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.23
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 23
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:
Robert E. Carlson, Esq.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 S. Flower Street, 23rd Floor
Los Angeles, CA 90071-2371
(Counsel for the Registrant)
Title of Securities being Registered: Shares of Capital Stock, $1 par value
Approximate date of proposed public offering:
It is proposed that this filing become effective on November 1, 1997, pursuant
to paragraph (b) of rule 485.
<PAGE>
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 Expenses
3. Condensed Financial Information Financial Highlights; Investment Results
4. General Description of Registrant Fund Organization and Management; Investment Policies and
Risks; Securities and Investment Techniques
5. Management of the Fund Financial Highlights; Fund Organization and Management
6. Capital Stock and Other Securities Investment Policies and Risks; Fund Organization and
Management; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares; Fund Organization and Management; Other
Important Things to Remember
8. Redemption or Repurchase Selling 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 Page
11. Table of Contents Table of Contents
12. General Information and History N/A
13. Investment Objectives and Policies Description of Certain Securities; Investment Restrictions
14. Management of the Registrant Fund Officers and Directors
15. Control Persons and Principal Holders
of Securities Fund Officers and Directors
16. Investment Advisory and Other Services Fund Officers and Directors; Fund Organization and Management
(Part "A"); General Information; Management
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions; Fund Organization and
Management (Part "A")
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing of
Securities Being Offered Purchase of Shares; Redeeming Shares; Shareholder Account
Services and Privileges; Purchasing Shares (Part "A"); General
Information
20. Tax Status Dividends and Distributions
21. Underwriter Management -- Principal Underwriter; Fund Organization and
Management (Part "A")
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
Item in Part "C"
<TABLE>
<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>
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
- --------------------------------------------------------------------------------
The Tax-Exempt Bond
Fund of America(R)
Prospectus
NOVEMBER 1, 1997
<PAGE>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
333 South Hope Street
Los Angeles, CA 90071
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Expenses 3 Investment Results 10
................................ ................................
Financial Highlights 4 Dividends, Distributions and
Taxes 11
................................ ................................
Investment Policies and Fund Organization and
Risks 5 Management 12
................................ ................................
Securities and Investment Shareholder Services 15
Techniques 6
................................
Multiple Portfolio
Counselor System 9
</TABLE>
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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. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE FUND IS NOT
A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY OR PERSON
INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
19-010-1197
<PAGE>
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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EXPENSES
The effect of the expenses described below is reflected in the fund's share
price and return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Fund operating expenses are paid out of the fund's assets
and are factored into its share price.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases
(as a percentage of offering price) 4.75%
................................................................................
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is no sales
charge on reinvested dividends, and no deferred sales charge or redemption or
exchange fees. A contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Management fees 0.36%
................................................................................
12b-1 expenses 0.24%/1/
................................................................................
Other expenses 0.08%
................................................................................
Total fund operating expenses 0.68%
</TABLE>
/1/ 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
One year $ 54
................................................................................
Three years $ 68
................................................................................
Five years $ 84
................................................................................
Ten years $128
</TABLE>
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
3
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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FINANCIAL HIGHLIGHTS
The following information has been audited by Price Waterhouse LLP, independent
accountants. This table should be read together with the financial statements
which are included in the statement of additional information and annual
report.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
....................
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $11.86 $11.94 $11.65 $12.43 $11.78 $11.30 $10.78 $10.99 $10.67 $10.78
- --------------------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income .64 .64 .68 .67 .68 .70 .71 .73 .74 .74
........................................................................................................
Net realized and
unrealized gain
(loss) on investments .45 .01 .29 (.69) .73 .48 .52 (.21) .32 (.05)
........................................................................................................
Total income from
investment
operations 1.01 .65 .97 (.02) 1.41 1.18 1.23 .52 1.06 .69
- --------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (.64) (.64) (.68) (.68) (.68) (.70) (.71) (.73) (.74) (.74)
........................................................................................................
Distribution from
net realized gains (.04) (.09) -- (.08) (.08) -- -- -- -- (.06)
........................................................................................................
Total distributions (.68) (.73) (.68) (.76) (.76) (.70) (.71) (.73) (.74) (.80)
........................................................................................................
Net asset value, end of
year $12.27 $11.86 $11.94 $11.65 $12.43 $11.78 $11.30 $10.78 $10.99 $10.67
........................................................................................................
