPITAL STOCK AND OTHER SECURITIES NONE
SECURITIES BEING OFFERED ACCOUNT SERVICES AND PRIVILEGES
20. TAX STATUS DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
21. UNDERWRITER MANAGEMENT -- PRINCIPAL UNDERWRITER
22. CALCULATION OF PERFORMANCE DATA INVESTMENT RESULTS
23. FINANCIAL STATEMENTS FINANCIAL STATEMENTS
</TABLE>
ITEM IN PART "C"
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<CAPTION>
<S> <C>
24. FINANCIAL STATEMENTS AND EXHIBITS
25. PERSONS CONTROLLED BY OR UNDER
COMMON CONTROL WITH REGISTRANT
26. NUMBER OF HOLDERS OF SECURITIES
27. INDEMNIFICATION
28. BUSINESS AND OTHER CONNECTIONS OF
INVESTMENT ADVISER
29. PRINCIPAL UNDERWRITERS
30. LOCATION OF ACCOUNTS AND RECORDS
31. MANAGEMENT SERVICES
32. UNDERTAKINGS
SIGNATURE PAGE
</TABLE>
<PAGE>
Prospectus
THE TAX-EXEMPT BOND FUND OF AMERICA
AN OPPORTUNITY FOR INCOME FREE
FROM FEDERAL INCOME TAX,
CONSISTENT WITH THE PRESERVATION
OF CAPITAL
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
November 1, 1995
THE TAX-EXEMPT BOND FUND OF AMERICA
333 South Hope Street
Los Angeles, CA 90071
The fund's investment objective is to provide investors with a high level of
current income exempt from federal income taxes, consistent with the
preservation of capital. It seeks to achieve this objective through investment
primarily in a diversified and professionally managed portfolio of tax-exempt
securities, consisting of state, municipal and public authority bonds. The
income from these securities may be subject to state and local taxes.
Investments may also be made in short-term taxable obligations when such
investments are considered advisable.
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
November 1, 1995, 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.
19-010-1195
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses................ 3
Financial Highlights............... 4
Investment Objective and Policies.. 4
Certain Securities and
Investment Techniques............. 5
Investment Results................. 7
Dividends, Distributions and Taxes. 8
Fund Organization and Management... 9
The American Funds
Shareholder Guide................. 12-20
Purchasing Shares................. 12
Reducing Your Sales Charge........ 15
Shareholder Services.............. 16
Redeeming Shares.................. 18
Retirement Plans.................. 20
</TABLE>
IMPORTANT PHONE NUMBERS
Shareholder Services:....800/421-0180 ext. 1
Dealer Services:.....800/421-9900 ext. 11
American FundsLine(R)....800/325-3590
(24-hour information)
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SUMMARY OF EXPENSES
Average annual
expenses paid over a
10-year period would
be approximately
$13 per year,
assuming a $1,000
investment and a 5%
annual return.
This table is designed to help you understand costs of investing in the fund.
These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases
(as a percentage of offering price).............................. 4.75%/1/
The fund has no sales charge on reinvested dividends, deferred sales charge,/2/
redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management fees.................................................... 0.38%
12b-1 expenses..................................................... 0.22%/3/
Other expenses (including audit, legal, shareholder
services, transfer agent and custodian expenses)................... 0.06%
Total fund operating expenses...................................... 0.66%
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<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 $54 $68 $83 $126
a 5% annual return./4/
</TABLE>
/1/ Sales charges are reduced for certain large purchases. (See "The American
Funds Shareholder Guide: Purchasing Shares--Sales Charges.")
/2/ Purchases of $1 million or more are not subject to an initial sales charge
as described in this prospectus. However, a contingent deferred sales charge
of 1% applies on certain redemptions within 12 months following such
purchases. (See "The American Funds Shareholder Guide: Redeeming Shares--
Contingent Deferred Sales Charge.")
/3/ These expenses may not exceed 0.25% of the fund'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.
/4/ 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.
3
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FINANCIAL The following information has been audited by Price
HIGHLIGHTS Waterhouse LLP, independent accountants, whose unquali-
(For a share fied report covering each of the most recent five years
outstanding is incorporated by reference in the statement of addi-
throughout the tional information. This information should be read in
fiscal year) conjunction with the financial statements and accompa-
nying notes which are also included in the statement of
additional information.
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 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, Begin-
ning of Year........... $11.65 $12.43 $11.78 $11.30 $10.78 $10.99 $10.67 $10.78 $11.51 $10.02
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. .68 .67 .68 .70 .71 .73 .74 .74 .77 .82
Net realized and
unrealized gain (loss)
on investments........ .29 (.69) .73 .48 .52 (.21) .32 (.05) (.64) 1.52
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from in-
vestment operations... .97 (.02) 1.41 1.18 1.23 .52 1.06 .69 .13 2.34
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income..... (.68) (.68) (.68) (.70) (.71) (.73) (.74) (.74) (.77) (.82)
Distribution from net
realized gains........ -- (.08) (.08) -- -- -- -- (.06) (.09) (.03)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.... (.68) (.76) (.76) (.70) (.71) (.73) (.74) (.80) (.86) (.85)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $11.94 $11.65 $12.43 $11.78 $11.30 $10.78 $10.99 $10.67 $10.78 $11.51
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/1/......... 8.70% (.14)% 12.42% 10.80% 11.70% 4.84% 10.24% 6.72% 1.06% 24.15%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in millions).......... $1,424 $1,385 $1,327 $ 921 $ 712 $ 551 $ 450 $ 346 $ 333 $ 253
Ratio of expenses to av-
erage
net assets............. .66% .69% .71% .71% .72% .70% .73% .63% .57% .59%
Ratio of net income to
average
net assets............. 5.87% 5.53% 5.62% 6.04% 6.33% 6.65% 6.78% 6.90% 6.78% 7.29%
Portfolio turnover rate. 49.28% 22.40% 15.55% 17.22% 24.73% 39.90% 55.70% 61.92% 26.49% 23.97%
</TABLE>
--------
/1/ This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
The fund's investment objective is to provide a high
INVESTMENT level of current income exempt from federal income
OBJECTIVE taxes consistent with the preservation of capital.
AND POLICIES
During periods of normal market conditions, at least
The fund's goal is 80% of the fund's total assets will be invested in tax-
to provide you exempt securities consisting primarily of state,
with high current municipal and public authority bonds and notes.
income exempt from Moreover, at least 65% of the fund's assets will be
federal income invested in tax-exempt securities consisting primarily
taxes while of state, municipal and public authority bonds and
preserving your notes that are rated by either Moody's Investors
capital. Service, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P") at the time of purchase in one of
their three highest categories (or unrated but
determined by the investment adviser to be comparable).
Up to 35% of the fund's total assets may be invested in
lower rated (or comparable unrated) tax-exempt
securities which generally carry a greater
4
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degree of investment risk. These securities may be
rated as high as Baa by Moody's or BBB by S&P and as
low as Ca by Moody's or CC by S&P. Securities rated Ba
and BB or below or unrated securities that are
determined to be of equivalent quality are commonly
known as "junk" or "high-yield, high-risk" bonds and
will be limited to no more than 20% of the fund's
assets. The ratings are more fully described in the
statement of additional information.
The average monthly composition of the fund's portfolio
based on the higher of the Moody's or S&P ratings for
the fiscal year ended August 31, 1995 was as follows:
bonds--Aaa/AAA-27.42%; Aa/AA-17.74%; A/A-19.65%;
Baa/BBB-22.10%; Ba/BB-3.60%; and non-rated-5.99%; some
or all of these non-rated securities were determined to
be equivalent to securities rated by Moody's or S&P as
follows: A/A-0.35%; Baa/BBB-3.57%; Ba/BB-0.95%; and
B/B-1.12%. Money market instruments and cash made up
3.51% of the fund's portfolio.
The fund will not invest in those tax-exempt securities
believed to pay interest constituting an item of tax
preference subject to alternative minimum taxes.
However, investments may be made in short-term taxable
obligations (generally, securities with original or
remaining maturities of one year or less), when, for
economic reasons, these investments are considered
advisable.
The fund's investment restrictions (which are described
in the statement of additional information) and
objective cannot be changed without shareholder
approval. All other investment practices may be changed
by the fund's board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
CERTAIN RISKS The market value of fixed-income securities
SECURITIES AND generally vary inversely with the level of interest
INVESTMENT rates--when interest rates rise, their values will
TECHNIQUES generally decline and vice versa. The magnitude of
these changes generally will be greater the longer the
Investing in bonds remaining maturity of the security. Fluctuations in the
involves certain value of the fund's investments will be reflected in
risks. its net asset value per share which typically declines
when interest rates rise.
High-yield, high-risk bonds (bonds rated Ba or BB or
below or comparable unrated bonds) typically are
subject to greater market fluctuations and to greater
risk of loss of income and principal due to default by
the issuer than are higher-rated bonds. Their values
tend to reflect short-term corporate, economic and
market developments and investor perceptions of the
issuer's credit quality to a greater extent than
5
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higher-rated bonds. In addition, it may be more
difficult to dispose of, or to determine the value of,
high-yield, high-risk bonds. Bonds rated Ba or BB or
below are considered speculative. Bonds rated Ca or CC
are described by the ratings agencies as "speculative
in a high degree; often in default or [having] other
marked shortcomings."
Capital Research and Management Company attempts to
reduce the risks described above through
diversification of the portfolio and by analysis of
each issuer as well as by monitoring broad economic
trends and corporate and legislative developments.
MUNICIPAL LEASE OBLIGATIONS The fund may invest in
municipal lease revenue obligations. The fund currently
intends to purchase only municipal lease revenue
obligations that are determined to be liquid by Capital
Research and Management Company. In determining whether
these securities are liquid, Capital Research and
Management Company will consider, among other things,
the credit quality and support, including strengths and
weaknesses of the issuer and lessee, the terms of the
lease, frequency and volume of trading and number of
dealers.
WHEN-ISSUED SECURITIES AND FIRM COMMITMENT AGREEMENTS
The fund may purchase securities on a delayed delivery
or "when-issued" basis and enter into firm commitment
agreements (transactions whereby the payment obligation
and interest rate are fixed at the time of the
transaction but the settlement is delayed). The fund as
purchaser assumes the risk of any decline in value of
the security beginning on the date of the agreement or
purchase. As the fund's aggregate commitments under
these transactions increase, the opportunity for
leverage similarly may increase. (See the statement of
additional information.)
VARIABLE AND FLOATING RATE OBLIGATIONS The fund may
invest in variable and floating rate obligations which
have interest rates that are adjusted at designated
intervals, or whenever there are changes in the market
rates of interest on which the interest rates are
based. The rate adjustment feature tends to limit the
extent to which the market value of the obligation will
fluctuate.
MATURITY There are no restrictions on the maturity
composition of the portfolio, although it is
anticipated that the fund normally will be invested
substantially in intermediate-term (3 to 10 years to
maturity) and long-term (over 10 years to maturity)
securities.
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
6
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individual counselors. Each counselor decides how their
segment will be invested (within the limits provided by
the fund's objective 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 below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
YEARS OF EXPERIENCE
AS INVESTMENT
PROFESSIONAL
(APPROXIMATE)
PORTFOLIO YEARS OF EXPERIENCE
COUNSELORS FOR AS PORTFOLIO
THE TAX-EXEMPT BOND PRIMARY TITLE(S) COUNSELOR FOR WITH CAPITAL
FUND OF AMERICA THE TAX-EXEMPT BOND RESEARCH AND
FUND OF AMERICA MANAGEMENT
(APPROXIMATE) COMPANY OR ITS TOTAL
AFFILIATES YEARS
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rebecca L. Ford Vice President-- 10 years 13 years 13 years
Investment Management
Group, Capital Research
and Management Company
- --------------------------------------------------------------------------------------------
Neil L. Langberg Senior Vice President of Since the fund 17 years 17 years
the fund. Vice began operations*
President--Investment
Management Group, Capital
Research and Management
Company
- --------------------------------------------------------------------------------------------
Mark R. Macdonald Vice President-- 1 year 1 year 10 years
Investment Management
Group, Capital Research
and Management Company
- --------------------------------------------------------------------------------------------
John H. Smet Vice President, Capital 3 years 12 years 13 years
Research and Management
Company
- --------------------------------------------------------------------------------------------
</TABLE>
*The fund began operations on October 3, 1979.
INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a
averaged a total total return, yield and/or distribution rate basis for
return of 8.45% a various periods, with or without sales charges. Results
year (assuming the calculated without a sales charge will be higher. Total
maximum sales returns assume the reinvestment of all dividends and
charge was paid) capital gain distributions.
over its lifetime
(October 3, 1979 The fund's yield and the average annual total returns
through September are calculated in accordance with Securities and
30, 1995). Exchange Commission requirements which provide that the
maximum sales charge be reflected. The fund's
distribution rate is calculated by annualizing the
current month's dividend and dividing by the average
price for the month. For the 30-day period ended
September 30, 1995, the fund's SEC yield was 4.85% and
the distribution rate was 5.23%, at maximum offering
price. The SEC yield
7
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reflects income earned by the fund, while the
distribution rate reflects dividends paid by the fund.
Among the elements used to calculate the SEC yield are
the dividend and interest income earned and expenses
paid by the fund, whereas the income paid to
shareholders is used to calculate the distribution
rate. The fund's total return over the past 12 months
and average annual total returns over the past five-
and ten-year periods, as of September 30, 1995, were
5.57%, 7.68% and 8.58%, 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 The fund declares dividends
DISTRIBUTIONS from its net investment income daily and distributes
AND TAXES the accrued dividends to shareholders each month. Divi-
dends begin accruing one day after payment for shares
Income is received by the fund or American Funds Service Com-
distributions are pany. All capital gains, if any, are distributed annu-
made each month. ally, usually in December. When a capital gain is de-
clared, the net asset value per share is reduced by the
amount of the payment.
FEDERAL TAXES The fund intends to operate as a "regu-
lated 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 invest-
ment income and any net capital gains, the fund itself
is relieved of federal income tax.
As a regulated investment company, the fund is permit-
ted to pass through to its shareholders federally tax-
exempt income subject to certain requirements which the
fund intends to satisfy.
The fund may invest in obligations which pay interest
that is subject to state and local taxes when
distributed by the fund even though the interest, if
realized directly, would be exempt from these taxes.
For example, a state may require that a fund hold a
specified percentage of its bonds in order for the fund
to pass through interest paid on these bonds to its
shareholders on a state tax-exempt basis, whereas if
the bonds were held directly by shareholders the
interest would be exempt from state tax. In addition,
to the extent shareholders receive dividends derived
from taxable interest income or distributions of
capital gains, these dividends or distributions will
not be exempt from federal (or state or local) income
tax.
You will be advised as to the tax consequences of
dividends and capital gain distributions. You are
required by the Internal Revenue Code to report to the
federal government all fund exempt-interest dividends
(and all other tax-exempt interest).
8
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IF YOU HAVE NOT FURNISHED A CERTIFIED CORRECT TAXPAYER
IDENTIFICATION NUMBER (GENERALLY YOUR SOCIAL SECURITY
NUMBER) AND HAVE NOT CERTIFIED THAT WITHHOLDING DOES
NOT APPLY, OR IF THE INTERNAL REVENUE SERVICE HAS NOTI-
FIED THE FUND THAT THE TAXPAYER IDENTIFICATION NUMBER
LISTED ON YOUR ACCOUNT IS INCORRECT ACCORDING TO ITS
RECORDS OR THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING,
FEDERAL LAW GENERALLY REQUIRES THE FUND TO WITHHOLD 31%
FROM ANY DIVIDENDS (OTHER THAN TAX-EXEMPT DIVIDENDS)
AND/OR REDEMPTIONS (INCLUDING EXCHANGE REDEMPTIONS).
Amounts withheld are applied to your federal tax lia-
bility; a refund may be obtained from the Service if
withholding results in overpayment of taxes.
This is a brief summary of some of the tax laws that
affect your investment in the fund. Please see the
statement of additional information and your tax ad-
viser for further information.
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, diversified management investment company, was or-
AND ganized as a Maryland corporation in 1979. 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. Shareholders have one vote per share owned and,
investment at the request of the holders of at least 10% of the
advisers. shares, the fund will hold a meeting at which any mem-
ber of the board could be removed by a majority vote.
There will not usually be a shareholder meeting in any
year except, for example, when the election of the
board is required to be acted upon by shareholders un-
der the Investment Company Act of 1940.
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 Ange-
les, CA 90071 and at 135 South State College Boulevard,
Brea, CA 92621. (See "The American Funds Shareholder
Guide--Investment Minimums and Fund Numbers" for a
listing of funds in The American Funds Group.) Capital
Research and Management Company manages the investment
portfolio and business affairs of the fund and receives
a fee at the annual rate of 0.30% of the first $60 mil-
lion of the fund's net assets, plus 0.21% on net assets
from $60 million to $1 billion, plus 0.18% on net as-
sets from $1 billion to $3 billion, plus 0.16% on net
assets over $3 billion, plus 3% of the first $40 mil-
lion of annual gross income, plus 2.5% of annual gross
investment income from $40 million to $100 million and
2.25% of annual
9
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gross investment income over $100 million. Assuming net
assets of $1.5 billion and gross income levels of 4%,
5%, 6%, 7%, 8% and 9%, management fees would be .32%,
.34%, .37%, .39%, .41% and .44%, respectively.
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 affili-
ated companies have adopted a personal investing policy
that is consistent with the recommendations contained
in the report dated May 9, 1994 issued by the Invest-
ment Company Institute's Advisory Group on Personal In-
vesting. (See the statement of additional information.)
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. Fixed-income securities are
generally traded on a "net" basis with a dealer acting
as principal for its own account without a stated
commission, although the price of the security usually
includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed
price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's
concession or discount. On occasion, securities may be
purchased directly from an issuer, in which case no
commissions or discounts are paid.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and execu-
tions, preference may be given to brokers that have
sold shares of the fund or have provided investment re-
search, 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 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 moni-
tored for verification, recordkeeping and quality as-
surance purposes.
10
<PAGE>
================================================================================
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 the catego-
ries of 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). (See "Purchasing
Shares--Sales Charges" below.)
TRANSFER AGENT American Funds Service Company, a wholly
owned subsidiary of Capital Research and Management
Company, is the transfer agent and performs shareholder
service functions. It was paid a fee of $473,000 for the
fiscal year ended August 31, 1995. Telephone
conversations with American Funds Service Company may be
recorded or monitored for verification, recordkeeping
and quality assurance purposes.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
-------------------------------------------------------------
SERVICE ADDRESS AREAS SERVED
AREA
-------------------------------------------------------------
WEST P.O. Box 2205 AK, AZ, CA, HI, ID,
Brea, CA 92622-2205 MT, NV, OR, UT, WA
Fax: 714/671-7080 and outside the U.S.
-------------------------------------------------------------
CENTRAL- P.O. Box 659522 AR, CO, IA, KS, LA,
WEST San Antonio, TX 78265-9522 MN, MO, ND, NE, NM,
Fax: 210/530-4050 OK, SD, TX, and WY
-------------------------------------------------------------
CENTRAL- P.O. Box 6007 AL, IL, IN, KY, MI,
EAST Indianapolis, IN 46206-6007 MS, OH, TN and WI
Fax: 317/735-6620
-------------------------------------------------------------
EAST P.O. Box 2280 CT, DE, FL, GA, MA,
Norfolk, VA 23501-2280 MD, ME, NC, NH, NJ,
Fax: 804/670-4773 NY, PA, RI, SC, VA,
VT, WV and
Washington, D.C.
-------------------------------------------------------------
ALL SHAREHOLDERS MAY CALL AMERICAN FUNDS SERVICE
COMPANY AT 800/421-0180 FOR SERVICE.
-------------------------------------------------------------
[MAP OF THE UNITED STATES OF AMERICA]
-------------------------------------------------------------
West (light grey); Central-West (white); Central-East
(dark grey), East (blue)
11
<PAGE>
THE AMERICAN FUNDS SHAREHOLDER GUIDE
----------------------------------------------------------
PURCHASING SHARES METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
----------------------------------------------------------
See "Investment $50 minimum (except
Minimums and Fund where a lower
Numbers" for minimum is noted
initial under "Investment
investment Minimums and Fund
minimums. Numbers").
Your investment ----------------------------------------------------------
dealer can help By Visit any Mail directly to
you establish your contacting investment dealer your investment
account--and help your who is registered dealer's address
you add to it investment in the state printed on your
whenever you like. dealer where the account statement.
purchase is made
and who has a
sales agreement
with American
Funds
Distributors.
----------------------------------------------------------
By mail Make your check Fill out the account
payable to the additions form at the
fund and mail to bottom of a recent
the address account statement,
indicated on the make your check
account payable to the fund,
application. write your account
Please indicate number on your check,
an investment and mail the check
dealer on the and form in the
account envelope provided
application. with your account
statement.
----------------------------------------------------------
By wire Call 800/421-0180 Your bank should wire
to obtain your your additional
account investments in the
number(s), if same manner as
necessary. Please described under
indicate an "Initial Investment."
investment dealer
on the account.
Instruct your
bank to wire
funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco,
CA 94106
(ABA #121000248)
For credit to the
account of:
American Funds
Service Company
a/c #4600-076178
(fund name)
(your fund acct.
no.)
----------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO REJECT ANY PURCHASE ORDER.
SHARE PRICE Shares are purchased at the next offering
price 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. This
price is the net asset value plus a sales charge, if
applicable. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The 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. The net asset value
per share of the money market funds normally will remain
constant at $1.00 based on the funds' current practice
of valuing their shares using the penny-rounding method
in accordance with rules of the Securities and Exchange
Commission.
SHARE CERTIFICATES Shares are credited to your account
and certificates are not issued unless specifically
requested. This eliminates the costly problem of lost or
destroyed certificates.
12
<PAGE>
================================================================================
If you would like certificates issued, please request
them by writing to American Funds Service Company.
There is usually no charge for issuing certificates in
reasonable denominations. CERTIFICATES ARE NOT
AVAILABLE FOR THE MONEY MARKET FUNDS.
INVESTMENT MINIMUMS AND FUND NUMBERS Here are the
minimum initial investments required by the funds in
The American Funds Group along with fund numbers for
use with our automated phone line, American
FundsLine(R) (see description below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
- ---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R)..................................... $1,000 02
American Balanced Fund(R)......................... 500 11
American Mutual Fund(R)........................... 250 03
Capital Income Builder(R)......................... 1,000 12
Capital World Growth and Income Fund(SM).......... 1,000 33
EuroPacific Growth Fund(R)........................ 250 16
Fundamental Investors(SM)......................... 250 10
The Growth Fund of America(R)..................... 1,000 05
The Income Fund of America(R)..................... 1,000 06
The Investment Company of America(R).............. 250 04
The New Economy Fund(R)........................... 1,000 14
New Perspective Fund(R)........................... 250 07
SMALLCAP World Fund(SM)........................... 1,000 35
Washington Mutual Investors Fund(SM).............. 250 01
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
- ---- ---------- ------
<S> <C> <C>
BOND FUNDS
American High-Income Municipal Bond Fund(SM)...... $1,000 40
American High-Income Trust(R)..................... 1,000 21
The Bond Fund of America(SM)...................... 1,000 08
Capital World Bond Fund(R)........................ 1,000 31
Intermediate Bond Fund of America(R).............. 1,000 23
Limited Term Tax-Exempt Bond Fund of America(SM).. 1,000 43
The Tax-Exempt Bond Fund of America(SM)........... 1,000 19
The Tax-Exempt Fund of California(R)*............. 1,000 20
The Tax-Exempt Fund of Maryland(R)*............... 1,000 24
The Tax-Exempt Fund of Virginia(R)*............... 1,000 25
U.S. Government Securities Fund(SM)............... 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of America(R)........... 2,500 09
The Tax-Exempt Money Fund of America(SM).......... 2,500 39
The U.S. Treasury Money Fund of America(SM)....... 2,500 49
</TABLE>
--------
* Available only in certain states.
For retirement plan investments, the minimum is $250,
except that the money market funds have a minimum of
$1,000 for individual 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 deductions and may be reduced or
waived for shareholders of other funds in The American
Funds Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS
RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
SALES CHARGES The sales charges you pay when purchasing
the stock, stock/bond, and bond funds of The American
Funds Group are set forth below. The money market funds
of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for
a listing of the funds.)
13
<PAGE>
================================================================================
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE NET AMOUNT OFFERING OFFERING
AT THE OFFERING PRICE INVESTED PRICE PRICE
--------------------- ---------- -------- -------------
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $50,000................. 6.10% 5.75% 5.00%
$50,000 but less than $100,000.... 4.71 4.50 3.75
BOND FUNDS
Less than $25,000................. 4.99 4.75 4.00
$25,000 but less than $50,000..... 4.71 4.50 3.75
$50,000 but less than $100,000.... 4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000... 3.63 3.50 2.75
$250,000 but less than $500,000... 2.56 2.50 2.00
$500,000 but less than $1,000,000. 2.04 2.00 1.60
$1,000,000 or more................ none none (see below)
</TABLE>
Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1
million or more, for purchases 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 (paid pursuant to the fund's plan of
distribution), and for purchases made at net asset
value by certain retirement plans of organizations with
collective retirement plan assets of $100 million or
more as set forth in the statement of additional
information (paid by American Funds Distributors).
American Funds Distributors, at its expense (from a
designated percentage of its income), will, during
calendar year 1996, provide additional promotional
incentives to dealers. Currently these incentives are
limited to the top one hundred dealers who have sold
shares of the fund or other funds in The American Funds
Group. These 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 promotional
incentives.
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 purchaser
investing 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% is imposed on
certain redemptions within one year of the purchase.
(See "Redeeming Shares--Contingent Deferred Sales
Charge.")
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds)
14
<PAGE>
================================================================================
annually in order to promote selling efforts and to
compensate them for providing certain services. (See
"Fund Organization and Management-- Plan of
Distribution.") These services include processing
purchase and redemption transactions, establishing
shareholder accounts and providing certain information
and assistance with respect to the fund.
NET ASSET VALUE PURCHASES The stock, stock/bond and
bond funds may sell shares at net asset value to: (1)
current or retired directors, trustees, officers and
advisory board members of the funds managed by Capital
Research and Management Company, employees of
Washington Management Corporation, employees and
partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such
persons; (2) current registered representatives,
retired registered representatives with respect to
accounts established while active, or full-time
employees (and their spouses, parents, and children) of
dealers who have sales agreements with American Funds
Distributors (or who clear transactions through such
dealers) and plans for such persons or the dealer; (3)
companies exchanging securities with the fund through a
merger, acquisition or exchange offer; (4) trustees or
other fiduciaries purchasing shares for certain
retirement plans of organizations with retirement plan
assets of $100 million or more; (5) insurance company
separate accounts; (6) accounts managed by subsidiaries
of The Capital Group Companies, Inc.; and (7) The
Capital Group Companies, Inc., its affiliated companies
and Washington Management Corporation. Shares are
offered at net asset value to these persons and
organizations due to anticipated economies in sales
effort and expense.
REDUCING AGGREGATION Sales charge discounts are available for
YOUR SALES certain aggregated investments. Qualifying investments
CHARGE include those by you, your spouse and your children
under the age of 21, if all parties are purchasing
You and your shares for their own account(s), which may include
immediate family purchases through employee benefit plan(s) such as an
may combine IRA, individual-type 403(b) plan or single-participant
investments to Keogh-type plan or by a business solely controlled by
reduce your costs. these individuals (for example, the individuals own the
entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these
individuals. Individual purchases by a trustee(s) or
other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or
fiduciary account, including an employee benefit plan
other than those described above or (2) made for two or
more employee benefit plans of a single employer or of
affiliated employers as defined in the Investment
Company Act of 1940, again excluding employee benefit
plans described above, or (3) for a diversified common
trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating
fund shares. Purchases made for nominee or street name
accounts (securities held in the name of an investment
dealer or another nominee such as a bank trust
department instead of the customer) may not be
15
<PAGE>
================================================================================
aggregated with those made for other accounts and may
not be aggregated with other nominee or street name
accounts unless otherwise qualified as described above.
CONCURRENT PURCHASES To qualify for a reduced sales
charge, you may combine concurrent purchases of two or
more funds in The American Funds Group, except direct
purchases of the money market funds. (Shares of the
money market funds purchased through an exchange,
reinvestment or cross-reinvestment from a fund having a
sales charge do qualify.) For example, if you
concurrently invest $25,000 in one fund and $25,000 in
another, the sales charge would be reduced to reflect a
$50,000 purchase.
RIGHT OF ACCUMULATION The sales charge for your invest-
ment may also be reduced by taking into account the
current value of your existing holdings in The American
Funds Group. Direct purchases of the money market funds
are excluded. (See account application.)
STATEMENT OF INTENTION You may reduce sales charges on
all investments by meeting the terms of a statement of
intention, a non-binding commitment to invest a certain
amount in fund shares subject to a commission within a
13-month period. Five percent of the statement amount
will be held in escrow to cover additional sales
charges which may be due if your total investments over
the statement period are insufficient to qualify for a
sales charge reduction. (See account application and
the statement of additional information under "Purchase
of Shares--Statement of Intention.")
YOU MUST LET YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY KNOW IF YOU QUALIFY FOR A REDUCTION IN
YOUR SALES CHARGE USING ONE OR ANY COMBINATION OF THE
METHODS DESCRIBED ABOVE.
SHAREHOLDER AUTOMATIC INVESTMENT PLAN You may make regular monthly
SERVICES or quarterly investments through automatic charges to
your bank account. Once a plan is established, your ac-
The fund offers count will normally be charged by the 10th day of the
you a valuable month during which an investment is made (or by the
array of services 15th day of the month in the case of any retirement
designed to plan for which Capital Guardian Trust Company--another
increase the affiliate of The Capital Group Companies, Inc.--acts as
convenience and trustee or custodian).
flexibility of
your investment-- AUTOMATIC REINVESTMENT Dividends and capital gain dis-
services you can tributions are reinvested in additional shares at no
use to alter your sales charge unless you indicate otherwise on the
investment program account application. You also may elect to have divi-
as your needs and dends and/or capital gain distributions paid in cash by
circumstances informing the fund, American Funds Service Company or
change. your investment dealer.
CROSS-REINVESTMENT You may cross-reinvest dividends or
dividends and capital gain distributions paid by one
fund into another fund in The American Funds Group,
subject to conditions outlined in the statement of ad-
ditional information. Generally, to use this service
the value of your account in the paying fund must equal
at least $5,000.
16
<PAGE>
================================================================================
EXCHANGE PRIVILEGE You may exchange shares into other
funds in The American Funds Group. Exchange purchases
are subject to the minimum investment requirements of
the fund purchased and no sales charge generally
applies. However, exchanges of shares from the money
market funds are subject to applicable sales charges on
the fund being purchased, unless the money market fund
shares were acquired by an exchange from a fund having
a sales charge, or by reinvestment or cross-
reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds
Service Company (see "Redeeming Shares"), by contacting
your investment dealer, by using American FundsLine(R)
(see "Shareholder Services--American FundsLine(R)" be-
low), or by telephoning 800/421-0180 toll-free, faxing
(see "Transfer Agent" above for the appropriate fax
numbers) or telegraphing American Funds Service Compa-
ny. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for
which Capital Guardian Trust Company serves as trustee
may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simul-
taneously at the share prices next determined after the
exchange order is received. (See "Purchasing Shares--
Share Price.") THESE TRANSACTIONS HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES You may automatically exchange
shares (in amounts of $50 or more) among any of the
funds in The American Funds Group on any day (or pre-
ceding business day if the day falls on a non-business
day) of each month you designate. You must either meet
the minimum initial investment requirement for the re-
ceiving fund OR the originating fund's balance must be
at least $5,000 and the receiving fund's minimum must
be met within one year.
AUTOMATIC WITHDRAWALS You may make automatic
withdrawals of $50 or more as follows: five or more
times per year if you have an account of $10,000 or
more, or four or fewer times per year if you have an
account of $5,000 or more. Withdrawals are made on or
about the 15th day of each month you designate, and
checks will be sent within seven days. (See "Other
Important Things to Remember.") Additional investments
in a withdrawal account must not be less than one
year's scheduled withdrawals or $1,200, whichever is
greater. However, additional investments in a
withdrawal account may be inadvisable due to sales
charges and tax liabilities.
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.
ACCOUNT STATEMENTS Your account is opened in accordance
with your registration instructions. Transactions in
the account, such as additional investments and
dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service
Company.
17
<PAGE>
================================================================================
AMERICAN FUNDSLINE(R) You may check your share balance,
the price of your shares, or your most recent account
transaction, redeem shares (up to $10,000 per fund, per
account each day), or exchange shares around the clock
with American FundsLine(R). To use this service, call
800/325-3590 from a TouchTone(TM) telephone.
Redemptions and exchanges through American FundsLine(R)
are subject to the conditions noted above and in
"Redeeming Shares--Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of
funds in The American Funds Group under "Purchasing
Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of
your Social Security number or other tax identification
number associated with your account) and account
number.
---------------------------------------------------------
REDEEMING By writing to Send a letter of instruction
SHARES American specifying the name of the fund, the
Funds Service number of shares or dollar amount to
You may take money Company (at be sold, your name and account
out of your the number. You should also enclose any
account whenever appropriate share certificates you wish to
you please. address redeem. For redemptions over $50,000
indicated and for certain redemptions of
under "Fund $50,000 or less (see below), your
Organization signature must be guaranteed by a
and bank, savings association, credit
Management-- union, or member firm of a domestic
Transfer stock exchange or the National
Agent") Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. You should verify with
the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required for redemption of shares
held in corporate, partnership or
fiduciary accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
---------------------------------------------------------
By contacting If you redeem shares through your
your investment dealer, you may be charged
investment for this service. SHARES HELD FOR YOU
dealer IN YOUR INVESTMENT DEALER'S STREET
NAME MUST BE REDEEMED THROUGH THE
DEALER.
--------------------------------------------------------
You may have You may use this option, provided the
a redemption account is registered in the name of
check sent to an individual(s), a UGMA/UTMA
you by using custodian, or a non-retirement plan
American trust. These redemptions may not
FundsLine(R) exceed $10,000 per day, per fund
or by account and the check must be made
telephoning, payable to the shareholder(s) of
faxing, or record and be sent to the address of
telegraphing record provided the address has been
American used with the account for at least 10
Funds Service days. See "Transfer Agent" and
Company "Exchange Privilege" above for the
(subject to appropriate telephone or fax number.
the
conditions
noted in this
section and
in "Telephone
Redemptions
and
Exchanges"
below)
---------------------------------------------------------
In the case Upon request (use the account
of the money application for the money market
market funds, funds) you may establish telephone
you may have redemption privileges (which will
redemptions enable you to have a redemption sent
wired to your to your bank account) and/or check
bank by writing privileges. If you request
telephoning check writing privileges, you will be
American provided with checks that you may use
Funds Service to draw against your account. These
Company checks may be made payable to anyone
($1,000 or you designate and must be signed by
more) or by the authorized number of registered
writing a shareholders exactly as indicated on
check ($250 your checking account signature card.
or more)
---------------------------------------------------------
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY
REDEMPTION OF $50,000 OR LESS PROVIDED THE REDEMPTION
CHECK IS MADE PAYABLE TO THE REGISTERED SHAREHOLDER(S)
AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE
ADDRESS HAS BEEN USED WITH THE ACCOUNT FOR AT LEAST 10
DAYS.
18
<PAGE>
================================================================================
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
TELEPHONE REDEMPTIONS AND EXCHANGES By using the
telephone (including American FundsLine(R)), fax or
telegraph redemption and/or exchange options, you agree
to hold the fund, American Funds Service Company, any
of its affiliates or mutual funds managed by such
affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including
attorney fees) which may be incurred in connection with
the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these
options. However, you may elect to opt out of these
options by writing American Funds Service Company (you
may reinstate them at any time also by writing American
Funds Service Company). If American Funds Service
Company does not employ reasonable procedures to
confirm that the instructions received from any person
with appropriate account information are genuine, the
fund may be liable for losses due to unauthorized or
fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of
technical difficulties, market conditions, or a natural
disaster, redemption and exchange requests may be made
in writing only.
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions
within the first year 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; for
distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 59 1/2; for tax-free
returns of excess contributions to IRAs; for
redemptions through certain automatic withdrawals not
exceeding 10% of the amount that would otherwise be
subject to the charge; and for redemptions in
connection with loans made by qualified retirement
plans.
REINSTATEMENT PRIVILEGE You may reinvest proceeds from
a redemption or a dividend or capital gain distribution
without sales charge (any contingent deferred sales
charge paid will be credited to your
19
<PAGE>
================================================================================
account) in any fund in The American Funds Group. Send
a written request and a check to American Funds Service
Company within 90 days after the date of the redemption
or distribution. Reinvestment will be at the next
calculated net asset value after receipt. The tax
status of a gain realized on a redemption will not be
affected by exercise of the reinstatement privilege,
but a loss may be nullified if you reinvest in the same
fund within 30 days. If you redeem your shares within
90 days after purchase and the sales charge on the
purchase of other shares is waived under the
reinstatement privilege, the sales charge you
previously paid for the shares may not be taken into
account when you calculate your gain or loss on that
redemption.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because each stock,
stock/bond and bond fund's net asset value fluctuates,
reflecting the market value of the fund's portfolio,
the amount a shareholder receives 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.
A fund may, with 60 days' written notice, close your
account if, due to a redemption, the account has a
value of less than the minimum required initial
investment. (For example, a fund may close an account
if a redemption is made shortly after a minimum initial
investment is made.)
RETIREMENT You may invest in the funds through various retirement
PLANS plans including the following plans for which Capital
Guardian Trust Company acts as trustee or custodian:
IRAs, Simplified Employee Pension plans, 403(b) plans
and Keogh- and corporate-type business retirement
plans. For further information about any of the plans,
agreements, applications and annual fees, contact
American Funds Distributors or your investment dealer.
To determine which retirement plan is appropriate for
you, please consult your tax adviser. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS INVESTMENTS FOR RETIREMENT PLANS.
FOR MORE INFORMATION, PLEASE REFER TO THE ACCOUNT
APPLICATION OR THE STATEMENT OF ADDITIONAL INFORMATION.
IF YOU HAVE ANY QUESTIONS ABOUT ANY OF THE SHAREHOLDER
SERVICES DESCRIBED HEREIN OR YOUR ACCOUNT, PLEASE
CONTACT YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
20
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 1, 1995
This document is not a prospectus but should be read in conjunction with
the current prospectus dated November 1, 1995 of The Tax-Exempt Bond Fund of
America, Inc. (the "fund"). The prospectus may be obtained from your
investment dealer or financial planner or by writing to the fund at the
following address:
The Tax-Exempt Bond Fund of America, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
Item Page No.
Description of Certain Securities and Investment Techniques 1
Investment Restrictions 5
Fund Officers and Directors 8
Management 11
Dividends and Distributions 14
Additional Information Concerning Taxes 14
Purchase of Shares 17
Shareholder Account Services and Privileges 19
Execution of Portfolio Transactions 20
General Information 20
Investment Results 21
Description of Ratings for Debt Securities 25
Financial Statements Attached
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
INVESTMENT POLICIES -- Up to 35% of the fund's total assets may be invested
in tax-exempt securities that are rated below the three highest categories by
Standard & Poor's Corporation ("S&P") or by Moody's Investors Service, Inc.
("Moody's") (or equivalent securities that are not rated); however investments
in securities rated Ba and BB or below (or equivalent securities that are not
rated) will be limited to no more than 20% of the fund's assets. Bonds rated
BB and below by S&P or Ba and below by Moody's are commonly known as "junk
bonds" or high-yield, high-risk bonds. See "Description of Ratings for Debt
Securities" below.
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk bonds
can be sensitive to adverse economic changes and corporate/political
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers or issuers whose revenue is very
sensitive to economic conditions may experience financial stress that would
adversely affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay
interest or principal or entered into bankruptcy proceedings, the fund may
incur losses or expenses in seeking recovery of amounts owed to it. In
addition, periods of economic uncertainty and changes can be expected to result
in increased volatility of market prices and yields of high-yield, high-risk
bonds.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds may contain redemption or
call provisions. If an issuer exercised these provisions in a declining
interest rate market, the fund would have to replace the security with a lower
yielding security, resulting in a decreased return for investors. Conversely,
a high-yield, high-risk bond's value will decrease in a rising interest rate
market, as will the value of the fund's assets.
LIQUIDITY AND VALUATION - There may be little trading in the secondary market
for particular bonds, which may affect adversely the fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
Subsequent to its purchase by the fund, an issue of municipal bonds or notes
may cease to be rated or its rating may be reduced below the minimum rating
required for its purchase. Neither event requires the elimination of such
obligation from the fund's portfolio, but Capital Research and Management
Company (the "Investment Adviser") will consider such an event in its
determination of whether the fund should continue to hold such obligation in
its portfolio. If, however, as a result of downgrades or otherwise, the fund
holds more than 20% of its net assets in high-yield, high-risk bonds, the fund
will dispose of the excess as expeditiously as possible.
MUNICIPAL BONDS -- Municipal bonds are debt obligations generally issued to
obtain funds for various public purposes, including the construction of public
facilities. Municipal bonds may be used to refund outstanding obligations, to
obtain funds for general operating expenses or public improvements or for
lending private institutions or corporations funds for the construction of
educational facilities, hospitals, housing, industrial facilities or for other
public purposes. The interest on these obligations is generally not included
in gross income for federal income tax purposes. See "Additional Information
Concerning Taxes" below. Opinions relating to the validity of municipal bonds
and to the exclusion from gross income for federal income tax purposes and,
where applicable, the exemption from state and local income tax are rendered by
bond counsel to the respective issuing authorities at the time of issuance.
The two principal classifications of municipal bonds are general obligation
and limited obligation (or revenue) bonds. General obligation bonds are
secured by the issuer's pledge of its full faith and credit including, if
available, its taxing power for the payment of principal and interest. Issuers
of general obligation bonds include states, counties, cities, towns and various
regional or special districts. The proceeds of these obligations are used to
fund a wide range of public facilities such as the construction or improvement
of schools, highways and roads, water and sewer systems and facilities for a
variety of other public purposes. Lease revenue bonds or certificates of
participation in leases are payable from annual lease rental payments from a
state or locality. Annual rental payments are payable to the extent such
rental payments are appropriated annually.
Typically, the only security for a limited obligation or revenue bond is
the net revenue derived from a particular facility or class of facilities
financed thereby or, in some cases, from the proceeds of a special tax or other
special revenues. Revenue bonds have been issued to fund a wide variety of
revenue-producing public capital projects including: electric, gas, water and
sewer systems; highways, bridges and tunnels; port and airport facilities;
colleges and universities; hospitals; and convention, recreational and housing
facilities. Although the security behind these bonds varies widely, many
provide additional security in the form of a debt service reserve fund which
may also be used to make principal and interest payments on the issuer's
obligations. In addition, some revenue obligations (as well as general
obligations) are insured by a bond insurance company or backed by a letter of
credit issued by a banking institution.
Revenue bonds also include, for example, pollution control, health care and
housing bonds, which, although nominally issued by municipal authorities, are
generally not secured by the taxing power of the municipality but by the
revenues of the authority derived from payments by the private entity which
owns or operates the facility financed with the proceeds of the bonds.
Obligations of housing finance authorities have a wide range of security
features including reserve funds and insured or subsidized mortgages, as well
as the net revenues from housing or other public projects. Most of these bonds
do not generally constitute the pledge of the credit of the issuer of such
bonds. The credit quality of such revenue bonds is usually directly related to
the credit standing of the user of the facility being financed or of an
institution which provides a guarantee, letter of credit, or other credit
enhancement for the bond issue.
There are, in addition, a variety of hybrid and special types of municipal
obligations as well as numerous differences in the security of municipal bonds,
both within and between the two primary classifications described above.
The amount of information about the financial condition of an issuer of
municipal bonds may not be as extensive as that which is made available by
corporations whose equity securities are publicly traded.
TEMPORARY INVESTMENTS -- The fund may invest in short-term municipal
obligations of up to one year in maturity during periods of temporary defensive
strategy or when such investments are considered advisable for liquidity.