Total return /1/ 9.39% 5.51% 8.70% (.14)% 12.42% 10.80% 11.70% 4.84% 10.24% 6.72%
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $1,593 $1,476 $1,424 $1,385 $1,327 $ 921 $ 712 $ 551 $ 450 $ 346
........................................................................................................
Ratio of expenses
to average net assets .68% .68% .66% .69% .71% .71% .72% .70% .73% .63%
........................................................................................................
Ratio of net income
to average net assets 5.27% 5.35% 5.87% 5.53% 5.62% 6.04% 6.33% 6.65% 6.78% 6.90%
........................................................................................................
Portfolio
turnover rate 14.39% 26.89% 49.28% 22.40% 15.55% 17.22% 24.73% 39.90% 55.70% 61.92%
</TABLE>
/1/ Excludes maximum sales charge of 4.75%.
4
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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INVESTMENT POLICIES AND RISKS
The investment objective of the fund is to provide a high level of current
income exempt from federal income taxes, consistent with the preservation of
capital.
Under normal market conditions, the fund will invest at least 80% of its assets
in tax-exempt securities consisting primarily of state, municipal and public
authority bonds and notes. Moreover, at least 65% of the fund's assets will be
invested in tax-exempt securities consisting primarily of state, municipal and
public authority bonds and notes that are rated at the time of purchase in one
of the three highest categories by either Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("S&P") (or unrated but determined
by the investment adviser to be of comparable quality).
Up to 35% of the fund's total assets may be invested in tax-exempt securities
rated Baa or BBB or below by Moody's or S&P (or unrated) which generally carry
a greater degree of investment risk. Securities rated Ba and BB or below or
unrated securities that are determined to be of equivalent quality are commonly
known as "high-yield, high-risk" or "junk" bonds and will be limited to no more
than 20% of the fund's assets.
The fund will not invest in those tax-exempt securities believed to pay
interest constituting an item of tax preference subject to federal 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. Limits on the fund's investment policies are determined at the time
of purchase and are based on the fund's net assets unless otherwise stated. The
fund's fundamental investment restrictions (described in the statement of
additional information) and objective may not be changed without shareholder
approval. MORE INFORMATION ON THE FUND'S INVESTMENT POLICIES IS CONTAINED IN
ITS STATEMENT OF ADDITIONAL INFORMATION.
THE FUND MAY NOT ACHIEVE ITS INVESTMENT OBJECTIVE DUE TO MARKET CONDITIONS AND
OTHER FACTORS. IN ADDITION, THE FUND MAY EXPERIENCE DIFFICULTY LIQUIDATING
CERTAIN PORTFOLIO SECURITIES DURING SIGNIFICANT MARKET DECLINES OR PERIODS OF
HEAVY REDEMPTIONS.
5
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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SECURITIES AND INVESTMENT TECHNIQUES
DEBT SECURITIES
Bonds and other debt securities are used by issuers to borrow money. Issuers
pay investors interest and generally must repay the amount borrowed at
maturity. Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. The prices of
debt securities fluctuate depending on such factors as interest rates, credit
quality and maturity. In general, their prices decline when interest rates rise
and vice versa.
The fund may invest up to 20% of its assets in debt securities rated Ba and BB
or below by Moody's or S&P or in unrated securities that are determined to be
of equivalent quality by Capital Research and Management Company, the fund's
investment adviser. These securities are commonly known as "high-yield, high-
risk" or "junk" bonds. High-yield, high-risk bonds are described by the rating
agencies as speculative and involve greater risk of default or price changes
due to changes in the issuer's creditworthiness than higher rated bonds, or
they may already be in default. The market prices of these securities may
fluctuate more than higher quality securities and may decline significantly in
periods of general economic difficulty. It may be more difficult to dispose of,
or to determine the value of, high-yield, high-risk bonds. The fund may invest
in bonds rated as low as Ca by Moody's or CC by S&P which are described by the
rating agencies as "speculative in a high degree; often in default or [having]
other marked shortcomings." See the statement of additional information for a
complete description of the ratings.
Capital Research and Management Company attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis of each
issuer as well as by monitoring broad economic trends and corporate and
legislative developments.
MUNICIPAL BONDS
Municipal bonds are debt obligations generally issued to obtain funds for
various public purposes, including the construction of public facilities. The
interest on these obligations is generally not included in gross income for
federal income tax purposes.