Generally, the income from all such securities is exempt from federal income
tax. See "Additional Information Concerning Taxes" below. Further, a portion
of the fund's assets, which will normally be less than 20%, may be held in cash
or invested in high quality taxable short-term securities of up to one year in
maturity. Such temporary investments may include: (1) obligations of the U.S.
Treasury; (2) obligations of agencies and instrumentalities of the U.S.
Government; and (3) money market instruments, such as certificates of deposit
issued by domestic banks, corporate commercial paper, and bankers' acceptances;
and (4) repurchase agreements (which are described below).
WHEN-ISSUED SECURITIES AND FIRM COMMITMENT AGREEMENTS - The fund may
purchase securities on a delayed delivery or "when-issued" basis and enter into
firm commitment agreements (transactions whereby the payment obligation and
interest rate are fixed at the time of the transaction but the settlement is
delayed). The fund as purchaser assumes the risk of any decline in value of
the security beginning on the date of the agreement or purchase. As the fund's
aggregate commitments under these transactions increase, the opportunity for
leverage similarly may increase.
The fund will not use these transactions for leveraging purposes, and will
identify liquid assets such as cash, U.S. Government securities or other
appropriate high-grade debt obligations in an amount sufficient to meet its
payment obligations in these transactions. Although these transactions will
not be entered into for leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its holdings of cash and securities
that do not fluctuate in value (such as short-term money market instruments),
the fund temporarily will be in a leveraged position (in other words, it will
have an amount greater than its net assets subject to market risk). Should the
fund be in a leveraged position during a period of declining bond prices,
greater depreciation of its net assets would likely occur than were it not in
such a position. The fund will not borrow money to settle these transactions
and, therefore, will liquidate other portfolio securities in advance of
settlement if necessary to generate addetional cash to meet its obligations
thereunder.
REPURCHASE AGREEMENTS -- Although the fund has no current intention of doing so
during the next 12 months, it may enter on a temporary basis into repurchase
agreements, under which the fund buys a security and obtains a simultaneous
commitment from the seller to repurchase the security at a specified time and
price. Repurchase agreements permit the fund to maintain liquidity and earn
income over periods of time as short as overnight. The seller must maintain
with the fund's custodian collateral equal to at least 100% of the repurchase
price including accrued interest, as monitored daily by the Investment Adviser.
The fund will only enter into repurchase agreements involving securities in
which it could otherwise invest and with selected banks and securities dealers
whose financial condition is monitored by the Investment Adviser. If the
seller under the repurchase agreement defaults, the fund may incur a loss if
the value of the collateral securing the repurchase agreement has declined and
may incur disposition costs in connection with liquidating the collateral. If
bankruptcy proceedings are commenced with respect to the seller, realization
upon the collateral by the fund may be delayed or limited.
PORTFOLIO MANAGEMENT -- In seeking to achieve the fund's objective, the
Investment Adviser causes the fund to purchase securities which it believes
represent the best values then currently available in the marketplace. Such
values are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the economy, movements in
the general level and term structure of interest rates, political developments,
and variations in the supply of funds available for investment in the
tax-exempt market relative to the demand for the funds placed upon it. These
latter factors change continuously and should be met with a dynamic, responsive
approach to the investment process. Some of the more important portfolio
management techniques that are utilized by the Investment Adviser are set forth
below.
ADJUSTMENT OF MATURITIES -- The Investment Adviser seeks to anticipate
movements in interest rates and adjusts the maturity distribution of the
portfolio accordingly. Longer term securities ordinarily yield more than
shorter term securities but are subject to greater and more rapid price
fluctuation. Keeping in mind the fund's objective of producing a high level of
current income, the Investment Adviser will increase the Fund's exposure to
this price volatility only when it appears likely to increase current income
without undue risk to capital.
ISSUE CLASSIFICATION -- Securities with the same general quality rating and
maturity characteristics, but which vary according to the purpose for which
they were issued, often tend to trade at different yields. These yield
differentials tend to fluctuate in response to political and economic
developments, as well as temporary imbalances in normal supply/demand
relationships. The Investment Adviser monitors these fluctuations closely, and
will attempt to adjust portfolio concentrations in various issue
classifications according to the value disparities brought about by these yield
relationship fluctuations.
QUALITY -- Securities issued for similar purposes and with the same general
maturity characteristics, but which vary according to the creditworthiness of
their respective issuers, tend to trade at different yields. These yield
differentials also tend to fluctuate in response to political, economic and
supply/demand factors. The Investment Adviser will attempt to take advantage
of these fluctuations by adjusting the concentration of portfolio securities in
any given quality category according to the value disparities produced by these
yield relationship fluctuations.
The Investment Adviser believes that, in general, the market for municipal
bonds is less liquid than that for taxable fixed-income securities.
Accordingly, the ability of the fund to make purchases and sales of securities
in the foregoing manner may, at any particular time and with respect to any
particular securities, be limited (or non-existent).
PORTFOLIO TURNOVER -- Portfolio changes will be made without regard to the
length of time particular investments may have been held. High portfolio
turnover involves correspondingly greater transaction costs in the form of
dealer spreads or brokerage commissions, and may result in the realization of
net capital gains, which are taxable when distributed to shareholders.
Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved. See "Financial
Highlights" in the prospectus for the fund's portfolio turnover for each of the
last 10 years.
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions which may not be changed
without a majority vote of its outstanding shares. Such majority is defined by
the Investment Company Act of 1940 (the "1940 Act") as the vote of the lesser
of (i) 67% or more of the outstanding voting securities present at a meeting,
if the holders of more than 50% of the outstanding voting securities are
present in person or by proxy, or (ii) more than 50% of the outstanding voting
securities. All percentage limitations expressed in the following investment
restrictions are measured immediately after and giving effect to the relevant
transactions. These restrictions provide that the fund may not:
1. 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;
2. Enter into any repurchase agreement if, as a result, more than 10% of the
value of the fund's total assets would be subject to repurchase agreements
maturing in more than seven days;
3. Buy or sell real estate in the ordinary course of its business; however,
the fund may invest in securities secured by real estate or interests therein;
4. Acquire securities subject to restrictions on disposition, except for
repurchase obligations;
5. Make loans to others, except for the purchase of debt securities or
entering into repurchase agreements;
6. Sell securities short, except to the extent that the fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
7. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases or sales;
8. Borrow money, except from banks for temporary or emergency purposes, not
in excess of 5% of the value of the fund's total assets, excluding the amount
borrowed. This borrowing provision is intended to facilitate the orderly sale
of portfolio securities to accommodate unusually heavy redemption requests, if
they should occur; it is not intended for investment purposes;
9. 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;
10. Underwrite any issue of securities, except to the extent that the
purchase of municipal bonds directly from the issuer in accordance with the
fund's investment objective, policies and restrictions, and later resale may be
deemed to be an underwriting;
11. Invest in companies for the purpose of exercising control or management;
12. Purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition, or reorganization;
13. Buy or sell commodities or commodity contracts or oil, gas or other
mineral exploration or development programs;
14. Write, purchase or sell puts, calls, straddles, spreads or any
combination thereof;
15. Purchase or retain the securities of any issuer, if, to the knowledge
of the fund, those individual officers and directors of the fund, its
Investment Adviser, or principal underwriter, each owning beneficially more
than 1/2 of 1% of the securities of such issuer, together own more than 5% of
the securities of such issuer;
For the purpose of the fund's investment restrictions, the identification of
the "issuer" of municipal bonds that are not general obligation bonds is made
by the Investment Adviser on the basis of the characteristics of the bonds as
described, the most significant of which is the ultimate source of funds for
the payment of principal and interest on such bonds.
For purposes of Investment Restriction #13, the term "oil, gas or other
mineral exploration or development programs" includes oil, gas or other mineral
exploration or development leases.
Notwithstanding Investment Restriction #12, the fund may invest in
securities of other investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
the Directors pursuant to an exemptive order granted by the Securities and
Exchange Commission.
The fund has adopted the following non-fundamental investment policies, which
may be changed by action of the Board of Directors without shareholder
approval. The fund may not:
(a) invest 25% or more of its assets in municipal bonds the issuers of which
are located in the same state, unless such securities are guaranteed by the
U.S. Government, or more than 25% of its total assets in securities the
interest on which is paid from revenues of similar type projects (such as
hospitals and health facilities; turnpikes and toll roads; ports and airports;
or colleges and universities). The fund may on occasion invest more than an
aggregate of 25% of its total assets in industrial development bonds. There
could be economic, business or political developments which might affect all
municipal bonds of a similar category or type or issued by issuers within any
particular geographical area or jurisdiction;
(b) 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 or instrumentalities, or municipal bonds rated at
least "A" by either Moody's Investors Service, Inc. or Standard & Poor's
Corporation; and
(c) invest more than 15% of its total assets in securities which are not
readily marketable.
FUND OFFICERS AND DIRECTORS
Directors and Director Compensation
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS (POSITIONS WITHIN THE AGGREGATE
TOTAL COMPENSATION TOTAL NUMBER
REGISTRANT ORGANIZATIONS LISTED MAY HAVE CHANGED DURING THIS PERIOD) COMPENSATION FROM
ALL FUNDS OF FUND BOARDS ON WHICH
(INCLUDING MANAGED BY CAPITAL DIRECTOR SERVES/2/
VOLUNTARILY DEFERRED RESEARCH AND
COMPENSATION/1/) FROM THE COMPANY DURING FISCAL YEAR ENDED
AUGUST 31, 1995 MANAGEMENT COMPANY/2/
<S> <C> <C> <C> <C> <C>
++ H. Frederick Christie Director Private Investor. The Mission Group (non-utility holding Company, subsidiary of
Southern California Edison Company), former President and Chief Executive Officer $3,559/3/ $136,600 18
P.O. Box 144
Palos Verdes Estates, CA 90274
Age: 62
Diane C. Creel Director Chairwoman, CEO and President, $2,931 $30,675 12
100 W. Broadway The Earth Technology Corporation
Suite 5000
Long Beach, CA 90802
Age: 46
Martin Fenton, Jr. Director Chairman, Senior Resource Group $3,972/3/ $102,700 16
4350 Executive Drive (management of senior living
Suite 101 centers)
San Diego, CA 92121-2116
Age: 60
Leonard R. Fuller Director President, Fuller & Company, Inc. $2,786 $31,575 12
4337 Marina City Drive (financial management consulting
Suite 841 ETN firm)
Marina del Rey, CA 90292
Age: 48
+* Abner D. Goldstine President, Capital Research and Management none/4/ none/4/ 12
Age: 65 PEO and Company, Senior Vice President
Director and Director
+** Paul G. Haaga, Jr. Chairman of Capital Research and Management none/4/ none/4/ 14
Age: 46 the Board Company, Senior Vice President
and Director
Herbert Hoover III Director Private Investor $3,377 $60,050 14
200 S. Los Robles Avenue
Suite 520
Pasadena, CA 91101-2431
Age: 67
Richard G. Newman Director Chairman, President and CEO, $3,991 $39,050 12
3250 Wilshire Boulevard AECOM Technology Corporation
Los Angeles, CA 90010-1599 (architectural engineering)
Age: 60
Peter Valli Director Chairman and CEO, BW/IP $3,700 $37,050 12
200 Oceangate Boulevard International Inc. (industrial
Suite 900 manufacturing)
Long Beach, CA 90802
Age: 68
</TABLE>
+ Directors who are considered "interested persons" as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), on
the basis of their affiliation with the fund's Investment Adviser, Capital
Research and Management Company.
++ May be deemed an "interested person" of the fund due to membership on the
board of directors of the parent company of a registered broker-dealer.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
** Address is 333 South Hope Street, Los Angeles, CA 90071
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the Fund in 1994. 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/ Capital Research and Management Company manages The American Funds Group
consisting of 28 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., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicle for certain
variable insurance contracts; and Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt organizations.
/3/ 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 ($2,113), Martin Fenton, Jr. ($5,807), Richard G. Newman
($7,813) and Peter C. Valli ($6,975).
/4/ Paul G. Haaga, Jr. and Abner D. Goldstine are affiliated with the
Investment Adviser and, accordingly, receive no compensation from the Fund.
OFFICERS
(with their principal occupations during the past five years)#
*** Neil L. Langberg, SENIOR VICE PRESIDENT. Capital Research and Management
Company,
Vice President, Investment Management Group
** Mary C. Cremin, VICE PRESIDENT AND TREASURER. Capital Research and
Management Company,
Senior Vice President - Fund Business Management Group
* Michael J. Downer, VICE PRESIDENT. Capital Research and Management Company,
Senior Vice President - Fund Business Management Group
* Julie F. Williams, SECRETARY. Capital Research and Management Company,
Vice President - Fund Business Management Group
* Kimberly S. Verdick, ASSISTANT SECRETARY. Capital Research and Management
Company, Assistant Vice President - Fund Business Management Group
** Nymia M. Cucueco, ASSISTANT TREASURER. Capital Research and Management
Company,
Vice President - Fund Business Management Group
** Anthony W. Hynes, Jr., ASSISTANT TREASURER. Capital Research and Management
Company,
Vice President - Fund Business Management Group
# Positions within the organizations listed may have changed during this
period.
* Address is 333 South Hope Street, Los Angeles, CA 90071.
** Address is 135 South State College Boulevard, Brea, CA 92621.
*** Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
No compensation is paid by the fund to any officer or Director who is a
Director or officer of the Investment Adviser. The fund pays annual fees of
$2,500 to Directors who are not affiliated with the Investment Adviser, plus
$200 for each Board of Directors meeting attended, plus $200 for each meeting
attended as a member of a committee of the Board of Directors. The Directors
may elect, on a voluntary basis, to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund. The fund also
reimburses certain expenses of the Directors who are not affiliated with the
Investment Adviser. As of October 1, 1995 the officers and Directors and their
families as a group, owned beneficially or of record less than 1% of the
outstanding shares of the fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have years of investment experience. The Investment Adviser's research
professionals travel several million miles a year, making more than 5,000
research visits in more than 50 countries around the world. The Investment
Adviser believes that it is able to attract and retain quality personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for more than $100 billion of stocks,
bonds and money market instruments and serves over five million investors of
all types throughout the world. These investors include privately owned
businesses and large corporations, as well as schools, colleges, foundations
and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the Investment Adviser will
continue in effect until
February 29, 1996, unless sooner terminated, and may be renewed from year to
year thereafter, provided that any such renewal has been specifically approved
at least annually by (i) the Board of Directors, or by the vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of the fund,
and (ii) the vote of a majority of Directors who are not parties to the
Agreement or interested persons (as defined in the 1940 Act) of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
The Agreement provides that the Investment Adviser has no liability to the fund
for its acts or omissions in the performance of its obligations to the fund not
involving willful misconduct, bad faith, gross negligence or reckless disregard
of its obligations under the Agreement. The Agreement also provides that
either party has the right to terminate, without penalty, upon 60 days' written
notice to the other party and that the Agreement automatically terminates in
the event of its assignment (as defined in the 1940 Act).
The Investment Adviser, in addition to providing investment advisory
services, furnishes the services and pays the compensation and travel expenses
of qualified persons to perform the executive and related administrative
functions of the fund, provides suitable office space, necessary small office
equipment and telephone facilities and utilities, and general purpose forms,
supplies, stationery and postage used at the office of the fund relating to the
services furnished by the Investment Adviser.
The fund pays all expenses not specifically assumed by the Investment Adviser,
including, but not limited to, custodian, stock transfer and dividend
disbursing fees and expenses; expenses pursuant to the fund's Plan of
Distribution (see below); costs of designing, printing and mailing reports,
prospectuses, proxy statements and notices to shareholders; taxes; expenses of
the issuance and redemption of shares of the fund (including stock
certificates, registration and qualification fees and expenses); legal and
auditing fees and expenses; compensation, fees, and expenses paid to Directors
not affiliated with the Investment Adviser; association dues; and costs of
stationery and forms prepared exclusively for the fund.
The Agreement provides that the Investment Adviser will reimburse the fund for
any expenses incurred by the fund in any fiscal year, exclusive of interest,
taxes and brokerage costs and extraordinary expenses such as litigation and
acquisitions, to the extent such expenses exceed the lesser of 25% of gross
income for the preceding year or the sum of (a) 1.5% of the average daily net
assets of the preceding year up to and including $30 million and (b) 1% of any
excess of average daily net assets of the preceding year over $30 million. The
investment advisory fee is included as an expense of the fund and is subject to
the expense limitation described in the preceding sentence.
During the fiscal years ended August 31, 1995, 1994, and 1993, the
Investment Adviser's total fees amounted to $5,202,000, $5,180,000 and
$4,274,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The fund has
adopted a Plan of Distribution (the "Plan"), pursuant to rule 12b-1 under the
1940 Act (see "Principal Underwriter" in the Prospectus). The Principal
Underwriter receives amounts payable pursuant to the Plan (see below) and
commissions consisting of that portion of the sales charge remaining after the
discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the fiscal year ended
August 31, 1995 amounted to $670,000 after allowance of $2,759,000 to dealers.
During the fiscal years ended August 31, 1994 and 1993 the Principal
Underwriter retained $1,284,000 and $1,698,000 respectively.
As required by rule 12b-1, the Plan (together with the Principal Underwriting
Agreement) has been approved by a majority of the entire Board of Directors and
separately by a majority of the Directors who are not "interested persons" of
the fund and who have no direct or indirect financial interest in the operation
of the Plan or the Principal Underwriting Agreement, and the Plan has been
approved by the vote of a majority of the outstanding voting securities of the
fund. The officers and Directors who are "interested persons" of the fund may
be considered to have a direct or indirect financial interest in the operation
of the Plan due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the Plan to the fund are improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of Directors who
are not "interested persons" of the fund shall be committed to the discretion
of the Directors who are not "interested persons" during the existence of the
Plan. The Plan is reviewed quarterly and must be renewed annually by the Board
of Directors.
Under the Plan the fund may expend up to 0.25% of its average net assets
annually to finance any activity which is primarily intended to result in the
sale of fund shares, provided the fund's Board of Directors has approved the
category of expenses for which payment is being made. These include service
fees for qualified dealers and dealer commissions and wholesaler compensation
on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees). Only expenses incurred
during the preceding 12 months and accrued while the Plan is in effect may be
paid by the fund. During the fund's fiscal year ended August 31, 1995, the
fund paid or accrued $3,001,000 under the Plan as compensation to dealers. As
of August 31, 1995 accrued and unpaid distribution expenses were $653,000.
The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit federally chartered or supervised banks from engaging in the
business of underwriting, selling or distributing securities, but permit banks
to make shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries or affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer with adverse financial consequences as a result of
any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS AND DISTRIBUTIONS - For the purpose of calculating dividends, daily
net investment income of the fund consists of: (a) all interest income accrued
on the fund's investments including any discount or premium ratably amortized
to the date of maturity or determined in such other manner as may be deemed
appropriate; minus (b) all liabilities accrued, including interest, taxes and
other expense items, amounts determined and declared as dividends or
distributions and reserves for contingent or undetermined liabilities, all
determined in accordance with generally accepted accounting principles.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month are treated as paid and are thereby
taxable as of December 31, provided that the fund pays the dividend no later
than the end of January of the following year.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional federal, state and local
tax considerations generally affecting the fund and its shareholders. No
attempt is made to present a detailed explanation of the tax treatment of the
fund or its shareholders, and the discussion here and in the fund's Prospectus
is not intended as a substitute for careful tax planning. Investors are urged
to consult their tax advisers with specific reference to their own tax
situations.
The fund is not intended to constitute a balanced investment program and is
not designed for investors seeking capital appreciation or maximum tax-exempt
income irrespective of fluctuations in principal. Shares of the fund would
generally not be suitable for tax-exempt institutions or tax-deferred
retirement plans (E.G., plans qualified under Section 401 of the Internal
Revenue Code, Keogh-type plans and individual retirement accounts). Such
retirement plans would not gain any benefit from the tax-exempt nature of the
fund's dividends because such dividends would be ultimately taxable to
beneficiaries when distributed to them. In addition, the fund may not be an
appropriate investment for entities which are "substantial users" of facilities
financed by private activity bonds or "related persons" thereof. "Substantial
user" is defined under U.S. Treasury Regulations to include a non-exempt person
who regularly uses a part of such facilities in his trade or business and whose
gross revenues derived with respect to the facilities financed by the issuance
of bonds are more than 5% of the total revenues derived by all users of such
facilities, or who occupies more than 5% of the usable area of such facilities
or for whom such facilities or a part thereof were specifically constructed,
reconstructed or acquired. "Related persons" include certain related natural
persons, affiliated corporations, a partnership and its partners and an S
Corporation and its shareholders.
The fund intends to meet all the requirements and has elected the tax status
of a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the "Code"). Under Subchapter M, if the fund
distributes within specified times at least 90% of its taxable and tax-exempt
net investment income, it will be taxed only on that portion, if any, which it
retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock, securities, currencies, or other income
derived with respect to its business of investing in such stock, securities, or
currencies; (b) derive less than 30% of its gross income from the gains or sale
or other disposition of stock or securities held less than three months, and
(c) diversify its holdings so that, at the end of each fiscal quarter, (i) at
least 50% of the market value of the fund's assets is represented by cash, cash
items, U.S. Government securities, securities of other regulated investment
companies, and other securities which must be limited, in respect of any one
issuer to an amount not greater than 5% of the fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. Government securities or the securities of other regulated investment
companies) or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
The percentage of total dividends paid by the fund with respect to any taxable
year which qualify for exclusion from gross income ("exempt-interest
dividends") will be the same for all shareholders receiving dividends during
such year. In order for the fund to pay exempt-interest dividends during any
taxable year, at the close of each fiscal quarter at least 50% of the aggregate
value of the fund's assets must consist of tax-exempt obligations. Not later
than 60 days after the close of its taxable year, the fund will notify each
shareholder of the portion of the dividends paid by the fund to the shareholder
with respect to such taxable year which constitutes exempt-interest dividends.
The aggregate amount of dividends so designated cannot, however, exceed the
excess of the amount of interest excludable from gross income from tax under
Section 103 of the Code received by the fund during the taxable year over any
amounts disallowed as deductions under Sections 265 and 171(a)(2) of the Code.
Interest on indebtedness incurred by a shareholder to purchase or carry fund
shares is not deductible for federal income tax purposes if the fund
distributes exempt-interest dividends during the shareholder's taxable year.
If a shareholder receives an exempt-interest dividend with respect to any share
and such share is held for six months or less, any loss on the sale or exchange
of such share will be disallowed to the extent of the amount of such
exempt-interest dividend.
While the fund does not expect to realize substantial long-term capital
gains, any net realized long-term capital gains will be distributed annually.
The fund will have no tax liability with respect to such gains, and the
distributions will be taxable to shareholders as long-term capital gains,
regardless of how long a shareholder has held fund shares. Such distributions
will be designated as a capital gains distribution in a written notice mailed
by the fund to shareholders not later than 60 days after the close of the
fund's taxable year. If a shareholder receives a designated capital gain
distribution (treated by the shareholder as a long-term capital gain) with
respect to any fund share and such fund share is held for six months or less,
then (unless otherwise disallowed) any loss on the sale or exchange of that
fund share will be treated as long-term capital loss to the extent of the
designated capital gain distribution. The fund also may make a distribution of
net realized long-term capital gains near the end of the calendar year to
comply with certain requirements of the Code. Gain recognized on the
disposition of a debt obligation (including tax-exempt obligations purchased
after April 30, 1993) purchased by the fund at a market discount (generally, at
a price less than its principal amount) will be treated as ordinary income to
the extent of the portion of the market discount which accrued during the
period of time the fund held the debt obligation.
Similarly, while the fund does not expect to earn any significant investment
company taxable income, in the event that any taxable income is earned by the
fund it will be distributed. In general, the fund's investment company taxable
income will be its taxable income subject to certain adjustments and excluding
the excess of any net long-term capital gain for the taxable year over the net
short-term capital loss, if any, for such year. The fund would be taxed on any
undistributed investment company taxable income. Since any such income will be
distributed, it will be taxable to shareholders as ordinary income (whether
distributed in cash or additional shares).
The Code imposes limitations on the use and investment of the proceeds of
state and local governmental bonds and upon other funds of the issuers of such
bonds. These limitations must be satisfied on a continuing basis to maintain
the exclusion from gross income of interest on such bonds. These provisions of
the Code generally apply to bonds issued after August 15, 1986. Bond counsel
qualify their opinions as to the federal tax status of new issues of bonds by
making such opinions contingent on the issuer's future compliance with these
limitations. Any failure on the part of an issuer to comply could cause the
interest on its bonds to become taxable to investors retroactive to the date
the bonds were issued.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually
distributed by the fund from its current year's ordinary income and capital
gain net income and (ii) any amount on which the fund pays income tax during
the periods described above. The fund intends to distribute net investment
income and net capital gains so as to minimize or avoid the excise tax
liability.
If for any taxable year the fund does not qualify for the special tax
treatment afforded regulated investment companies, all of its taxable income
will be subject to tax at regular corporate rates (without any deduction for
distributions to its shareholders). In such event, dividend distributions
would be taxable to shareholders to the extent of earnings and profits, and may
be eligible for the dividends-received deduction for corporations. Under
normal circumstances, no part of the distributions to shareholders by the fund
is expected to qualify for the dividends-received deduction allowed to
corporate shareholders.
If a shareholder exchanges or otherwise disposes of shares of the fund
within 90 days of having acquired such shares, and if, as a result of having
acquired those shares, the shareholder subsequently pays a reduced sales charge
for shares of the fund, or of a different fund, the sales charge previously
incurred in acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purposes of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other funds. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
As of the date of this statement of additional information, the maximum
individual tax rate applicable to ordinary income is 39.6% (effective tax rates
may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gains is 28%; and the maximum corporate tax applicable to ordinary
income and net capital gains is 35%. However, to eliminate the benefit of
lower marginal corporate income tax rates, (corporations which have taxable
income in excess of $100,000 for a taxable year will be required to pay an
additional amount of income tax of up to $11,750 and corporations which have
taxable income in excess of $15,000,000 for a taxable year will be required to
pay an additional amount of income tax of up to $100,000). Naturally, the
amount of tax payable by a taxpayer will be affected by a combination of tax
law rules covering, E.G., deductions, credits, deferrals, exemptions, sources
of income and other matters.
The interest on "private activity" bonds as defined under the Code is an
item of tax preference subject to the alternative minimum tax ("AMT") on
corporations and individuals. As of the date of this statement of additional
information, individuals are subject to an AMT at a maximum marginal rate of
28% and corporations at a rate of 20%. Shareholders will not be permitted to
deduct any of their share of fund expenses in computing alternative minimum
taxable income. With respect to corporate shareholders, all interest on
municipal bonds and other tax-exempt obligations, including exempt-interest
dividends paid by the fund, is included in adjusted book income and adjusted
current earnings in calculating federal alternative minimum taxable income, and
may also affect corporate federal "environmental tax" liability.
Under the Code, distributions of net investment income by the fund to a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation, or foreign partnership (a "foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or a lower treaty rate, if
applicable). Withholding will not apply if a dividend paid by the fund is
"effectively connected" with a U.S. trade or business, in which case the
reporting and withholding requirements applicable to U.S. citizens, U.S.
residents, or domestic corporations will apply.
PURCHASE OF SHARES
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. The dealer is responsible for promptly transmitting purchase
orders to the Principal Underwriter. Orders received by the investment dealer,
the Transfer Agent, or the fund after the time of the determination of the net
asset value will be entered at the next calculated offering price. Prices
which appear in the newspaper are not always indicative of prices at which you
will be purchasing and redeeming shares of the fund, since such prices
generally reflect the previous day's closing price whereas purchases and
redemptions are made at the next calculated price.
The price you pay for shares, the public offering price, is based on the
net asset value per share which is calculated once daily at the close of
trading (currently 4:00 p.m., New York time) each day the New York Stock
Exchange is open. The New York Stock Exchange is currently closed on weekends
and on the following holidays: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The
net asset value per share is determined as follows:
1. Municipal bonds and notes and any other securities with more than 60
days remaining to maturity normally are valued at prices obtained from a
national municipal bond pricing service, except that, where such prices are not
available or determined by the fund's officers not to represent market value,
they are valued at prices representing the mean between bid and asked
quotations (on the sale of similar issues) obtained from one or more
broker/dealers dealing in such municipal bonds and notes.
All securities with 60 days or less to maturity are amortized to maturity
based on their cost to the fund if acquired within 60 days of maturity or, if
already held by the fund on the 60th day, based on the value determined on the
61st day. The maturities of variable or floating rate instruments, or
instruments with the right to sell them at par to the issuer or dealer, are
deemed to be the time remaining until the next interest adjustment date or
until they can be redeemed at par.
Where market prices or market quotations are not readily available, securities
are valued at fair value as determined in good faith by the Board of Directors
or a committee thereof. The fair value of all other assets is added to the
value of securities to arrive at the total assets;
2. There are deducted from the total assets, thus determined, the liabilities,
including proper accruals of expense items; and
3. The value of the net assets so obtained are then divided by the total
number of shares outstanding and the result, rounded to the nearer cent, is the
net asset value per share.
Any purchase order may be rejected by the Principal Underwriter or by the
fund. The fund will not knowingly sell fund shares (other than for the
reinvestment of dividends or capital gain distributions) directly or indirectly
or through a unit investment trust to any other investment company, person or
entity, where, after the sale, such investment company, person, or entity would
own beneficially directly, indirectly, or through a unit investment trust more
than 4.5% of the outstanding shares of the fund without the consent of a
majority of the Board of Directors.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $25,000 or more made within a
13-month period subject to the following statement of intention (the Statement)
terms. The Statement is not a binding obligation to purchase the indicated
amount. When a shareholder elects to utilize the Statement in order to qualify
for a reduced sales charge, shares equal to 5% of the dollar amount specified
in the Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and capital gain distributions on shares held in escrow will be
credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If the difference is not paid within 45 days after written request by
the Principal Underwriter or the securities dealer, the appropriate number of
shares held in escrow will be redeemed to pay such difference. If the proceeds
from this redemption are inadequate, the purchaser will be liable to the
Principal Underwriter for the balance still outstanding. The Statement may be
revised upward at any time during the 13-month period, and such a revision will
be treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases. Existing holdings
eligible for rights of accumulation (see the prospectus and account
application) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement plans
by payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the Statement, a sales charge will be assessed according to
the sales charge breakpoint thus determined. There will be no retroactive
adjustments in sales charges on investments previously made during the 13-month
period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase .
DEALER COMMISSIONS - The following commissions will be paid, as described in
the prospectus, to dealers who initiate and are responsible for purchases of $1
million or more, for purchases by any employer-sponsored 403(b) plan or
purchases by any defined contribution plan qualified under Section 401(a) of
the Internal Revenue Code including a "401(k)" plan with 200 or more eligible
employees, and for purchases made at net asset value by certain retirement
plans of organizations with collective retirement plan assets of $100 million
or more: 1.00% on amounts of $1 million to $2 million, 0.80% on amounts over
$2 million to $3 million, 0.50% on amounts over $3 million to $50 million,
0.25% on amounts over $50 million to $100 million, and 0.15% on amounts over
$100 million. The level of dealer commissions will be determined based on
sales made over a 12-month period commencing from the date of the first sale at
net asset value. See "The American Funds Shareholder Guide" in the fund's
prospectus for more information.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the 10th day of the month (or on or about the
15th day of the month in the case of accounts for retirement plans where
Capital Guardian Trust Company serves as custodian or trustee.) Bank accounts
will be charged on the day or a few days before investments are credited,
depending on the bank's capabilities, and shareholders will receive a
confirmation statement showing the current transaction. Participation in the
plan will begin within 30 days after receipt of the account application. If
the shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or closing of the account, the plan may be terminated and
the related investment reversed. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing to the Transfer
Agent.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the "paying fund") into any other fund in The
American Funds Group (the "receiving fund") subject to the following
conditions: (i) the aggregate value of the shareholder's account(s) in the
paying fund(s) must equal or exceed $5,000 (this condition is waived if the
value of the account in the receiving fund equals or exceeds that fund's
minimum initial investment requirement), (ii) as long as the value of the
account in the receiving fund is below that fund's minimum initial investment
requirement, dividends and capital gain distributions paid by the receiving
fund must be automatically reinvested in the receiving fund, and (iii) if this
privilege is discontinued with respect to a particular receiving fund, the
value of the account in that fund must equal or exceed the fund's minimum
initial investment requirement or the fund shall have the right, if the
shareholder fails to increase the value of the account to such minimum within
90 days after being notified of the deficiency, automatically to redeem the
account and send the proceeds to the shareholder. These cross-reinvestments of
dividends and capital gain distributions will be at net asset value (without
sales charge).
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New
York, NY 10081, as Custodian.
INDEPENDENT ACCOUNTANTS - Price Waterhouse LLP, 400 South Hope Street, Los
Angeles, CA 90071, has served as the fund's independent accountants since its
inception, providing audit services, preparation of tax returns and review of
certain documents to be filed with the Securities and Exchange Commission. The
financial statements included in this Statement of Additional Information have
been so included in reliance on the report of the independent accountants given
on the authority of said firm as experts in accounting and auditing.
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors, as
though the fund were a common-law trust. Accordingly, the directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on August 31.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio and financial statements and other information. The
fund's annual financial statements are audited annually by the fund's
independent accountants, Price Waterhouse LLP, whose selection is determined
annually by the Directors.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
The financial statements including the investment portfolio and the report of
Independent Accountants contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
<TABLE>
<CAPTION>
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- AUGUST 31, 1995
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $11.94
Maximum offering price per share (100/95.25 of
per share net asset value, which takes into account
the fund's current maximum sales charge) $12.54
</TABLE>
INVESTMENT RESULTS
The fund's yield is 4.89% based on a 30-day (or one month) period ended
August 31, 1995, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last
day of the period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ - 1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund may also calculate a tax equivalent yield based on a 30-day (or
one month) period ended no later than the date of the most recent balance sheet
included in the registration statement, computed by dividing that portion of
the yield (as computed by the formula stated above) which is tax-exempt by one
minus a stated income tax rate and adding the product to that portion, if any,
of the yield that is not tax-exempt. The fund's tax equivalent yield based on
the maximum individual effective federal tax rate of 39.6% for the 30-day (or
one month) period ended August 31, 1995 was 8.10%
The fund may also calculate a distribution rate on a taxable and tax
equivalent basis. The distribution rate is computed by annualizing the current
month's dividend and dividing by the average price for the month. The taxable
equivalent distribution rate will reflect the most current federal and state
tax rates available. The current distribution rate may differ from the current
yield.
The fund's total return over the past 12 months and average annual total
returns over the past five-year and ten-year periods ending on August 31, 1995
were 3.55%, 7.54% and 8.33%, respectively. The average annual total return
("T") is computed by equating the value at the end of the period ("ERV") with a
hypothetical initial investment of $1,000 ("P") over a period of years ("n")
according to the following formula as required by the Securities and Exchange
Commission: P(1+T)/n/ = ERV.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales load of
4.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated.
During its lifetime, the fund had a total return of 263.6% compared with
289.4% for The Bond Buyer Index./1/ In the period from January 1, 1980, when
the Lehman Brothers Municipal Bond Index/2/ began, to August 31, 1995, the fund
had a total return of 263.0% and the index showed a 281.4% return.
EXPERIENCE OF INVESTMENT ADVISER - Capital Research and Management Company
manages nine common stock funds that are at least 10 years old. In all of the
10-year periods during which those funds were managed by Capital Research and
Management Company since 1964 (115 in all), those funds have had better total
returns than the Standard and Poor's 500 Stock Composite Index in 94 of the 115
periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
The fund may also refer to results compiled by organizations such as Lipper
Analytical Services, Morningstar, Inc. and Wiesenberger Investment Companies
Services. Additionally, the fund may, from time to time, refer to results
published in various newspapers or periodicals, including Barrons, Forbes,
Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine, Money,
U.S. News and World Report and The Wall Street Journal.
_______________
/1/ The Bond Buyer Index is unmanaged, reflects no expenses or management fees
and consists of 20 General Obligation bonds maturing in 20 years and rated A
to AA by Standard & Poor's Corporation.
/2/ The Lehman Brothers Municipal Bond Index is unmanaged, reflects no
expenses or management fees and consists of a large universe of municipal
bonds issued as state general obligations or revenue bonds with a minimum
rating of BBB by Standard & Poor's Corporation.
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
...and taken all distributions
If you had invested in shares, your investment
$10,000 in the fund would have been worth this
this many years ago... much at August 31, 1995
<S> <C> <C>
Periods
Number of Years 9/1-8/31 Value
1 1994 - 1995 $10,355
2 1993 - 1995 10,339
3 1992 - 1995 11,621
4 1991 - 1995 12,883
5 1990 - 1995 14,383
6 1989 - 1995 15,080
7 1988 - 1995 16,630
8 1987 - 1995 17,741
9 1986 - 1995 17,938
10 1985 - 1995 22,263
11 1984 - 1995 25,908
12 1983 - 1995 27,827
13 1982 - 1995 32,370
14 1981 - 1995 40,681
15 1980 - 1995 37,052
16 1979*- 1995 36,356
</TABLE>
ILLUSTRATION OF A $10,000 INVESTMENT IN THE FUND
WITH DIVIDENDS REINVESTED
(FOR THE LIFETIME OF THE FUND OCTOBER 3, 1979 THROUGH AUGUST 31, 1995)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
COST OF SHARES VALUE OF SHARES**
Fiscal Annual Dividends Total From From From Total
Year End Dividends (cumulative) Investment Initial Capital Gains Dividends Value
Aug. 31 Cost Investment Reinvested Reinvested
1980* $ 553 $ 553 $ 10,553 $ 8,819 $ 0 $ 529 $ 9,348
1981 779 1,332 11,332 7,362 0 1,146 8,508
1982 932 2,264 12,264 8,362 0 2,333 10,695
1983 978 3,242 13,242 8,971 0 3,473 12,444
1984 1,026 4,268 14,268 8,895 0 4,466 13,361
1985 1,182 5,450 15,450 9,543 0 6,012 15,555
1986 1,297 6,747 16,747 10,962 53 8,297 19,312
1987 1,335 8,082 18,082 10,267 192 9,056 19,515
1988 1,390 9,472 19,472 10,162 307 10,358 20,827
1989 1,499 10,971 20,971 10,467 317 12,176 22,960
1990 1,573 12,544 22,544 10,267 311 13,494 24,072
1991 1,621 14,165 24,165 10,762 326 15,801 26,889
1992 1,722 15,887 25,887 11,219 339 18,235 29,793
1993 1,773 17,660 27,660 11,838 577 21,078 33,493
1994 1,874 19,534 29,534 11,095 773 21,578 33,446
1995 2,011 21,545 31,545 11,371 792 24,193 36,356
</TABLE>
The dollar amount of capital gain distributions during the period was $771.
* From inception on October 3, 1979
** Results assume deduction of the maximum sales charge of 4.75% from the
initial purchase payment.
[/R]
DESCRIPTION OF RATINGS FOR DEBT SECURITIES
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Corporation represent their opinions as to the quality of the municipal bonds
which they undertake to rate. It should be emphasized, however, that ratings
are general and are not absolute standards of quality. Consequently, municipal
bonds with the same maturity, coupon and rating may have different yields,
while municipal bonds of the same maturity and coupon with different ratings
may have the same yield.
Moody's Investors Service, Inc. rates the long-term debt securities issued by
various entities from "Aaa" to "C." Moody's applies the numerical modifiers 1,
2, and 3 in each generic rating classification from AA through B in its
corporate bond rating system. The modifier 1 indicates that the security ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category. Ratings are described as follows:
BONDS --
"Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as 'gilt
edge.' Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
"Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well."
"Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class."
"Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small."
"Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest."
"Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or having other marked
shortcomings."
"Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing."
NOTES --
"The MIG 1 designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
The MIG 2 designation denotes high quality. Margins of protection are ample
although not as large as in the preceding group."
COMMERCIAL PAPER --
"Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:
-- Leading market positions in well established industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
-- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
-- Well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while appropriate, may
be more affected by external conditions. Ample alternate liquidity is
maintained."
Standard & Poor's Corporation rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality. The
ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
Ratings are described as follows:
BONDS -- "Debt rated 'AAA' has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."
"Debt rated 'BBB' is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"The rating 'C1' is reserved for income bonds on which no interest is being
paid."
"Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The 'D' rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized."
NOTES -- "The SP-1 rating denotes a very strong or strong capacity to pay
principal and interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
The SP-2 rating denotes a satisfactory capacity to pay principal and
interest."
COMMERCIAL PAPER --
The A-1 designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
designation."