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
6
<PAGE>
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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bonds include states, counties, cities, towns and various regional or special
districts. Limited obligation or revenue bonds are secured by 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.
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.
There are, in addition, a variety of hybrid and special types of municipal
obligations, such as zero coupon and pre-refunded bonds, 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.
PORTFOLIO COMPOSITION
The average monthly composition of the fund's portfolio as a percentage of its
average net assets based on the higher of Moody's or S&P ratings for the fiscal
year ended August 31, 1997 was as follows:
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Aaa/AAA 30.99%
................................................................................
Aa/AA 17.25%
................................................................................
A/A 14.47%
................................................................................
Baa/BBB 24.96%
................................................................................
Ba/BB 1.76%
................................................................................
Non-rated 5.59%
</TABLE>
Some or all of these non-rated securities were determined to be equivalent to
securities rated by Moody's or S&P as follows:
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
A/A 0.47%
................................................................................
Baa/BBB 1.03%
................................................................................
Ba/BB 1.60%
................................................................................
B/B 2.49%
</TABLE>
Money market instruments and cash made up an average of 4.98% of the fund's
portfolio.
7
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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MUNICIPAL LEASE OBLIGATIONS
The fund may invest in municipal lease revenue obligations, some of which may
be considered illiquid. The fund may purchase, without limitation, 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 issuers
and lessees, the terms of the lease, the frequency and volume of trading and
the number of dealers trading the securities.
FORWARD COMMITMENTS
The fund may enter into commitments to purchase or sell securities at a future
date. When the fund agrees to purchase such securities, it assumes the risk of
any decline in value of the securities beginning on the date of the agreement.
When the fund agrees to sell such securities, it does not participate in
further gains or losses with respect to the securities. If the other party to
such a transaction fails to deliver or pay for the securities, the fund could
miss a favorable price or yield opportunity, or could experience a loss.
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 interest
rates change. 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 securities with maturities in excess of three years.
8
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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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 a fund is divided into segments which are managed by individual
counselors. Counselors decide how their respective segments will be invested
(within the limits provided by a fund's objective(s) and policies and by
Capital Research and Management Company's investment committee). In addition,
Capital Research and Management Company's research professionals may make
investment decisions with respect to a portion of a fund's portfolio. The
primary individual portfolio counselors for the fund are listed below.
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
.........................
YEARS OF EXPERIENCE AS
PORTFOLIO PORTFOLIO COUNSELOR WITH CAPITAL
COUNSELORS FOR RESEARCH AND
FOR THE TAX- THE TAX-EXEMPT BOND MANAGEMENT
EXEMPT BOND FUND OF AMERICA COMPANY OR
FUND OF AMERICA PRIMARY TITLE(S) (APPROXIMATE) ITS AFFILIATES TOTAL YEARS
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEIL L. Senior Vice 18 years (since 19 years 19 years
LANGBERG President of the fund began
the fund. Vice operations)
President--
Investment
Management
Group, Capital
Research and
Management
Company
- ------------------------------------------------------------------------------------
MARK R. Vice President 3 years 3 years 12 years
MACDONALD of the fund.
Vice
President--
Investment
Management
Group, Capital
Research and
Management
Company
- ------------------------------------------------------------------------------------
REBECCA L. Vice 12 years 15 years 15 years
FORD President--
Investment
Management
Group, Capital
Research and
Management
Company
- ------------------------------------------------------------------------------------
</TABLE>
The fund began operations on October 3, 1979.
9
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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INVESTMENT RESULTS
The fund may compare investment results on a taxable and tax equivalent basis
to various indices or other mutual funds. Fund results may be calculated on a
total return, yield, and/or distribution rate basis. Results calculated without
a sales charge will be higher.
[X] TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gain
distributions.
[X] YIELD is computed by dividing the net investment income per share earned by
the fund over a given period of time by the maximum offering price per share
on the last day of the period, according to a formula mandated by the
Securities and Exchange Commission. A yield calculated using this formula
may be different than the income actually paid to shareholders.
[X] DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by annualizing the current month's dividend
and dividing by the average price for the month.
INVESTMENT RESULTS
(FOR PERIODS ENDED SEPTEMBER 30, 1997)
<TABLE>
<CAPTION>
AVERAGE
ANNUAL THE FUND THE FUND AT
TOTAL AT NET MAXIMUM
RETURNS: ASSET VALUE/1/ SALES CHARGE/1/,/2/ LIPPER/3/ LEHMAN/4/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One year 9.06% 3.86% 8.59% 9.02%
................................................................................
Five years 7.29% 6.24% 6.63% 7.17%
................................................................................
Ten years 8.52% 8.00% 8.45% 8.77%
................................................................................
Lifetime/5/ 8.66% 8.37% 8.20% N/A
- --------------------------------------------------------------------------------
</TABLE>
Yield/1/,/2/: 4.25%
Distribution Rate/2/: 6.12%
/1/ These fund results were calculated according to a standard formula that is
required for all stock and bond funds.
/2/ The maximum sales charge has been deducted.
/3/ Lipper General Municipal Bond Fund Average reflects the average results of
funds that invest at least 65% of assets in municipal debt issues in the top
four rating categories.
/4/ Lehman Brothers Municipal Bond Index represents the long-term investment
grade municipal bond market. This index is unmanaged and does not reflect
sales charges, commission or expenses.
/5/ The fund began investment operations on October 3, 1979.
10
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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Here are the fund's annual total returns calculated without a sales charge.
This information is being supplied on a calendar year basis.
[BAR GRAPH]
1987 0.13
1988 9.28
1989 9.49
1990 6.17
1991 11.17
1992 9.04
1993 11.72
1994 -4.82
1995 17.28
1996 4.57
[END BAR GRAPH]
Past results are not an indication of future results.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund declares dividends from its net investment income daily and
distributes the accrued dividends to shareholders each month. Dividends begin
accruing one day after payment for shares is received by the fund or American
Funds Service Company. Capital gains, if any, are usually distributed in
November or December. When a capital gain is distributed, the net asset value
per share is reduced by the amount of the payment.
If a shareholder has elected to receive dividends and/or capital gain
distributions in cash, and the postal or other delivery service is unable to
deliver checks to the shareholder's address of record, or the shareholder does
not respond to mailings from American Funds Service Company with regard to
uncashed distribution checks, the shareholder's distribution option will
automatically be converted to having all dividends and other distributions
reinvested in additional shares.
11
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax. The fund
is permitted to pass through to its shareholders federally tax-exempt income
subject to certain requirements. However, the fund may invest in obligations
which pay interest that is subject to state and local taxes when distributed by
the fund. Dividends
derived from taxable interest income, distributions of capital gains and
dividends on gains from the disposition of certain market discount bonds will
not be exempt from federal, state or local income tax.
Capital gains are taxable whether they are reinvested or received in cash --
unless you are exempt from taxation or entitled to tax deferral. Early each
year, you will be notified as to the amount and tax status of all income
distributions paid during the prior year. 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).
YOU MUST PROVIDE THE FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE THE
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. Federal law
also requires the fund to withhold 30% or the applicable tax treaty rate from
dividends paid to certain nonresident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
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
adviser for further information.
- --------------------------------------------------------------------------------
FUND ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Maryland corporation in 1979. All fund operations are supervised by the
fund's board of directors who meet periodically and perform duties required by
applicable state and federal laws. Members of the board who are not employed by
Capital Research and Management Company or its affiliates are paid certain fees
for services rendered to the fund as described in the statement of additional
information. They may elect to defer all or a portion of these fees through a
deferred compensation plan in effect for the fund. The fund does not hold
annual meetings of shareholders. However, significant matters which require
shareholder approval, such as certain elections of board members or a
12
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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change in a fundamental investment policy, will be presented to shareholders at
a meeting called for such purpose. Shareholders have one vote per share owned.
At the request of the holders of at least 10% of the shares, the fund will hold
a meeting at which any member of the board could be removed by a majority vote.
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment adviser to the fund
and other funds, including those in The American Funds Group. Capital Research
and Management Company, a wholly owned subsidiary of The Capital Group
Companies, Inc., is headquartered at 333 South Hope Street, Los Angeles, CA
90071. Capital Research and Management Company manages the investment portfolio
and business affairs of the fund. The management fee paid by the fund to
Capital Research and Management Company is composed of a management fee, which
may not exceed 0.30% of the fund's average net assets annually and declines at
certain asset levels, plus an amount which may not exceed 3% of the fund's
gross investment income for the preceding month and which also declines at
certain annual gross investment levels. The total management fee paid by the
fund, as a percentage of average net assets, for the previous fiscal year is
discussed above under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's code of ethics.