THE TAX-EXEMPT BOND FUND OF AMERICA
Investment Portfolio, August 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
GEOGRAPHIC BREAKDOWN
California -- 12.60%
New York -- 11.61%
Illinois -- 9.04%
Washington -- 7.66%
Pennsylvania -- 6.01%
Michigan -- 4.55%
Other States -- 43.83%
Cash & Short-Term Securities -- 4.70%
QUALITY RATING
Aaa/AAA -- 29%
Aa/AA -- 18%
A/A -- 19%
Baa/BBB -- 26%
Below investment grade -- 8%
Principal Market
Amount Value
(000) (000)
TAX-EXEMPT SECURITIES MATURING IN MORE THAN
ONE YEAR - 95.30%
ALABAMA - 0.18%
The Industrial Development Board of the City of
Mobile, Solid Waste Revenue Refunding Bonds (Mobile
Energy Services Company, L.L.C. Projects), Series
1995, 6.95% 2020 $2,500 $2,579
ALASKA - 0.97%
Alaska Housing Finance Corporation:
Insured Mortgage Program Refunding Bonds, 1990
First Series, 7.80% 2030 5,900 6,219
Collateralized Bonds (Veterans Mortgage
Program), Series 1992A-1, 6.75% 2032 4,800 4,914
City of Valdez, Marine Terminal Revenue Refunding
Bonds (BP Pipelines (Alaska) Inc. Project), Series
1993 B, 5.50% 2028 3,000 2,722
ARIZONA - 0.22%
State Transportation Board, Subordinated Highway
Revenue Bonds, Series 1992B, 6.50% 2008
(Prerefunded 2002) 1,850 2,078
Salt River Project Agricultural Improvement and
Power District, Electric System Revenue Bonds,
Refunding Series A, 7.875% 2028 (Prerefunded 1998) 1,000 1,102
CALIFORNIA - 12.60%
General Obligation Bonds, 6.75% 2002 5,000 5,547
Various Purpose General Obligation Bonds,
6.75% 2006 1,000 1,122
California Health Facilities Financing Authority:
Downey Community Hospital, Series 1993:
5.00% 2001 1,000 994
5.75% 2015 4,990 4,709
Kaiser Permanente Medical Care Program, Semiannual
Tender Revenue Bonds, 1985 Tender Bonds, 5.55% 2025 5,000 4,528
Public Works Board, Lease Revenue Bonds:
(California Community Colleges), 1994 Series B
(Various Community College Projects):
6.75% 2005 2,505 2,742
7.00% 2007 1,315 1,450
Department of Corrections:
(Various State Prisons), 1993 Series A, AMBAC
Insured, 5.25% 2005 3,800 3,897
(California State Prison-Lassen County,
Susanville), 1993 Series D, 5.20% 2007 3,760 3,641
Statewide Communities Development Authority:
Children's Hospital of Los Angeles, MBIA Insured,
6.00% 2008 3,415 3,624
St. Joseph Health System Obligated Group,
Certificates of Participation:
6.50% 2004 1,540 1,659
5.50% 2014 4,000 3,733
5.50% 2023 2,700 2,451
Castaic Lake Water Agency Financing Corporation,
Refunding Revenue Certificates of Participation
(Water System Improvement Projects), Series 1994A,
MBIA Insured:
7.25% 2010 1,245 1,472
7.00% 2011 2,400 2,756
Central Valley Financing Authority, Cogeneration
Project Revenue Bonds, (Carson Ice-Gen Project)
Series 1993, 6.10% 2013 1,000 973
Culver City Redevelopment Financing Authority, 1993
Tax Allocation Refunding Revenue Bonds, AMBAC
Insured, 5.00% 2023 6,135 5,313
City of Los Angeles:
State Building Authority Lease Revenue Bonds,
Series 1988 A, 7.20% 2004 3,250 3,443
State Building Authority Lease Revenue Refunding
Bonds, (State of California Department of General
Services Lease), 1993 Series A:
5.375% 2006 3,800 3,720
5.50% 2007 7,295 7,177
Convention and Exhibition Center Authority,
Certificates of Participation:
7.375% 2018 (Prerefunded 1999) 1,000 1,128
7.00% 2020 (Prerefunded 1999) 2,750 3,066
Regional Airports Improvement Corporation,
Facilities Lease Refunding Revenue Bonds,
Issue of 1992, United Air Lines, Inc. (Los
Angeles International Airport), 6.875% 2012 2,000 2,034
Department of Water and Power, Electric Revenue
Bonds, 7.10% 2031 (Prerefunded 2001) 3,000 3,371
Foothill/Eastern Transportation Corridor Agency
Toll Road Revenue Bonds, Series 1995A (Fixed
Rate) Senior Lien Current Interest Bonds,
6.00% 2034 5,000 4,576
La Quinta Redevelopment Agency Project (Tax
Allocation Refunding Bonds), Series 1994, MBIA
Insured, 7.30% 2009 1,250 1,484
County of Los Angeles, Certificates of
Participation (Marina Del Rey), Series A:
6.25% 2003 5,500 5,419
6.50% 2008 4,750 4,760
County of Los Angeles, Pension Obligation
Certificates, Series A, 6.875% 2006 10,925 11,285
The Metropolitan Water District of Southern
California, Waterworks General Obligation Refunding
Bonds, 1993 Series A1, 5.50% 2010 3,000 2,991
Northern California Power Agency, Geothermal
Project #3, Special Revenue Bonds, 1993 Refunding
Series A, 5.60% 2006 3,000 3,022
Orange County Local Transportation Authority,
(Orange County, California) Measure M Sales Tax
Revenue Bonds (Limited Tax Bonds):
Second Senior Bonds, Series 1992, FGIC Insured,
5.90% 2006 1,200 1,244
First Senior Bonds, MBIA Insured, 6.00% 2009 2,000 2,046
County of Orange (Aliso Viejo), Special Tax Bonds
of Community Facilities District No. 88-1,
Series A of 1992:
6.70% 2002 (Escrowed to maturity) 1,740 1,941
7.15% 2006 (Prerefunded 2002) 2,000 2,340
7.35% 2018 (Prerefunded 2002) 10,000 11,819
South Orange County, Public Financing Authority
Special Tax Revenue Bonds, 1994 Series B (Junior
Lien Bonds):
6.65% 2003 1,000 1,018
6.75% 2004 2,385 2,427
Pleasanton Joint Powers Financing Authority
Reassessment Revenue Bonds, 1993 Series A:
5.40% 1999 4,085 4,111
5.70% 2001 500 504
6.15% 2012 7,000 6,956
Riverside County Transportation Commission, Sales
Tax Revenue Bonds (Limited Tax Bonds), 1991
Series A, 6.50% 2009 3,600 3,757
City of Los Angeles, Wastewater System Revenue
Bonds, Refunding Series 1993 D, FGIC Insured,
5.20% 2021 2,500 2,240
Sacramento City Financing Authority, 1991 Revenue
Bonds, 6.80% 2020 (Prerefunded 2001) 5,000 5,712
Sacramento Cogeneration Authority, Cogeneration
Project Revenue Bonds, (Procter & Gamble Project),
1995 Series, 6.375% 2010 1,000 1,014
San Francisco Bay Area Rapid Transit District,
Sales Tax Revenue Refunding Bonds, Series 1990,
AMBAC Insured, 6.75% 2009 3,250 3,497
Redevelopment Agency of the City and County of
San Francisco Refunding Lease Revenue Bonds,
Series 1991 (George R. Moscone Convention
Center), 5.50% 2018 6,000 5,396
San Joaquin Hills Transportation Corridor Agency
(Orange County), Senior Lien Toll Road Revenue
Bonds, 0% 2000 4,525 3,404
The Regents of the University of California
(Various University of California Projects),1993:
Series A:
5.40% 2008 4,000 3,871
5.50% 2021 3,500 3,157
Series B, 5.375% 2009 2,000 1,905
The Regents of the University of California Revenue
Bonds, Series A, MBIA Insured, 6.90% 2015
(Prerefunded 1997) 2,750 2,963
COLORADO - 3.51%
Arapahoe County, Capital Improvement Trust Fund
Highway Revenue Bonds (E-470 Project):
6.90% 2015 5,750 5,904
6.95% 2020 20,500 21,066
Colorado Housing And Finance Authority,
Multi-Family Housing Insured Mortgage Revenue Bonds, 1982
Series A, 9.00% 2025 1,780 1,780
City and County of Denver, Airport System Revenue
Bonds, Series 1992A, 7.25% 2025 19,800 21,210
DISTRICT OF COLUMBIA - 3.13%
District of Columbia (Washington, D.C.), General
Obligation Bonds:
Series 1990 A, AMBAC Insured, 7.25% 2005
(Prerefunded 2000) 2,500 2,838
Series 1993 C, 5.25% 2000 4,000 3,915
Series 1993 A, 5.75% 2003 3,000 2,916
Series 1992 B, MBIA Insured, 6.125% 2003 1,750 1,851
AMBAC Insured, 5.20% 2004 1,500 1,493
Series 1993 A, AMBAC Insured, 5.875% 2005 7,000 7,249
Series A-1, MBIA Insured, 4.95% 2005 1,250 1,205
Series 1993 C, 5.75% 2005 2,500 2,365
Series B-2, FSA Insured, 5.50% 2007 8,725 8,628
Series B-1, AMBAC Insured, 5.50% 2009 8,500 8,201
Hospital Revenue Refunding Bonds
(Medlantic Healthcare Group, Inc. Issue):
Series 1992 A, 7.00% 2005 2,000 2,060
Series 1993 A, MBIA Insured, 5.25% 2012 2,000 1,840
FLORIDA - 1.03%
Broward County, Resource Recovery Revenue Bonds,
Series 1984: North Project,
North Project, 7.95% 2008 4,830 5,412
South Project, 7.95% 2008 1,240 1,389
The Crossing at Fleming Island Community Development
District (Clay County), Special Assessment Bonds,
Series 1995, 8.25% 2016 1,125 1,162
Mid-Bay Bridge Authority Revenue Refunding Bonds:
Series 1993A, 8.50% 2022 4,000 4,647
Series 1993D, 6.125% 2022 2,150 2,045
GEORGIA - 1.57%
General Obligation Bonds, 1995 D, 6.75% 2001 5,410 6,173
City of Atlanta, Airport Facilities Revenue
Refunding Bonds, Series 1994A, AMBAC Insured:
6.50% 2008 1,500 1,663
6.50% 2009 1,000 1,102
City of Atlanta, Special Purpose Facilities
Revenue Refunding Bonds (Delta Air Lines, Inc.
Project), Series 1989 A, 7.50% 2019 4,500 4,727
Fulco Hospital Authority Revenue Anticipation
Certificates (St. Joseph's Hospital of Atlanta,
Inc.), Series 1994, 4.80% 2001 2,305 2,219
Fulco Hospital Authority Revenue Anticipation
Certificates (Georgia Baptist Health Care System
Project), Series 1992:
A 6.40% 2007 1,000 1,016
A 6.375% 2022 1,595 1,504
B 6.375% 2022 910 856
Development Authority of Fulton County, Special
Facilities Revenue Bonds (Delta Air Lines, Inc.
Project), Series 1992, 6.95% 2012 3,000 3,104
HAWAII - 0.07%
State General Obligation Refunding Bonds of 1993,
Series C, 5.125% 2009 1,000 973
ILLINOIS - 9.04%
State of Illinois, Civic Center Bonds (Special State
Obligation Bonds), Series 1991, AMBAC Insured, 6.25%
2020 2,000 2,098
Build Illinois Bonds (Sales Tax Revenue Bonds),
Series O, 6.00% 2002 1,000 1,071
Health Facilities Authority:
Revenue Refunding Bonds (The Carle Foundation),
FGIC Insured, Series 1989 A, 6.00% 2015 3,000 3,002
Revenue Bonds (Rush-Presbyterian St. Luke's Medical
Center Obligated Group), MBIA Insured, Series 1993,
5.25% 2013 1,875 1,711
Revenue Bonds, Series 1992 (Edward Hospital
Association Project), 7.00% 2022 1,000 1,043
Refunding Bonds, Series 1993 A (Edward Hospital
Project), 6.00% 2019 1,435 1,349
Revenue and Revenue Refunding Bonds
(Evangelical Hospitals Corporation):
Series A, 6.25% 2022 2,000 1,977
Series C, 6.25% 2022 4,000 3,969
Revenue Bonds, Series 1994 A (Northwestern Memorial
Hospital), 6.00% 2024 13,000 12,737
Revenue Bonds, Series 1993 (OSF Healthcare System):
5.75% 2007 5,760 5,813
6.00% 2013 5,000 4,907
6.00% 2023 10,000 9,593
Regional Transportation Authority, Cook, DuPage,
Kane, Lake, McHenry and Will Counties, Illinois
General Obligation Bonds:
Series 1994D, 7.75% 2019 4,500 5,572
Series 1990A 7.20% 2020 1,000 1,173
City of Chicago:
Chicago-O'Hare International Airport:
General Airport Second Lien Revenue Refunding Bonds,
1993 Series C, MBIA Insured, 5.00% 2018 10,000 8,800
Special Facilities Revenue Bonds for United
Airlines:
1984 Series C, 8.20% 2018 1,230 1,340
1988 Series B, 8.85% 2018 1,940 2,205
Special Facilities Revenue Refunding Bonds
(Delta Airlines, Inc. Terminal), 6.45% 2018 7,435 7,399
Special Facilities Revenue Refunding Bonds,
Series 1994 (American Airlines, Inc. Project),
8.20% 2024 2,750 3,145
Skyway Toll Bridge Refunding Revenue Bonds,
Series 1994:
6.50% 2010 13,750 13,934
6.75% 2014 6,500 6,625
6.75% 2017 1,925 1,962
Water Revenue Bonds, Refunding
Series 1993, FGIC Insured, 6.50% 2011 4,345 4,767
Public Building Commission of Chicago, Building
Revenue Bonds (Board of Education of the City
of Chicago), MBIA Insured,
Series A of 1993, 5.75% 2018 8,000 7,770
Metropolitan Pier and Exposition Authority,
McCormick Place Expansion Project Bonds,
Current Interest Bonds, Series 1992 A,
6.50% 2027 4,000 4,060
Metropolitan Water Reclamation District of Greater
Chicago, Series B:
Capital Improvement Bonds, 5.25% 2004 5,000 5,159
Refunding Bonds, 5.30% 2005 5,325 5,477
INDIANA - 2.70%
Housing Finance Authority, Single Family Mortgage
Refunding Revenue Bonds, 1992 Series A, 6.75% 2010 1,660 1,735
Transportation Finance Authority, Airport
Facilities Lease Revenue Bonds, Series A:
6.50% 2007 7,000 7,446
6.75% 2011 2,400 2,513
City of East Chicago, Pollution Control Refunding
Revenue Bonds:
(Inland Steel Company Project No. 10), Series 1993,
6.80% 2013 6,000 6,093
(Inland Steel Company Project No. 11), Series 1994,
7.125% 2007 3,000 3,124
Hospital Authority of the City of Fort Wayne,
Revenue Bonds (Parkview Memorial Hospital, Inc.
Project), Series 1992:
6.375% 2013 6,000 6,060
6.40% 2022 8,000 8,049
Indianapolis Local Public Improvement Bond Bank,
Series 1992 D Bonds, 6.60% 2007 1,960 2,088
City of Sullivan, Pollution Control Revenue
Refunding Bonds (Indiana Michigan Power Company
Project), Series C, 5.95% 2009 1,300 1,281
KENTUCKY - 0.21%
The Turnpike Authority of Kentucky, Resource
Recovery Road Revenue Refunding Bonds, 1981
Series A, 13.125% 2009 (Prerefunded 1997) 390 453
Kenton County Airport Board, Special Facilities
Revenue Bonds (Delta Air Lines, Inc. Project):
7.80% 2015 1,000 1,063
1992 Series B, 7.25% 2022 1,350 1,420
LOUISIANA - 3.91%
Industrial Development Board of the Parish of
Calcasieu, Inc. (Louisiana) Pollution Control
Revenue Refunding Bonds (Gulf States Utilities
Company Project), Series 1992, 6.75% 2012 4,000 4,026
Offshore Terminal Authority, Deepwater Port
Refunding Revenue Bonds (LOOP INC. Project):
First Stage Series B, 6.25% 2004 2,200 2,364
First Stage Series E, 7.45% 2004 1,000 1,123
Lake Charles Harbor and Terminal District, Port
Facilities Revenue Refunding Bonds (Trunkline
LNG Company Project), Series 1992, 7.75% 2022 28,000 31,258
Orleans Levee District, Levee Improvement Fixed Rate
Refunding Bonds, Series 1987 A, 8.25% 2014 10,420 10,759
Parish of St. Charles, Adjustable/Fixed Rate
Pollution Control Revenue Bonds (Louisiana
Power & Light Company Project),
Series 1984, 8.25% 2014 5,490 6,121
MAINE - 0.55%
Maine State Housing Authority, Mortgage Purchase
Bonds,1994 Series C-1, 5.90% 2015 4,135 4,199
Town of Skowhegan, Maine, Pollution Control Revenue
Refunding Bonds, Series 1993 (Scott Paper Company
Project), 5.90% 2013 3,710 3,625
MARYLAND - 1.65%
State General Obligation Bonds, State
and Local Facilities Loan of 1993, Second Series
(Capital Improvement and Refunding Bonds),
5.00% 2004 1,700 1,740
Community Development Administration, Department
of Housing and Community Development, Single
Family Program Bonds, 1990 First Series,
7.60% 2017 5,920 6,316
Health and Higher Educational Facilities Authority:
Revenue Bonds, Howard County General Hospital
Issue, Series 1993:
5.50% 2013 2,300 2,041
5.50% 2021 6,225 5,219
Project and Refunding Revenue Bonds, Peninsula
Regional Medical Center Issue, Series 1993,
5.25% 2012 1,000 930
John Hopkins Hospital Issue, Revenue Refunding
Bonds, Series 1993, 5.00% 2023 1,000 862
Calvert County, Maryland Economic Development
Revenue Bonds (Asbury-Solomons Island Facility),
Series 1995, 8.625% 2024 2,500 2,680
Prince George's County, Hospital Revenue Bonds:
5.30% 2024 3,305 2,810
(Dimensions Health Corporation Issue) Series
1992, 7.25% 2017 (Prerefunded 2002) 750 875
MASSACHUSETTS - 3.25%
General Obligation Bonds Consolidated Loan of
1989, Series D, MBIA Insured, 7.00% 2009
(Prerefunded 1999) 1,000 1,118
Massachusetts Health and Educational Facilities
Authority, Revenue Bonds, Dana-Farger Cancer
Institute Issue, Series G-1, 5.50% 2027 2,500 2,194
Health and Educational Facilities Authority,
Revenue Bonds:
Brigham and Women's Hospital Issue, Series D,
6.75% 2024 7,000 7,275
New England Deaconess Hospital Issue, Series C,
7.20% 2022 2,000 2,111
Massachusetts Bay Transportation Authority, General
Transportation System Bonds, 1994 Series A
Refunding Bonds, 7.00% 2007 10,110 11,632
City of Boston, Massachusetts Revenue Refunding
Bonds, Boston City Hospital (FHA-Insured Mortgate):
7.625% 2021 980 1,123
5.75% 2023 8,000 7,528
Massachusetts Water Resources Authority:
General Revenue Bonds, 1990 Series A, 7.50% 2009
(Prerefunded 2000) 9,500 10,848
General Revenue Refunding Bonds, 1993 Series B,
5.25% 2009 2,500 2,439
MICHIGAN - 4.55%
The Economic Development Corporation of Dickinson
County (Michigan), Series 1969, Solid Waste
Disposal Refunding Revenue Bonds, Champion
International Corp. Project, 6.55% 2007 3,000 3,122
Job Development Authority, Pollution
Control Revenue Bonds (Chrysler Corporation
Project), Series 1984, 5.70% 1999 7,000 7,182
State Housing Development Authority, Rental Housing
Revenue Bonds, 1994 Series A, 6.20% 2003 600 627
State Hospital Finance Authority, Hospital Revenue
Refunding Bonds (McLaren Obligated Group),
Series 1993A, 5.375% 2013 2,985 2,728
Michigan State Hospital Finance Authority, Hospital
Revenue and Refunding Bonds (The Detroit Medical
Center Obligated Group), Series 1993 B, 5.50% 2023 2,000 1,762
Michigan State Hospital Finance Authority, Hospital
Revenue Refunding Bonds (Genesys Health System
Obligated Group), Series 1995A:
7.10% 2002 1,955 2,069
8.00% 2005 8,880 9,819
8.10% 2013 5,000 5,375
8.125% 2021 4,500 4,847
7.50% 2027 3,925 4,019
City of Detroit, Michigan, General Obligation
Refunding Bonds (Unlimited Tax), Series 1995-B:
6.25% 2001 6,085 6,310
6.75% 2003 2,000 2,126
7.00% 2004 2,500 2,695
6.25% 2005 3,625 3,706
6.25% 2010 1,250 1,238
City of Royal Oak Hospital Financing Authority,
Hospital Revenue Refunding Bonds (William Beaumont
Hospital), Series 1993 G, 5.25% 2019 8,000 7,117
MINNESOTA - 0.54%
Housing and Redevelopment Authority of the City
of Saint Paul, Hospital Facility Revenue
Bonds (Healtheast Project), Series 1987-B:
9.75% 2017 (Prerefunded 1997) 2,770 3,098
9.75% 2017 (Prerefunded 1997) 4,095 4,580
MISSISSIPPI - 2.43%
Claiborne County Adjustable/Fixed Rate Pollution
Control Revenue Bonds (Middle South Energy, Inc.
Project):
Series A, 9.50% 2013 1,550 1,801
Series B, 8.25% 2014 4,750 5,204
Series C, 9.875% 2014 23,535 27,629
NEW HAMPSHIRE - 0.25%
New Hampshire Higher Educational and Health
Facilities Authority Revenue Bonds, Dartmouth
College Issue, Series 1993, 5.375% 2023 1,000 931
Business Finance Authority, Pollution Control
Refunding Revenue Bonds (The United Illuminating
Company Project), Series A 1993, 5.875% 2033 2,985 2,685
NEW JERSEY - 0.90%
New Jersey Economic Development Authority, First
Mortgage Revenue Fixed Rate Bonds (Fellowship
Village Project), Series 1995A, 9.25% 2025 7,000 7,454
New Jersey Housing and Mortgage Finance Agency,
Section 8 Bonds, 1991 Series A:
6.80% 2005 2,570 2,754
6.85% 2006 2,500 2,679
NEW MEXICO - 0.27%
Mortgage Finance Authority, Single Family Mortgage
Purchase Refunding Senior Bonds, 1992 Series
A-1, 6.85% 2010 3,660 3,865
NEW YORK - 11.61%
Dormitory Authority of the State of New York:
State University Educational Facilities Revenue
Refunding Bonds:
Series 1990 B, 7.50% 2011 1,720 1,989
Series 1990 A, 7.50% 2013 4,500 5,246
Series 1990 B, 7.00% 2016 1,000 1,064
City University System, Consolidated Second
General Resolution Revenue Bonds:
Series 1990 F, FGIC Insured, 7.50% 2020
(Prerefunded 2000) 7,100 8,184
Series G, 5.00% 2002 2,000 1,957
Environmental Facilities Corporation, State Water
Pollution Control Revolving Fund Revenue Bonds
(New York City Municipal Water Finance Authority
Project):
Series 1994 A, 5.75% 2009 8,380 8,604
Series 1991 E, 6.875% 2010 1,500 1,636
Series 1990 A, 7.50% 2012 500 559
Local Government Assistance Corporation:
Series 1991 A Bonds, 7.00% 2016 (Prerefunded 2001) 7,000 7,991
Series 1991 B Bonds, 7.50% 2020 (Prerefunded 2001) 6,925 8,074
Series 1991 C Bonds, 0% 2005 5,000 3,066
Series 1991 D Bonds, 7.00% 2011 2,000 2,212
Series 1991 D Bonds, 7.00% 2018 (Prerefunded 2001)/2/ 8,650 9,988
Series 1991 D Bonds, 6.75% 2021 (Prerefunded 2002) 1,350 1,541
Series 1992 C Bonds, 5.50% 2022 1,000 931
New York State Medical Care Facilities Finance
Agency, FHA-Insured Mortgage Project Revenue Bonds,
1995 Series D, AMBAC Insured, 5.75% 2025 1,000 971
State Medical Care Facilities Finance Agency,
Mental Health Services Facilities Improvement
Revenue Bonds:
1991 Series A, 7.50% 2021 (Prerefunded 2001) 3,645 4,239
1993 Series F, Refunding, 4.60% 1999 1,000 993
1994 Series A, 5.10% 2003 1,720 1,673
Urban Development Corporation, Correctional
Capital Facilities Revenue Bonds:
Series 1993 A, Refunding Series, 5.30% 2005 2,800 2,684
Series 2, 6.50% 2021 (Prerefunded 2001) 3,700 4,064
Series 1993, 5.25% 2003 4,500 4,424
Metropolitan Transit Authority, Transit Facilities
Service Contract Bonds, Series O and P,
5.375% 2002 4,000 4,049
Battery Park City Authority, Revenue Refunding
Bonds, Series 1993 A:
5.00% 2008 2,250 2,129
5.25% 2017 7,500 6,730
4.75% 2019 18,000 14,849
The City of New York, General Obligation Bonds,
Fiscal 1995 Series F:
6.375% 2006 3,000 3,103
6.60% 2010 2,000 2,039
6.625% 2025 1,500 1,522
City of New York General Obligation Bonds:
Fiscal 1992 Series H, 6.875% 2002 1,900 2,030
Fiscal 1993 Series A, 6.25% 2003 4,200 4,305
Fiscal 1991 Series B, 8.25% 2006 1,500 1,766
Fiscal 1994 Series C, 5.50% 2007 4,000 3,826
Fiscal 1995 Series E, MBIA Insured, 6.20% 2008 3,000 3,271
New York City, Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds:
Fiscal 1989 Series B, FGIC Insured,
7.625% 2017 (Prerefunded 1998) 3,000 3,325
Fiscal 1991 Series C, 7.75% 2020 (Prerefunded 2001) 5,000 5,897
Fiscal 1994 Series B, 4.875% 2002 3,000 3,011
Fiscal 1994 Series B, 5.50% 2019 2,000 1,853
New York City Transit Authority, Transit
Facilities Revenue Bonds (Livingston Plaza
Project), Series 1990, FSA Insured, 7.50% 2020
(Prerefunded 2000) 4,000 4,560
Triborough Bridge and Tunnel Authority, General
Purpose and Revenue Bonds:
Series K, 8.25% 2017 (Prerefunded 1997) 1,000 1,076
Series S, 7.00% 2021 (Prerefunded 2001) 11,400 12,913
Series Y, 6.00% 2012 1,000 1,035
NORTH CAROLINA - 1.91%
Eastern Municipal Power Agency, Power System Revenue
Bonds:
Refunding Series 1993 C, 5.00% 2002 1,000 968
Refunding Series 1993 C, 5.25% 2004 2,000 1,909
Refunding Series 1993 C, 5.50% 2007 5,250 5,086
1993 B, 6.00% 2006 3,000 2,995
1993 B, 7.00% 2008 10,045 10,729
1993 B, 7.25% 2007 5,000 5,452
OHIO - 0.12%
County of Franklin, Hospital Facilities Revenue
Refunding and Improvement Bonds (Doctors Hospital
Project), 5.60% 2006 1,750 1,772
OKLAHOMA - 0.19%
Grand River Dam Authority, Revenue Bonds, Refunding
Series 1995, AMBAC Insured, 6.25% 2011 2,500 2,720
PENNSYLVANIA - 6.01%
Pennsylvania Convention Center Authority Refunding
Revenue Bonds, 1994 Series A, 6.25% 2004 10,000 10,390
Higher Educational Facilities Authority, Revenue
Bonds (Thomas Jefferson University), 1992
Series A, 6.625% 2009 1,250 1,332
Housing Finance Authority, Single Family Mortgage
Revenue Bonds:
Series 1990-29A, 7.375% 2016 3,575 3,842
Series 1992-33, 6.85% 2009 1,000 1,078
The Pennsylvania Industrial Development Authority,
Economic Development Revenue Bonds, Series 1994,
AMBAC Insured, 7.00% 2007 1,750 2,029
The Hospitals and Higher Education Facilities
Authority of Philadelphia:
Hospital Revenue Bonds (The Children's Hospital of
Philadelphia Project):
Series A of 1992, 6.50% 2009 (Prerefunded 2002) 4,500 5,040
Series A of 1992, 6.50% 2021 (Prerefunded 2002) 3,000 3,360
Series A of 1993, 5.00% 2021 10,500 9,041
Frankford Hospital, Series A:
6.00% 2014 1,805 1,651
6.00% 2023 7,250 6,311
The Hospital Authority of Philadelphia Hospital
Revenue Bonds (Temple University Hospital):
Series of 1993 A, 6.50% 2008 12,500 12,902
Series of 1983, 6.625% 2023 20,385 20,382
City of Pottsville Hospital Authority, Hospital
Revenue Bonds (The Pottsville Hospital and Warne
Clinic), Series of 1994, 7.25% 2024 8,500 8,230
RHODE ISLAND - 2.25%
Convention Center Authority Refunding Revenue
Bonds, MBIA Insured:
1993 Series B, 5.00% 2008 2,790 2,691
1993 Series A, 5.00% 2010 3,190 2,969
1993 Series B, 5.25% 2015 5,000 4,657
Depositors Economic Protection Corporation, Special
Obligation Bonds:
1993 Series A, MBIA Insured, 5.75% 2012 4,850 4,834
1992 Series A, FSA Insured, 6.625% 2019
(Prerefunded 2002) 1,000 1,133
1993 Series A, 5.75% 2021 6,500 6,015
1993 Series A, 6.375% 2022 7,000 7,104
Housing and Mortgage Finance Corporation,
Homeownership Opportunity Bonds, Series 3-A,
7.80% 2010 2,500 2,685
SOUTH DAKOTA - 0.21%
South Dakota Housing Development Authority,
Homeownership Mortgage Bonds, 1995 Series A and B,
6.00% 2023 2,945 2,969
TENNESSEE - 2.42%
The Health and Educational Facilities Board of the
Metropolitan Government of Nashville and Davidson
County, Tennessee, 9.25% 2024 6,600 6,960
Memphis-Shelby County Airport Authority, Special
Facilities Revenue Bonds, Refunding Series 1992
(Federal Express Corporation), 6.75% 2012 26,375 27,549
TEXAS - 3.80%
National Research Laboratory Commission General
Obligation Bonds, Series 1990 (Superconducting
Super Collider Project), 7.125% 2020
(Prerefunded 2000) 14,450 16,279
City of Austin, Combined Utility Systems Revenue
Refunding Bonds, Series 1990 A, FGIC Insured,
6.00% 2010 2,000 2,023
Dallas-Fort Worth International Airport, Facility
Improvement Corporation (Delta Air Lines, Inc.),
Revenue Refunding Bonds, Series 1993, 6.25% 2013 6,420 6,296
Fort Worth Independent School District (Tarrant
County, Texas), Unlimited Tax Refunding Bonds,
Series 1993, 4.90% 2002 2,875 2,918
Harris County Health Facilities Development
Corporation, SCH Health Care System Revenue Bonds
(Sisters of Charity of the Incarnate Word,
Houston, Texas), Series 1991A, 7.10% 2021 8,000 8,655
Harris County Toll Road, Unlimited Tax and
Subordinate Lien Revenue Bonds, Series 1984,
10.375% 2014 (Prerefunded 1998) 1,000 1,143
North Central Texas Health Facilities Development
Corporation, Hospital Revenue Bonds
(Presbyterian Healthcare System Project),
Series 1993, 5.90% 2021 3,000 2,903
Northside Independent School District (Bexar,
Medina, and Bandera Counties, Texas), Unlimited
Tax School Building Bonds, Series 1991, 6.375% 2008 4,000 4,160
Tomball Hospital Authority, Hospital Revenue
Refunding Bonds, Series 1993, Tomball Regional
Hospital, 6.125% 2023 7,250 6,501
Village at Western Oaks Municipal Utility District,
City of Austin, Texas Contract Revenue Refunding
Bonds, Series 1991, FGIC Insured, 6.50% 2009 3,000 3,164
UTAH - 2.42%
Housing Finance Agency, Single Family Mortgage
Bonds, 1995 Issue E (Federally Insured or
Guaranteed Mortgage Loans), 5.50% 2024 2,000 2,007
Intermountain Power Agency:
Special Obligation Refunding Bonds,
5th Crossover Series: FGIC Insured 7.00% 2015
FGIC Insured, 7.00% 2015 7,000 7,479
7.20% 2019 1,000 1,056
Power Supply Revenue, Refunding Bonds,
1996 Series B, MBIA Insured:
6.25% 2006* 4,000 4,257
6.50% 2009* 2,000 2,122
Salt Lake City, Utah Hospital Revenue Bonds, Series
1992 (IHC Hospitals, Inc.):
5.50% 2021 8,100 7,476
6.25% 2023 10,000 10,102
VERMONT - 0.09%
Vermont Housing Finance Agency, Single Family
Housing Bonds, Series 4, 5.75% 2012 1,250 1,261
VIRGINIA - 1.49%
Industrial Development Authority of Fairfax
County, Hospital Revenue Refunding Bonds (Inova
Health System Hospitals Project), Series 1993A:
4.80% 2005 1,850 1,800
5.00% 2010 3,450 3,180
5.00% 2011 1,300 1,181
5.25% 2019 1,000 883
5.00% 2023 2,000 1,681
Industrial Development Authority of the County of
Hanover, Hospital Revenue Bonds, (Memorial Regional
Medical Center Project at Hanover Medical Park),
Series 1995, MBIA Insured:
6.50% 2009 1,000 1,101
6.375% 2018 3,000 3,213
6.00% 2009 1,550 1,633
Industrial Development Authority of the City of
Norfolk, Hospital Revenue Bonds (Sentara
Hospitals-Norfolk Project), Series 1991,
6.50% 2013 2,500 2,621
Commonwealth Transportation Board, Commonwealth of
Virginia Transportation Contract Revenue Bonds,
Series 1988 (Route 28 Project), 7.80% 2016
(Prerefunded 1998) 3,500 3,870
WASHINGTON - 7.66%
State General Obligation, Series B, 5.50% 2010 2,000 1,986
Washington Public Power Supply System:
Nuclear Project No. 1 Refunding Revenue Bonds:
Series 1989 A, 7.50% 2015 (Prerefunded 1999) 1,820 2,057
Series 1989 A, 6.00% 2017 11,000 10,560
MBIA Insured, 5.00% 2009 5,645 5,199
Nuclear Project No. 2 Refunding Revenue Bonds:
Series 1990 A, 7.375% 2012 (Prerefunded 2000) 17,335 19,805
Series 1993 A, 5.10% 2000 4,600 4,651
Series 1994 A, 6.00% 2007 20,000 20,579
Series 1994 A, 5.25% 2008 6,800 6,452
Nuclear Project No. 3 Refunding Revenue Bonds:
BIG Insured, 7.25% 2016 (Prerefunded 1999) 5,000 5,608
Series 1989 B, 7.25% 2015 (Prerefunded 2000) 5,450 6,128
Series 1989 B, FGIC Insured, 7.00% 2005 14,400 15,782
Series 1989 B, 5.375% 2015 5,000 4,459
Series 1989 B, 7.125% 2016 5,250 5,780
WEST VIRGINIA - 0.20%
Kanawha County, West Virginia, Pollution Control
Revenue Bonds (Union Carbide Corporation Project),
Series 1984, 7.35% 2004 2,600 2,853
WISCONSIN - 1.13%
Health and Educational Facilities Authority,
Revenue Bonds, Children's Hospital Project,
Series 1993, FGIC Insured, 5.50% 2006 2,000 2,060
Housing and Economic Development Authority, Housing
Revenue Bonds, 6.40% 2003 3,480 3,712
Pollution Control and Industrial Development Revenue
Bonds (General Motors Corporation Projects), City
of Janesville, Series 1984, 5.55% 2009 3,000 2,873
City of Superior, Wisconsin, Limited Obligation
Refunding Revenue Bonds (Midwest Energy Resources
Company Project), Series E-1991 (Collateralized),
FGIC Insured, 6.90% 2021 6,000 6,809
The Wisconsin Public Power Incorporated System,
Power Supply System Revenue Bonds, Series
1990 A, AMBAC Insured, 7.40% 2020 (Prerefunded
2000) 500 572
WYOMING - 0.05%
Community Development Authority, Single Family
Mortgage Bonds, 1989 Series A, 7.90% 2017 705 753
GUAM - 0.21%
Government of Guam, General Obligation Bonds,
1995 Series A, 5.625% 2002 3,000 3,006
--------
1,356,970
--------
Principal Market
TAX-EXEMPT SECURITIES MATURING IN Amount Value
ONE YEAR OR LESS - 4.27% (000) (000)
County of Alameda, California, 1995-96 Tax and
Revenue Anticipation Notes, 4.75% 1996 $10,800 10,872
State of California, 1994 Revenue Anticipation
Warrants, Series C, FGIC Insured, 5.75% 1996 5,975 6,047
State of Georgia, General Obligation Bonds, Series
1993 F, 6.50% 1995 4,240 4,271
Municipal Electric Authority of Georgia
Power Revenue Bonds, 1986 Series A, 7.875% 2018
(Prerefunded 1996) 3,500 3,618
Harris County, Texas, Tax Anticipation Notes,
Series 1995, 4.25% 1996 1,600 1,603
City and County of Honolulu, Hawaii, General
Obligation Bonds, Refunding and Improvement Series,
1993 B, 3.60% 1995 3,000 3,000
City of Houston, Texas, Tax and Revenue Anticipation
Notes, Series 1995, 4.50% 1996 10,000 10,044
Jacksonville Electric Authority, St. John's River
Power Park System Revenue Bonds, Issue One,
Series Five, 9.50% 2020 (Prerefunded 1995) 750 765
The Turnpike Authority of Kentucky, Resource
Recovery Road Revenue Refunding Bonds, 1981
Series A 13.125% 2009 (Prerefunded 1996) 5 6
County of Los Angeles, California, 1995-96 Tax and
Revenue Anticipation Notes, Series A, 4.50% 1996 7,425 7,456
State of Michigan, Full Faith and Credit General
Obligation Notes, 5.00% 1995 8,800 8,808
North Carolina Municipal Power Agency Number 1,
Catawba Electric Revenue Bonds:
Series 1985 B, 8.50% 2017 (Prerefunded 1996) 1,560 1,616
Series 1985 A, 9.625% 2019 (Prerefunded 1996) 750 787
South Carolina Public Service Authority, Electric
Revenue Bonds, 7.875% 2021 (Prerefunded 1996) 140 145
State of Wisconsin Operating Notes of 1995, 4.50%
1996 1,785 1,793
---------
60,831
---------
TOTAL TAX-EXEMPT SECURITIES (cost: $1,350,955,000) 1,417,801
Excess of cash and receivables over payables 6,179
---------
NET ASSETS $1,423,980
=========
*Represents a when-issued security.
</TABLE>
See Notes to Financial Statements
The Tax-Exempt Bond Fund of America
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1995 (dollars in thousands)
Assets:
Tax-exempt securities (cost: $1,350,955) $1,417,801
Cash 936
Receivables for--
Sales of investments $ 6,076
Sales of fund's shares 1,462
Accrued interest 21,200 28,738
------- -------
1,447,475
Liabilities:
Payables for--
Purchases of investments 18,425
Repurchases of fund's shares 1,276
Dividends payable 2,695
Management services 446
Accrued expenses 653 23,495
------- --------
Net Assets at August 31, 1995--
Equivalent to $11.94 per share on
119,298,302 shares of $1 par value
capital stock outstanding (authorized
capital stock--200,000,000 shares) $1,423,980
========
STATEMENT OF OPERATIONS
For the year ended August 31, 1995
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $ 88,624
Expenses:
Management services fee $ 5,202
Distribution expenses 3,001
Transfer agent fee 473
Reports to shareholders 32
Registration statement and prospectus 36
Postage, stationery and supplies 37
Directors' fees 31
Auditing and legal fees 40
Custodian fee 57
Taxes other than federal income tax 6 8,915
------- ------
Net investment income 79,709
------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 8,891
Net unrealized appreciation on investments:
Beginning of year 44,575
End of year 66,846
-------
Net increase in unrealized appreciation
on investments 22,271
--------
Net realized gain and increase in
unrealized appreciation on investments 31,162
--------
Net Increase in Net Assets Resulting
from Operations $110,871
========
STATEMENT OF CHANGES IN NET ASSETS
(dollars in thousands)
Year ended August 31
1995 1994
------- --------
Operations:
Net investment income $ 79,709 $ 76,230
Net realized gain (loss) on investments 8,891 (359)
Net change in unrealized appreciation
on investments 22,271 (80,386)
-------- --------
Net increase (decrease) in net assets
resulting from operations 110,871 (4,515)
-------- --------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (79,742) (77,282)
Distributions from net realized gain on
investments - (9,069)
--------- --------
Total dividends and distributions (79,742) (86,351)
-------- --------
Capital Share Transactions:
Proceeds from shares sold:
24,743,163 and 33,079,334
shares, respectively 285,197 399,869
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
4,184,414 and 4,618,485 shares,
respectively 48,311 55,571
Cost of shares repurchased:
28,504,965 and 25,556,775
shares, respectively (325,755) (306,226)
-------- --------
Net increase in net assets
resulting from capital share
transactions 7,753 149,214
-------- --------
Total increase in Net Assets 38,882 58,348
Net Assets:
Beginning of year 1,385,098 1,326,750
-------- --------
End of year $1,423,980 $1,385,098
========= =========
</TABLE>
See Notes to Financial Statements
THE TAX-EXEMPT BOND FUND OF AMERICA
NOTES TO FINANCIAL STATEMENTS
1. The Tax-Exempt Bond Fund of America (the "fund") is registered under the
Investment Company Act of 1940 as an open-end, diversified management
investment company. The following paragraphs summarize the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
Tax-exempt securities with original or remaining maturities in excess of 60
days are valued at prices obtained from a national municipal bond pricing
service. The pricing service takes into account various factors such as
quality, yield and maturity of tax-exempt securities comparable to those held
by the fund, as well as actual bid and asked prices on a particular day. Other
securities with original or remaining maturities in excess of 60 days,
including securities for which pricing service values are not available, are
valued at the mean of their quoted bid and asked prices. However, in
circumstances where the investment advisor deems it appropriated to do so,
securities will be valued at the mean of their representative quoted bid and
asked price, or, if such prices are not available, at the mean of such prices
for securities of comparable maturity quality and type. All securities with 60
days or less to maturity are valued at amortized cost, which approximates
market value.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by the Valuation Committee of the Board
of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Interest income is reported on the accrual basis. Premiums and
original issue discounts on securities purchased are amortized over the life of
the respective securities. Dividends are declared on a daily basis after the
determination of the fund's net investment income and paid to shareholders on a
monthly basis.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
During the year ended August 31, 1995, no credit was used to offset the
custodian fee.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net investment income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of August 31, 1995, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $66,846,000, of which $73,463,000
related to appreciated securities and $6,617,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended August 31, 1995. The cost of
portfolio securities for book and federal income tax purposes was
$1,350,955,000 at August 31, 1995.
3. The fee of $5,202,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.30% of the first $60 million of average net assets;
0.21% of such assets in excess of $60 million but not exceeding $1 billion;
0.18% of such assets in excess of $1 billion but not exceeding $3 billion; and
0.16% of such assets in excess of $3 billion ("asset-based fee"); plus 3.00% on
the first $3,333,333 of the fund's monthly gross investment income; 2.50% of
such income in excess of $3,333,333 but not exceeding $8,333,333; and 2.25% of
such income in excess of $8,333,333 ("income-based fee").
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the year ended August 31, 1995,
distribution expenses under the Plan were $3,001,000. As of August 31, 1995,
accrued and unpaid distribution expenses were $653,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $473,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $670,000(after allowances to
dealers) as its portion of the sales charges paid by purchasers of the fund's
shares. Such sales charges are not an expense of the fund and, hence, are not
reflected in the accompanying statement of operations.
Directors of the fund who are unaffiliated with CRMC may elect to defer
part or all of the fees earned for services as members of the Board. Amounts
deferred are not funded and are general unsecured liabilities of the fund. As
of August 31, 1995, aggregate amounts deferred were $19,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS, and AFD. No such
persons received any remuneration directly from the fund.
4. As of August 31, 1995, accumulated net realized gain on investments was
$7,439,000 and additional paid-in capital was $1,230,429,000.
The fund made purchases and sales of investment securities of $646,108,000
and $674,159,000, respectively, during the year ended August 31, 1995.
Per-Share
Data and Ratios
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year ended August 31
1995 1994 1993 1992 1991
Net Asset Value, Beginning
of Year $11.65 $12.43 $11.78 $11.30 $10.78
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .68 .67 .68 .70 .71
Net realized and
unrealized gain
(loss) on investments .29 (.69) .73 .48 .52
---- ---- ---- ---- ----
Total income from
investment operations .97 (.02) 1.41 1.18 1.23
---- ---- ---- ---- ----
LESS DISTRIBUTIONS:
Dividends from net
investment income (.68) (.68) (.68) (.70) (.71)
Distributions from net
realized gains - (.08) (.08) - -
----- ----- ----- ----- -----
Total distributions (.68) (.76) (.76) (.70) (.71)
----- ----- ----- ----- -----
Net Asset Value, End of Year $11.94 $11.65 $12.43 $11.78 $11.30
===== ===== ===== ===== =====
Total Return* 8.70% (.14)% 12.42% 10.80% 11.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) $1,424 $1,385 $1,327 $921 $712
Ratio of expenses to average
net assets .66% .69% .71% .71% .72%
Ratio of net income to
average net assets 5.87% 5.53% 5.62% 6.04% 6.33%
Portfolio turnover rate 49.28% 22.40% 15.55% 17.22% 24.73%
</TABLE>
*This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
The Tax-Exempt Bond Fund of America, Inc.:
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations
and of changes in net assets and the per-share data and ratios present fairly,
in all material respects, the financial position of The Tax-Exempt Bond Fund of
America, Inc. (the "Fund") at August 31, 1995, the results of its operations
for the year then ended, the changes in its net assets and the per-share data
and ratios for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and per-share data and
ratios (hereafter referred to as "financial statements") are the responsibility
of the Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
Los Angeles, California
September 29, 1995
TAX INFORMATION (UNAUDITED)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year.
Shareholders may exclude from federal taxable income any exempt-interest
dividends paid from net investment income. All of the dividends paid from net
investment income qualify as exempt-interest dividends. Any distributions paid
from realized net short-term or long-term capital gains are not exempt from
federal taxation.
Since the above is reported for the fund's fiscal year and not the calendar
year, shareholders should refer to the year-end information which will be
mailed in January 1996 to determine the calendar year status of the fund's
distributions for purposes of their 1995 tax returns. Shareholders should
consult their tax advisers.
PART C
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
Investment Portfolio Notes to Financial Statements
Statement of Assets and Liabilities Selected Per-Share Data and Ratios
Statement of Operations Report of Independent Accountants
Statement of Changes in Net Assets
(B) EXHIBITS:
1. On file (see SEC file nos. 811-3624 and 2-49291).
2. On file (see SEC file nos. 811-3624 and 2-49291).
3. None.
4. On file (see SEC file nos. 811-3624 and 2-49291).
5. On file (see SEC file nos. 811-3624 and 2-49291).
6. On file (see SEC file No. 811-3624 and 2-49291).
7. None
8. On file (see SEC file nos. 811-3624 and 2-49291).
9. Form of Shareholder Services Agreement between Registrant and American
Funds Service Company, as amended 1/1/95.
10. Not applicable to this filing.
11. Consent of independent accountants
12. None.
13. On file (see SEC file nos. 811-3624 and 2-49291).
14. On file (see SEC file nos. 811-3624 and 2-49291).
15. On file (see SEC file nos. 811-3624 and 2-49291).
16. Updates to previously filed schedule for computation of each performance
quotation provided in the Registration Statement in response to Item 22 (see
SEC file nos. 811-3624 and 2-49291).
17. Financial data schedule.
C-1
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of August 31, 1995.
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
<S> <C>
Capital Stock 40,042
($1.00 par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under an Investment Advisor/Mutual fund
Errors and Omissions Policy written by American International Surplus Lines
Insurance Company, Chubb Custom Insurance Company, and ICI Mutual Insurance
Company which insures its officers and trustees [directors] against certain
liabilities. However, in no event will Registrant maintain insurance to
indemnify any such person for any act for which the Registrant itself is not
permitted to indemnify the individual.
Subsection (b) of Section 2-418 of the General Corporation Law of Maryland
empowers a corporation to indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against reasonable expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding unless it is established that:
(i) the act or omission of the person was material to the matter giving rise to
the proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the person actually received an improper personal
benefit of money, property or services; or (iii) with respect to any criminal
action or proceeding, the person had reasonable cause to believe his act or
omission was unlawful.
Indemnification under subsection (b) of Section 2-418 may not be made by a
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification is permissible in the circumstances because
the party to be indemnified has met the standard of conduct set forth in
subsection (b). This determination shall be made (i) by the Board of Directors
by a majority vote of a quorum consisting of directors not, at the time,
parties to the proceeding, or, if such quorum cannot be obtained, then by a
majority vote of a committee of the Board consisting solely of two or more
directors not, at the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the full Board in which
the designated directors who are parties may participate;
(ii) by special legal counsel selected by the Board of Directors of a committee
of the Board by vote as set forth in subparagraph (i), or, if the requisite
quorum of the full Board cannot be obtained therefor and the committee cannot
be established, by a majority vote of the full Board in which any director who
is a party may participate; or (iii) by the stockholders (except that shares
held by any party to the specific proceeding may not be voted). A court of
appropriate jurisdiction may also order indemnification if the court determines
that a person seeking indemnification is entitled to reimbursement under
subsection (b).
ITEM 27. INDEMNIFICATION (CONT.)
Section 2-418 further provides that indemnification provided for by
Section 2-418 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; that the scope of indemnification extends to
directors, officers, employees or agents of a constituent corporation absorbed
in a consolidation, or merger and persons serving in that capacity at the
request of the constituent corporation for another; and empowers the
corporation to purchase and maintain insurance on behalf of a director,
officer, employee or agent of the corporation against any liability asserted
against or incurred by such person in any such capacity or arising out of such
person's status as such whether or not the corporation would have the power to
indemnify such person against such liabilities under Section 2-418.
Article VI of the Articles of Incorporation of the Fund provides that
"Nothing in these Articles of Incorporation or in the By-Laws shall be deemed
to protect any director or officer of the Corporation against any liability to
the Corporation or to its security holders to which he would otherwise be
subject by reason of willful malfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office."
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
(A) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income Fund, Inc., The Cash Management Trust of America, 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., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money
Fund of America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
# David A. Abzug Assistant Vice President None
John A. Agar Regional Vice President None
1501 N. University Drive
Little Rock, AR 72202
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
& Richard Armstrong Assistant Vice President None
* William W. Bagnard Vice President None
Steven L. Barnes Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Regional Vice President None
1190 Rockmart Circle
Kennesaw, GA 30144
Joseph T. Blair Vice President None
27 Drumlin Road
West Simsbury, CT 06092
Ian B. Bodell Regional Vice President None
3100 West End Avenue,
Suite 870
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
* Daniel C. Brown Director, Senior Vice President None
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Vice President None
999 Green Oaks Drive
Littleton, CO 80121
Christopher J. Cassin Regional Vice President None
231 Burlington
Clarendon Hills, IL 60514
Denise M. Cassin Regional Vice President None
1425 Vallejo, #203
San Francisco, CA 94109
* Larry P. Clemmensen Treasurer and Director None
* Kevin G. Clifford Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th Street, 12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
3521 Rittenhouse Street6, N.W.
Washington, D.C. 20015
* Carl D. Cutting Vice President None
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
3622 E. 87th Street
Tulsa, OK 74137
Kirk D. Dodge Regional Vice President None
2617 Salisbury Road
Ann Arbor, MI 48103
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
* Michael J. Downer Secretary Vice President
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
+ Lloyd G. Edwards Vice President None
@ Richard A. Eychner Vice President None
* Paul H. Fieberg Senior Vice President None
John Fodor Regional Vice President None
5 Marlborough Street, Suite 51
Boston, MA 02116
* Mark P. Freeman, Jr. Director, President None
Clyde E. Gardner Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
# Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
* Paul G. Haaga, Jr. Director Chairman of the Board
David E. Harper Vice President None
R.D. 1, Box 210, Rte. 519
Frenchtown, NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
* Robert L. Johansen Vice President, Controller None
* Victor J. Kriss, Jr. Senior Vice President None
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
12585-E East Tennessee Circle
Aurora, CO 80012
* Heather A. Maier Assistant Vice President - None
Institutional Investment
Services Division
Steve A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5241 South Race Street
Littleton, CO 80121
* John C. Massar Vice President None
* E. Lee McClennahan Vice President None
Laurie B. McCurdy Regional Vice President None
6008 E. Anderson Drive
Scottsdale, AZ 85255
& John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
* R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Regional Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
* Barbara G. Nicholich Assistant Vice President - None
Institutional Investment
Services Division
William E. Noe Regional Vice President None
12535 Barkley
Overland Park, KS 66209
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
# Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, S.E.
Mercer Island, WA 98040
* John O. Post, Jr. Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
* George L. Romine, Jr. Vice President - Institutional None
Investment Services Division
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
* Julie D. Roth Vice President None
Douglas F. Rowe Regional Vice President None
104 River Road
Georgetown, TX 78628
* Christopher Rowey Regional Vice President None
Dean B. Rydquist Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe, Ave., No. 4
Marina del Rey, CA 90292
Joe D. Scarpitti Regional Vice President None
25760 Kensington Drive
Westlake, OH 44145
* R. Michael Shanahan Chairman of the Board None
David W. Short Vice President None
1000 RIDC Plaza, Suite 212
Pittsburgh, PA 15238
* Victor S. Sidhu Vice President - Institutional None
Investment Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Assistant Vice President - None
Institutional Investment
Services Division
* Mary E. Smith Assistant Vice President - None
Institutional Investment
Services Division
Rodney G. Smith Regional Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue,
Suite 406
San Mateo, CA 94402
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
& James P. Toomey Assistant Vice President None
& Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
@ Andrew Ward Vice President None
* David M. Ward Assistant Vice President - None
Institutional Investment
Services Division
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd.,
#1012
Sarasota, FL 34242
# J. Kelly Webb Senior Vice President None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Canonsburg, PA 15317
# Timothy W. Weiss Director None
** N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
* Marshall D. Wingo Senior Vice President None
* Robert L. Winston Director, Senior Vice President None
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
</TABLE>
* Business Address, 333 South Hope Street, Los Angeles, CA 90071
** Business Address, Four Embarcadero Center, Suite 1800, San Francisco, CA
94111
# Business Address, 135 South State College Blvd., Brea, CA 92621
& Business Address, 8000 IH-10 West, Suite 1400, San Antonio, TX 78230
@ Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
+ Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
% Business Address, 3000 K. Street, Suite 230, Washington, D.C.
20007-5124
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended, are maintained and kept in the
offices of the Fund and its investment adviser, Capital Research and Management
Company, 333 South Hope Street, Los Angeles, CA 90071. Certain accounting
records are maintained and kept in the offices of the Fund's accounting
department, 135 South State College Blvd., Brea, CA 92621.
Records covering shareholder accounts are maintained and kept by the
transfer agent, American Funds Service Company, 135 South State College Blvd.,
Brea, CA 92621, 8000 IH-10 West, Suite 1400, San Antonio, TX 78230, 5300 Robin
Hood Road, Norfolk, VA 23514 and 8332 Woodfield Crossing Blvd., Indianapolis,
IN 46240.
Records covering portfolio transactions are also maintained and kept by
the custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza, New York,
NY 10081.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
(c) As reflected in the prospectus, Registrant undertakes to provide each
person to whom a prospectus is delivered with a copy of the fund's latest
annual report to shareholders, upon request and without charge.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California, on the
25th day of October, 1995.
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
By /s/ Paul G. Haaga, Jr.
(Paul G. Haaga, Jr., Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment
to registration statement has been signed below on October 25, 1995, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE
(1) Principal Executive Officer:
/s/ Abner D. Goldstine President and Director
(Abner D. Goldstine)
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ Mary C. Cremin Treasurer
(Mary C. Cremin)
(3) Directors:
H. Frederick Christie* Director
Martin Fenton, Jr.* Director
/s/ Abner D. Goldstine President and Director
(Abner D. Goldstine)
/s/ Paul G. Haaga, Jr. Chairman of the Board
(Paul G. Haaga, Jr.)
Diane C. Creel/1/ Director
Leonard R. Fuller/1/ Director
Herbert Hoover III* Director
Richard G. Newman* Director
Peter C. Valli* Director
</TABLE>
*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact
/1/ Powers of Attorney are attached hereto.
Counsel represents that this amendment does not contain disclosures that
would make the amendment ineligible for effectivenss under the provisions of
Rule 485(b).
/s/ Michael J. Downer
Michael J. Downer
C-13
POWER OF ATTORNEY
I, Diane C. Creel, the undersigned Director of The Tax-Exempt Bond Fund of
America, Inc., a Maryland corporation, revoking all prior powers of attorney
given as a Director of The Tax-Exempt Bond Fund of America, Inc. do hereby
constitute and appoint Mary C. Cremin, Michael J. Downer, Paul G. Haaga, Jr.,
Kimberly S. Verdick and Julie F. Williams, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as
Director of said Corporation to any and all Registration Statements of The
Tax-Exempt Bond Fund of America, Inc., File No. 2-49291, under the Securities
Act of 1933 as amended and 811-3624, under the Investment Company Act of 1940,
as amended, and any and all amendments thereto, said Registration Statements
and amendments to be filed with the Securities and Exchange Commission, and to
any and all reports, applications or renewal of applications required by any
State in the United States of America in which this Corporation is registered
to sell shares, and (2) to deliver any and all such Registration Statements and
amendments, so signed, for filing with the Securities and Exchange Commission
under the provisions of the Securities Act of 1933 as amended and/or the
Investment Company Act of 1940, as amended, granting to said attorneys-in-fact,
and each of them, full power and authority to do and perform every act and
thing whatsoever requisite and necessary to be done in and about the premises
as fully to all intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and approving the acts of said
attorneys-in-fact.
EXECUTED at Los Angeles, California, this 12th day of December, 1994.
/s/ Diane C. Creel
Diane C. Creel, Director
POWER OF ATTORNEY
I, Leonard R. Fuller, the undersigned Director of The Tax-Exempt Bond Fund
of America, Inc., a Maryland corporation, revoking all prior powers of attorney
given as a Director of The Tax-Exempt Bond Fund of America, Inc. do hereby
constitute and appoint Mary C. Cremin, Michael J. Downer, Paul G. Haaga, Jr.,
Kimberly S. Verdick and Julie F. Williams, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as
Director of said Corporation to any and all Registration Statements of The
Tax-Exempt Bond Fund of America, Inc., File No. 2-49291, under the Securities
Act of 1933 as amended and File No. 811-3624 under the Investment Company Act
of 1940, as amended, and any and all amendments thereto, said Registration
Statements and amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Corporation
is registered to sell shares, and (2) to deliver any and all such Registration
Statements and amendments, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended and/or the Investment Company Act of 1940, as amended, granting to said
attorneys-in-fact, and each of them, full power and authority to do and perform
every act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as the undersigned might or
could do if personally present, hereby ratifying and approving the acts of said
attorneys-in-fact.
EXECUTED at Los Angeles, California, this 12th day of December, 1994.
/s/ Leonard R. Fuller
Leonard R. Fuller, Director
SHAREHOLDER SERVICES AGREEMENT
1. The parties to this Agreement, which is effective as of January 1, 1995, are
THE TAX-EXEMPT BOND FUND OF AMERICA, INC. (hereinafter called "the Fund") and
American Funds Service Company, a California corporation (hereinafter called
"AFS"). AFS is a wholly owned subsidiary of Capital Research and Management
Company (hereinafter called "CRMC"). This Agreement will continue in effect
until amended or terminated in accordance with its terms.
2. The Fund hereby employs AFS, and AFS hereby accepts such employment by the
Fund, as its transfer agent. In such capacity AFS will provide the services of
stock transfer agent, dividend disbursing agent, redemption agent, and such
additional related services as the Fund may from time to time require, all of
which services are sometimes referred to herein as "shareholder services."
3. AFS has entered into substantially identical agreements with other
investment companies for which CRMC serves as investment adviser. (For the
purposes of this Agreement, such investment companies, including the Fund, are
called "participating investment companies.")
4. AFS has entered into an agreement with DST Systems, Inc. (hereinafter called
"DST"), to provide AFS with electronic data processing services sufficient for
the performance of the shareholder services referred to in paragraph 2.
5. The Fund, together with the other participating companies, will maintain a
Review and Advisory Committee, which Committee will review and may make
recommendations to the boards of the participating investment companies
regarding all fees and charges provided for in this Agreement, as well as
review the level and quality of the shareholder services rendered to the
participating investment companies and their shareholders. Each participating
investment company may select one director or trustee who is not affiliated
with CRMC, or any of its affiliated companies, or with Washington Management
Corporation or any of its affiliated companies, to serve on the Review and
Advisory Committee.
6. AFS will provide to the participating investment companies the shareholder
services referred to herein in return for the following fees:
ANNUAL ACCOUNT MAINTENANCE FEE (PAID MONTHLY):
$.67 per month for each open account on AFS books or in Level 2 or 4
Networking ($8.04 per year)
$.09 per month for each open account maintained in Street Name or Level
1 or 3 Networking ($1.08 per year)
No annual fee will be charged for a participant account underlying a 401(k)
or other defined contribution plan where the plan maintains a single account
on AFS books and responds to all participant inquiries
EXHIBIT 9
TRANSACTION FEES:
$2.00 per non-automated transaction
$0.50 per automated transaction
For this purpose, "transactions" shall include all types of transactions
included in an "activity index" as reported to the Review and Advisory
Committee at least annually. AFS will bill the Fund monthly, on or shortly
after the first of each calendar month, and the Fund will pay to AFS within
five business days of such billing.
Any revision of the schedule of charges set forth herein shall require the
affirmative vote of a majority of the members of the board of
directors/trustees of the Fund.
7. All fund-specific charges from third parties -- including DST charges,
payments described in the next sentence, postage, NSCC transaction charges and
similar out-of-pocket expenses -- will be passed through directly to the Fund
or other participating investment companies, as applicable. AFS, subject to
approval of its board of directors, is authorized in its discretion to
negotiate payments to third parties for account maintenance and/or transaction
processing services provided such payments do not exceed the anticipated
savings to the Fund, either in fees payable to AFS hereunder or in other direct
Fund expenses, that AFS reasonably anticipates would be realized by the Fund
from using the services of such third party rather than maintaining the
accounts directly on AFS' books and/or processing non-automated transactions.
8. It is understood that AFS may have income in excess of its expenses and may
accumulate capital and surplus. AFS is not, however, permitted to distribute
any net income or accumulated surplus to its parent, CRMC, in the form of a
dividend without the affirmative vote of a majority of the members of the
boards of directors/trustees of the Fund and all participating investment
companies.
9. This Agreement may be amended at any time by mutual agreement of the
parties, with agreement of the Fund to be evidenced by affirmative vote of a
majority of the members of the board of directors/trustees of the Fund.
10. This Agreement may be terminated on 180 days' written notice by either
party. In the event of a termination of this Agreement, AFS and the Fund will
each extend full cooperation in effecting a conversion to whatever successor
shareholder service provider(s) the Fund may select, it being understood that
all records relating to the Fund and its shareholders are property of the Fund.
11. In the event of a termination of this Agreement by the Fund, the Fund will
pay to AFS as a termination fee the Fund's proportionate share of any costs of
conversion of the Fund's shareholder service from AFS to a successor. In the
event of termination of this Agreement and all corresponding agreements with
all the participating investment companies, all assets of AFS will be sold or
otherwise converted to cash, with a view to the liquidation of AFS when it
ceases to provide shareholder services for the participating investment
companies. To the extent any such assets are sold by AFS to CRMC and/or any of
its affiliates, such sales shall be at fair market value at the time of sale as
agreed upon by AFS, the purchasing company or companies, and the Review and
Advisory Committee. After all assets of AFS have been converted to cash and
all liabilities of AFS have been paid or discharged, an amount equal to any
capital or paid-in surplus of AFS that shall have been contributed by CRMC or
its affiliates shall be set aside in cash for distribution to CRMC upon
liquidation of AFS. Any other capital or surplus and any assets of AFS
remaining after the foregoing provisions for liabilities and return of capital
or paid-in surplus to CRMC shall be distributed to the participating investment
companies in such proportions as may be determined by the Review and Advisory
Committee.
12. In the event of disagreement between the Fund and AFS, or between the Fund
and other participating investment companies as to any matter arising under
this Agreement, which the parties to the disagreement are unable to resolve,
the question shall be referred to the Review and Advisory Committee for
resolution. If the Review and Advisory Committee is unable to resolve the
question to the satisfaction of both parties, either party may elect to submit
the question to arbitration; one arbitrator to be named by each party to the
disagreement and a third arbitrator to be selected by the two arbitrators named
by the original parties. The decision of a majority of the arbitrators shall
be final and binding on all parties to the arbitration. The expenses of such
arbitration shall be paid by the party electing to submit the question to
arbitration.
13. The obligations of the Fund under this Agreement are not binding upon any
of the directors, trustees, officers, employees, agents or shareholders of the
Fund individually, but bind only the Fund itself. AFS agrees to look solely to
the assets of the Fund for the satisfaction of any liability of the Fund in
respect to this Agreement and will not seek recourse against such directors,
trustees, officers, employees, agents or shareholders, or any of them or their
personal assets for such satisfaction.
AMERICAN FUNDS SERVICE COMPANY The Tax-Exempt Bond Fund of America, Inc.
By /s/ Don R. Conlan By /s/ Paul G. Haaga, Jr.
Don R. Conlan, Chairman Paul G. Haaga, Jr., Chairman
By /s/ Kenneth R. Gorvetzian By /s/ Julie F. Williams
Kenneth R. Gorvetzian, Secretary Julie F. Williams, Secretary
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 21 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated September 29, 1995, relating to the financial
statements and selected per share data and ratios appearing in the August 31,
1995 Annual Report of The Tax-Exempt Bond Fund of America, Inc., which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Financial Highlights" in the Prospectus
and under the headings "Independent Accountants" and "Reports to Shareholders"
in the Statement of Additional Information.
PRICE WATERHOUSE LLP
Los Angeles, California
October 27, 1995
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
10/01/94 1000 12.01 4.75 % 83.264 11.44 953
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/30/95 1000 58 58 1058 0 996 0 996 59 1055.69 88.268
TOTAL $0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
10/01/90 1000 11.25 4.75 % 88.889 10.72 953
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/30/91 1000 64 64 1064 0 1012 0 1012 65 1077.37 94.672
09/30/92 1000 68 132 1132 0 1044 0 1044 137 1181.78 100.577
09/30/93 1000 70 202 1202 8 1112 9 1121 218 1339.68 107.089
09/30/94 1000 75 277 1277 10 1017 17 1034 272 1306.16 114.175
09/30/95 1000 80 357 1357 0 1063 18 1081 366 1447.58 121.035
TOTAL $18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
10/01/85 1000 10.28 4.75 % 97.276 9.79 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/30/86 1000 81 81 1081 3 1099 3 1102 85 1187.08 105.051
09/30/87 1000 83 164 1164 10 1001 11 1012 154 1166.35 113.348
09/30/88 1000 87 251 1251 7 1054 19 1073 249 1322.94 122.155
09/30/89 1000 94 345 1345 0 1059 20 1079 345 1424.09 130.77
09/30/90 1000 99 444 1444 0 1043 19 1062 436 1498.68 139.802
09/30/91 1000 101 545 1545 0 1107 20 1127 567 1694.45 148.897
09/30/92 1000 107 652 1652 0 1143 21 1164 694 1858.66 158.184
09/30/93 1000 110 762 1762 13 1217 36 1253 854 2107.01 168.426
09/30/94 1000 118 880 1880 15 1113 47 1160 894 2054.27 179.569
09/30/95 1000 125 1005 2005 0 1163 49 1212 1064 2276.71 190.36
TOTAL $48
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
10/03/79 1000 10.5 4.75 % 95.238 10 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/30/80 1000 61 61 1061 0 860 0 860 57 917.44 101.599
09/30/81 1000 79 140 1140 0 730 0 730 121 851.19 110.977
09/30/82 1000 94 234 1234 0 855 0 855 247 1102.12 122.731
09/30/83 1000 98 332 1332 0 917 0 917 363 1280.52 132.972
09/30/84 1000 103 435 1435 0 873 0 873 447 1320.08 143.956
09/30/85 1000 120 555 1555 0 932 0 932 598 1530.01 156.283
09/30/86 1000 131 686 1686 5 1076 5 1081 826 1907.17 168.776
09/30/87 1000 133 819 1819 15 980 18 998 875 1873.89 182.108
09/30/88 1000 139 958 1958 12 1031 31 1062 1063 2125.45 196.256
09/30/89 1000 151 1109 2109 0 1037 31 1068 1219 2287.95 210.096
09/30/90 1000 159 1268 2268 0 1021 31 1052 1355 2407.81 224.609
09/30/91 1000 163 1431 2431 0 1084 33 1117 1605 2722.37 239.224
09/30/92 1000 172 1603 2603 0 1119 34 1153 1833 2986.23 254.147
09/30/93 1000 177 1780 2780 21 1191 58 1249 2136 3385.22 270.601
09/30/94 1000 189 1969 2969 25 1090 76 1166 2134 3300.44 288.5
09/30/95 1000 201 2170 3170 0 1139 79 1218 2439 3657.79 305.835
TOTAL $78
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/94 1000 12.23 4.75 % 81.766 11.65 953
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/95 1000 57 57 1057 0 976 0 976 59 1035.5 86.725
TOTAL $0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/90 1000 11.32 4.75 % 88.339 10.78 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/91 1000 64 64 1064 0 998 0 998 65 1063.73 94.135
08/31/92 1000 68 132 1132 0 1041 0 1041 137 1178.61 100.052
08/31/93 1000 70 202 1202 8 1098 9 1107 218 1325 106.597
08/31/94 1000 74 276 1276 10 1029 17 1046 277 1323.13 113.573
08/31/95 1000 80 356 1356 0 1055 18 1073 365 1438.29 120.46
TOTAL $18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/85 1000 10.52 4.75 % 95.057 10.02 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/86 1000 79 79 1079 3 1094 3 1097 85 1182.51 102.738
08/31/87 1000 82 161 1161 9 1025 12 1037 158 1195.01 110.854
08/31/88 1000 85 246 1246 7 1014 19 1033 242 1275.31 119.523
08/31/89 1000 92 338 1338 0 1045 19 1064 341 1405.93 127.928
08/31/90 1000 96 434 1434 0 1025 19 1044 429 1473.98 136.733
08/31/91 1000 99 533 1533 0 1074 20 1094 552 1646.5 145.708
08/31/92 1000 105 638 1638 0 1120 21 1141 683 1824.37 154.87
08/31/93 1000 109 747 1747 13 1182 35 1217 833 2050.94 164.999
08/31/94 1000 115 862 1862 15 1107 47 1154 894 2048.04 175.797
08/31/95 1000 123 985 1985 0 1135 48 1183 1043 2226.28 186.456
TOTAL $47
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
01/01/80 10000 10.38 4.75 % 963.391 9.89 9528
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/80 10000 429 429 10429 0 8921 0 8921 413 9334.24 1008.017
08/31/81 10000 778 1207 11207 0 7447 0 7447 1048 8495.32 1099.006
08/31/82 10000 931 2138 12138 0 8459 0 8459 2221 10680 1216.401
08/31/83 10000 977 3115 13115 0 9075 0 9075 3351 12426.18 1319.127
08/31/84 10000 1024 4139 14139 0 8998 0 8998 4343 13341.1 1428.383
08/31/85 10000 1180 5319 15319 0 9653 0 9653 5878 15531.9 1550.09
08/31/86 10000 1295 6614 16614 49 11089 53 11142 8141 19283.43 1675.363
08/31/87 10000 1333 7947 17947 153 10385 192 10577 8910 19487.04 1807.703
08/31/88 10000 1388 9335 19335 116 10279 307 10586 10210 20796.86 1949.097
08/31/89 10000 1496 10831 20831 0 10588 316 10904 12022 22926.94 2086.164
08/31/90 10000 1570 12401 22401 0 10385 310 10695 13341 24036.63 2229.743
08/31/91 10000 1619 14020 24020 0 10886 325 11211 15638 26849.44 2376.057
08/31/92 10000 1720 15740 25740 0 11349 339 11688 18061 29749.4 2525.416
08/31/93 10000 1771 17511 27511 207 11975 577 12552 20892 33444.18 2690.602
08/31/94 10000 1872 19383 29383 246 11224 772 11996 21400 33396.82 2866.68
08/31/95 10000 2008 21391 31391 0 11503 791 12294 24009 36303.55 3040.498
TOTAL $771
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
10/03/79 10000 10.5 4.75 % 952.381 10 9524
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/80 10000 553 553 10553 0 8819 0 8819 528 9347.79 1009.481
08/31/81 10000 779 1332 11332 0 7362 0 7362 1145 8507.64 1100.6
08/31/82 10000 932 2264 12264 0 8362 0 8362 2333 10695.48 1218.164
08/31/83 10000 978 3242 13242 0 8971 0 8971 3473 12444.25 1321.046
08/31/84 10000 1026 4268 14268 0 8895 0 8895 4465 13360.52 1430.463
08/31/85 10000 1182 5450 15450 0 9543 0 9543 6011 15554.53 1552.348
08/31/86 10000 1297 6747 16747 49 10962 53 11015 8296 19311.55 1677.806
08/31/87 10000 1335 8082 18082 153 10267 192 10459 9056 19515.47 1810.34
08/31/88 10000 1390 9472 19472 116 10162 307 10469 10358 20827.21 1951.941
08/31/89 10000 1499 10971 20971 0 10467 317 10784 12176 22960.4 2089.208
08/31/90 10000 1573 12544 22544 0 10267 311 10578 13493 24071.69 2232.995
08/31/91 10000 1621 14165 24165 0 10762 326 11088 15800 26888.61 2379.523
08/31/92 10000 1722 15887 25887 0 11219 339 11558 18234 29792.75 2529.096
08/31/93 10000 1773 17660 27660 207 11838 577 12415 21077 33492.92 2694.523
08/31/94 10000 1874 19534 29534 246 11095 773 11868 21577 33445.5 2870.858
08/31/95 10000 2011 21545 31545 0 11371 792 12163 24193 36356.46 3044.93
TOTAL $771
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/80 10000 9.72 4.75 %1028.807 9.26 9527
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/81 10000 794 794 10794 0 7953 0 7953 717 8670.5 1121.669
08/31/82 10000 950 1744 11744 0 9033 0 9033 1867 10900.24 1241.485
08/31/83 10000 997 2741 12741 0 9691 0 9691 2991 12682.45 1346.332
08/31/84 10000 1045 3786 13786 0 9609 0 9609 4007 13616.26 1457.844
08/31/85 10000 1204 4990 14990 0 10309 0 10309 5543 15852.24 1582.06
08/31/86 10000 1322 6312 16312 50 11842 54 11896 7785 19681.14 1709.917
08/31/87 10000 1361 7673 17673 156 11091 196 11287 8601 19888.96 1844.987
08/31/88 10000 1416 9089 19089 119 10977 313 11290 9935 21225.79 1989.296
08/31/89 10000 1527 10616 20616 0 11307 323 11630 11769 23399.81 2129.191
08/31/90 10000 1603 12219 22219 0 11091 316 11407 13125 24532.39 2275.732
08/31/91 10000 1652 13871 23871 0 11626 332 11958 15445 27403.21 2425.063
08/31/92 10000 1755 15626 25626 0 12119 346 12465 17898 30363 2577.504
08/31/93 10000 1807 17433 27433 211 12788 588 13376 20757 34133.97 2746.096
08/31/94 10000 1910 19343 29343 251 11986 788 12774 21311 34085.67 2925.809
08/31/95 10000 2049 21392 31392 0 12284 807 13091 23961 37052.34 3103.211
TOTAL $787
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/81 10000 8.12 4.75 %1231.527 7.73 9520
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/82 10000 1043 1043 11043 0 10813 0 10813 1154 11967.77 1363.072
08/31/83 10000 1094 2137 12137 0 11601 0 11601 2323 13924.55 1478.19
08/31/84 10000 1148 3285 13285 0 11502 0 11502 3447 14949.8 1600.621
08/31/85 10000 1322 4607 14607 0 12340 0 12340 5064 17404.76 1737.002
08/31/86 10000 1451 6058 16058 55 14175 59 14234 7374 21608.64 1877.38
08/31/87 10000 1494 7552 17552 171 13276 215 13491 8345 21836.82 2025.679
08/31/88 10000 1555 9107 19107 130 13140 344 13484 9820 23304.57 2184.121
08/31/89 10000 1677 10784 20784 0 13534 354 13888 11803 25691.48 2337.714
08/31/90 10000 1760 12544 22544 0 13276 347 13623 13311 26934.94 2498.603
08/31/91 10000 1814 14358 24358 0 13916 364 14280 15806 30086.92 2662.559
08/31/92 10000 1927 16285 26285 0 14507 380 14887 18449 33336.56 2829.929
08/31/93 10000 1984 18269 28269 232 15308 646 15954 21522 37476.84 3015.031
08/31/94 10000 2097 20366 30366 275 14347 865 15212 22211 37423.78 3212.342
08/31/95 10000 2250 22616 32616 0 14704 886 15590 25091 40681.01 3407.12
TOTAL $863
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/82 10000 9.22 4.75 %1084.599 8.78 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/83 10000 871 871 10871 0 10217 0 10217 862 11079.79 1176.198
08/31/84 10000 913 1784 11784 0 10130 0 10130 1765 11895.59 1273.618
08/31/85 10000 1052 2836 12836 0 10868 0 10868 2981 13849.01 1382.137
08/31/86 10000 1155 3991 13991 44 12484 47 12531 4663 17194.08 1493.838
08/31/87 10000 1189 5180 15180 136 11692 171 11863 5512 17375.62 1611.839
08/31/88 10000 1237 6417 16417 104 11573 274 11847 6696 18543.52 1737.912
08/31/89 10000 1334 7751 17751 0 11920 282 12202 8240 20442.8 1860.127
08/31/90 10000 1400 9151 19151 0 11692 276 11968 9464 21432.24 1988.148
08/31/91 10000 1443 10594 20594 0 12256 290 12546 11394 23940.29 2118.61
08/31/92 10000 1534 12128 22128 0 12777 302 13079 13447 26526.03 2251.785
08/31/93 10000 1579 13707 23707 185 13482 514 13996 15824 29820.48 2399.073
08/31/94 10000 1669 15376 25376 219 12636 688 13324 16454 29778.27 2556.075
08/31/95 10000 1790 17166 27166 0 12950 705 13655 18715 32370.06 2711.06
TOTAL $688
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/83 10000 9.89 4.75 %1011.122 9.42 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/84 10000 785 785 10785 0 9444 0 9444 782 10226.05 1094.866
08/31/85 10000 905 1690 11690 0 10131 0 10131 1774 11905.35 1188.159
08/31/86 10000 993 2683 12683 38 11638 41 11679 3101 14780.92 1284.181
08/31/87 10000 1022 3705 13705 117 10900 147 11047 3889 14936.98 1385.62
08/31/88 10000 1064 4769 14769 89 10789 235 11024 4916 15940.96 1493.998
08/31/89 10000 1147 5916 15916 0 11112 242 11354 6219 17573.7 1599.063
08/31/90 10000 1204 7120 17120 0 10900 238 11138 7286 18424.28 1709.117
08/31/91 10000 1241 8361 18361 0 11426 249 11675 8905 20580.31 1821.266
08/31/92 10000 1318 9679 19679 0 11911 260 12171 10632 22803.14 1935.75
08/31/93 10000 1357 11036 21036 159 12568 442 13010 12625 25635.22 2062.367
08/31/94 10000 1435 12471 22471 188 11780 592 12372 13226 25598.93 2197.333
08/31/95 10000 1539 14010 24010 0 12073 606 12679 15147 27826.97 2330.567
TOTAL $591
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/84 10000 9.81 4.75 %1019.368 9.34 9521
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/85 10000 842 842 10842 0 10214 0 10214 870 11084.36 1106.224
08/31/86 10000 924 1766 11766 35 11733 38 11771 1990 13761.69 1195.629
08/31/87 10000 951 2717 12717 109 10989 137 11126 2781 13907.01 1290.075
08/31/88 10000 990 3707 13707 83 10877 219 11096 3745 14841.75 1390.979
08/31/89 10000 1068 4775 14775 0 11203 226 11429 4932 16361.85 1488.794
08/31/90 10000 1121 5896 15896 0 10989 221 11210 5943 17153.77 1591.259
08/31/91 10000 1155 7051 17051 0 11519 232 11751 7410 19161.13 1695.675
08/31/92 10000 1227 8278 18278 0 12008 242 12250 8980 21230.69 1802.266
08/31/93 10000 1264 9542 19542 148 12671 412 13083 10784 23867.45 1920.149
08/31/94 10000 1336 10878 20878 175 11876 551 12427 11406 23833.67 2045.809
08/31/95 10000 1433 12311 22311 0 12171 564 12735 13173 25908.09 2169.857
TOTAL $550
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/85 10000 10.52 4.75 % 950.57 10.02 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/86 10000 794 794 10794 30 10941 33 10974 851 11825.32 1027.395
08/31/87 10000 817 1611 11611 94 10247 118 10365 1585 11950.18 1108.551
08/31/88 10000 851 2462 12462 71 10143 188 10331 2422 12753.42 1195.26
08/31/89 10000 918 3380 13380 0 10447 194 10641 3418 14059.66 1279.314
08/31/90 10000 963 4343 14343 0 10247 190 10437 4303 14740.14 1367.36
08/31/91 10000 993 5336 15336 0 10741 199 10940 5525 16465.08 1457.087
08/31/92 10000 1055 6391 16391 0 11198 208 11406 6837 18243.42 1548.677
08/31/93 10000 1086 7477 17477 127 11816 354 12170 8339 20509.16 1649.973
08/31/94 10000 1148 8625 18625 151 11074 473 11547 8933 20480.11 1757.949
08/31/95 10000 1231 9856 19856 0 11350 485 11835 10427 22262.62 1864.541
TOTAL $473
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/86 10000 12.08 4.75 % 827.815 11.51 9528
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/87 10000 659 659 10659 75 8924 70 8994 634 9628.76 893.206
08/31/88 10000 686 1345 11345 57 8833 127 8960 1315 10275.92 963.067
08/31/89 10000 739 2084 12084 0 9098 131 9229 2099 11328.4 1030.792
08/31/90 10000 776 2860 12860 0 8924 129 9053 2823 11876.74 1101.738
08/31/91 10000 800 3660 13660 0 9354 135 9489 3777 13266.57 1174.033
08/31/92 10000 850 4510 14510 0 9752 141 9893 4806 14699.46 1247.832
08/31/93 10000 875 5385 15385 102 10290 257 10547 5978 16525.08 1329.451
08/31/94 10000 925 6310 16310 121 9644 355 9999 6502 16501.69 1416.454
08/31/95 10000 992 7302 17302 0 9884 364 10248 7689 17937.93 1502.339
TOTAL $355
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/87 10000 11.32 4.75 % 883.392 10.78 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/88 10000 678 678 10678 57 9426 57 9483 680 10163.04 952.487
08/31/89 10000 731 1409 11409 0 9708 59 9767 1436 11203.94 1019.467
08/31/90 10000 767 2176 12176 0 9523 58 9581 2165 11746.22 1089.631
08/31/91 10000 791 2967 12967 0 9982 61 10043 3077 13120.78 1161.131
08/31/92 10000 841 3808 13808 0 10406 63 10469 4068 14537.91 1234.118
08/31/93 10000 865 4673 14673 101 10981 174 11155 5188 16343.47 1314.841
08/31/94 10000 915 5588 15588 120 10292 276 10568 5752 16320.36 1400.889
08/31/95 10000 981 6569 16569 0 10548 283 10831 6909 17740.83 1485.832
TOTAL $278
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/88 10000 11.2 4.75 % 892.857 10.67 9527
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/89 10000 686 686 10686 0 9812 0 9812 690 10502.55 955.646
08/31/90 10000 719 1405 11405 0 9625 0 9625 1385 11010.89 1021.418
08/31/91 10000 742 2147 12147 0 10089 0 10089 2210 12299.41 1088.443
08/31/92 10000 788 2935 12935 0 10518 0 10518 3109 13627.85 1156.863
08/31/93 10000 811 3746 13746 95 11098 100 11198 4122 15320.39 1232.533
08/31/94 10000 857 4603 14603 113 10402 200 10602 4696 15298.72 1313.195
08/31/95 10000 920 5523 15523 0 10661 205 10866 5764 16630.26 1392.819
TOTAL $208
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/89 10000 11.54 4.75 % 866.551 10.99 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/90 10000 652 652 10652 0 9341 0 9341 643 9984.37 926.194
08/31/91 10000 672 1324 11324 0 9792 0 9792 1360 11152.78 986.972
08/31/92 10000 714 2038 12038 0 10208 0 10208 2149 12357.38 1049.014
08/31/93 10000 736 2774 12774 86 10771 91 10862 3030 13892.1 1117.627
08/31/94 10000 777 3551 13551 102 10095 181 10276 3596 13872.44 1190.767
08/31/95 10000 834 4385 14385 0 10347 186 10533 4546 15079.84 1262.968
TOTAL $188
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/90 10000 11.32 4.75 % 883.392 10.78 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/91 10000 641 641 10641 0 9982 0 9982 655 10637.36 941.359
08/31/92 10000 681 1322 11322 0 10406 0 10406 1380 11786.26 1000.531
08/31/93 10000 702 2024 12024 82 10981 87 11068 2182 13250.08 1065.976
08/31/94 10000 742 2766 12766 97 10292 173 10465 2766 13231.37 1135.74
08/31/95 10000 795 3561 13561 0 10548 177 10725 3657 14382.98 1204.605
TOTAL $179
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/91 10000 11.86 4.75 % 843.17 11.3 9528
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/92 10000 610 610 10610 0 9933 0 9933 623 10556.92 896.173
08/31/93 10000 628 1238 11238 73 10481 78 10559 1309 11868.06 954.792
08/31/94 10000 664 1902 11902 87 9823 155 9978 1873 11851.29 1017.278
08/31/95 10000 712 2614 12614 0 10067 159 10226 2656 12882.79 1078.961
TOTAL $160
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/92 10000 12.37 4.75 % 808.407 11.78 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/93 10000 567 567 10567 66 10049 70 10119 586 10705.77 861.285
08/31/94 10000 599 1166 11166 79 9418 140 9558 1132 10690.61 917.649
08/31/95 10000 643 1809 11809 0 9652 143 9795 1826 11621.09 973.291
TOTAL $145
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/93 10000 13.05 4.75 % 766.284 12.43 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/94 10000 533 533 10533 70 8927 66 8993 518 9511.43 816.432
08/31/95 10000 572 1105 11105 0 9149 68 9217 1122 10339.26 865.935
TOTAL $70
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/94 10000 12.23 4.75 % 817.661 11.65 9526
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/95 10000 573 573 10573 0 9763 0 9763 591 10354.85 867.24
TOTAL $0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SALES NET ASSINITIAL
INITIAL OFFERINCHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASEDPER SHARE VALUE
09/01/95 10000 12.54 4.75 % 797.448 11.94 9522
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOMEINVM'T CAP GAIN FROM CAP GAINSUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'DTOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/95 10000 0 0 10000 0 9522 0 9522 0 9521.53 797.448
TOTAL $0
</TABLE>
SCHEDULE FOR COMPUTATION OF EACH PERFORMANCE QUOTATION
PROVIDED IN THE REGISTRATION STATEMENT
(1) ENDING REDEMPTION VALUE AND TOTAL RETURN
Value of an initial investment at the end of a period and total return for the
period are computed as set forth below.
(A) Initial investment DIVIDED BY
Public offering price for one share at
beginning of period EQUALS
Number of shares initially purchased
(B) Number of shares initially purchased PLUS
Number of shares acquired at net asset
value through reinvestment of dividends
and capital gain distributions during period EQUALS
Number of shares purchased during period
(C) Number of shares purchased during period MULTIPLIED BY
Net asset value of one share as of the last day
of the period EQUALS
Value of investment at end of period
(D) Value of investment at end of period DIVIDED BY
Initial investment
minus one and then multiplied by 100 EQUALS
Total return for the period expressed as a
percentage
EXHIBIT 16
(2) AVERAGE ANNUAL TOTAL RETURN
Average annual total return quotations for the 1, 5, and 10-year periods ended
August 31, 1995 are computed according to the formula set forth below.
P(1+T)/n/ = ERV
WHERE: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 investment as of the
end of 1, 5 and 10-year periods (computed in accordance with the formula shown
in (1), above)
THUS:
AVERAGE ANNUAL TOTAL RETURN AT PUBLIC OFFERING PRICE:
1 Year Total Return 1,000(1+T)/1/ = $1,035.50
T = 3.55%
5 Year Average Annual Total Return 1,000(1+T)/5/ = $1,438.29
T = 7.54%
10 Year Average Annual Total Return 1,000(1+T)/10/ = $2,226.28
T = 8.33%
Hypothetical illustrations which are based on $1,000 and $10,000 initial
investments used to obtain ending values over various time periods are
attached.
(3) YIELD
Yield is computed as set forth below.
(A) Dividends and interest earned during the period MINUS
Expenses accrued for the period EQUALS
Net investment income
(B) Net income investment DIVIDED BY
Average daily number of shares
outstanding during the period that
were entitled to receive dividends EQUALS
Net investment income per share earned
during the period
(C) Net investment income per share earned
during the period DIVIDED BY
Maximum offering price per share on
last day of the period EQUALS
Current month's yield
(D) Current months yield PLUS ONE RAISED TO THE SIXTH POWER
EQUALS
Semiannual compounded yield
(E) Semiannual compounded yield MINUS ONE MULTIPLIED
BY TWO EQUALS
Annualized rate
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-1-1994
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 1,350,955
<INVESTMENTS-AT-VALUE> 1,417,801
<RECEIVABLES> 28,738
<ASSETS-OTHER> 936
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,447,475
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,495
<TOTAL-LIABILITIES> 23,495
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,230,429
<SHARES-COMMON-STOCK> 119,298,302
<SHARES-COMMON-PRIOR> 118,875,690
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 31,162
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,271
<NET-ASSETS> 1,423,980
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 88,624
<OTHER-INCOME> 0
<EXPENSES-NET> 8,915
<NET-INVESTMENT-INCOME> 79,709
<REALIZED-GAINS-CURRENT> 8,891
<APPREC-INCREASE-CURRENT> 22,271
<NET-CHANGE-FROM-OPS> 110,871
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 79,709
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24,743,163
<NUMBER-OF-SHARES-REDEEMED> 28,504,965
<SHARES-REINVESTED> 4,184,414
<NET-CHANGE-IN-ASSETS> 38,882
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,915
<AVERAGE-NET-ASSETS> 1,357,887
<PER-SHARE-NAV-BEGIN> 11.65
<PER-SHARE-NII> .68
<PER-SHARE-GAIN-APPREC> .29
<PER-SHARE-DIVIDEND> .68
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.94
<EXPENSE-RATIO> .007
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