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 categories of
expenses are approved in advance by the board. The 12b-1 fee paid by the fund,
as a percentage of average net assets, for the previous fiscal year is
discussed above under "Expenses."
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
13
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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compensation to the dealer, generally referred to as a concession or discount.
On occasion, securities may be purchased directly from an issuer, in which case
no commissions or discounts are paid. In the over-the-counter market, purchases
and sales are transacted directly with principal market-makers except in those
circumstances where it appears better prices and executions are available
elsewhere.
Subject to the above policy, when two or more brokers (either directly or
through their correspondent clearing agents) are in a position to offer
comparable prices and executions, preference may be given to brokers who have
sold shares of the fund or have provided investment research, statistical, and
other related services for the benefit of the fund and/or other funds served by
Capital Research and Management Company.
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180
WESTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2205
Brea, California 92822-2205
Fax: 714/671-7080
WESTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 659522
San Antonio, Texas 78265-9522
Fax: 210/530-4050
EASTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 6007
Indianapolis, Indiana 46206-6007
Fax: 317/735-6620
EASTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2280
Norfolk, Virginia 23501-2280
Fax: 804/670-4773
14
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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SHAREHOLDER SERVICES
The fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS OR
ACCOUNTS HELD BY INVESTMENT DEALERS. IF YOU ARE INVESTING IN SUCH A MANNER, YOU
SHOULD CONTACT YOUR PLAN ADMINISTRATOR/TRUSTEE OR DEALER ABOUT WHAT SERVICES
ARE AVAILABLE AND WITH QUESTIONS ABOUT YOUR ACCOUNT.
- --------------------------------------------------------------------------------
PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, computer,
wire, or bank debit. You may also establish or add to your account by
exchanging shares from any of your other accounts in The American Funds Group.
The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. This includes exchange purchase orders that may
place an unfair burden on other shareholders due to their frequency.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
[X] Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
[X] Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the fund
(with no sales charge). This will be done automatically unless you elect to
have the dividends and/or capital gain distributions paid to you in cash.
15
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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[X] Cross-Reinvestment
You may invest your dividends and capital gain distributions into any other
fund in The American Funds Group.
[X] Exchange Privilege
You may exchange your shares into other funds in The American Funds Group
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to automatically
exchange shares among any of the funds in The American Funds Group. Exchange
requests may be made in writing, by telephone, including American
FundsLine(R), by computer using American FundsLine OnLineSM (see below), or
by fax. EXCHANGES HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND
PURCHASES.
[X] Retirement Plans
Tax-exempt funds should not serve as retirement plan investments.
SHARE PRICE
The fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. The fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
INVESTMENT MINIMUMS
- --------------------------------------------------------------------------------
To establish an account $1,000
To add to an account $ 50
16
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
..................
DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 4.75% 4.99% 4.00%
................................................................................
$25,000 but less than $50,000 4.50% 4.71% 3.75%
................................................................................
$50,000 but less than $100,000 4.00% 4.17% 3.25%
................................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
................................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
................................................................................
$500,000 but less than $1 million 2.00% 2.04% 1.60%
................................................................................
$1 million or more and certain other
investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 100 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. Investments by retirement plans, foundations or endowments with $50
million or more in assets may be made with no sales charge and are not subject
to a contingent deferred sales charge. A dealer concession of up to 1% may be
paid by the fund from its Plan of Distribution and/or by American Funds
Distributors on all investments described above. Investments by certain
individuals and entities including employees and other associated persons of
dealers authorized to sell shares of the fund and Capital Research and
Management Company and its affiliated companies are not subject to a sales
charge.
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services pursuant to
the fund's Plan of Distribution. During the current fiscal year, American Funds
Distributors will also provide additional compensation to the top one hundred
dealers who have sold shares of funds in The American Funds Group based on the
pro rata share of a qualifying dealer's sales.
17
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. 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 below.
[X] Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by", as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not be
aggregated with those made for other accounts unless qualified as described
above.
[X] Concurrent Purchases
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.
[X] Right of Accumulation
You may take into account the current value of your existing holdings in The
American Funds Group to determine your sales charge. Direct purchases of the
money market funds are excluded.
[X] Statement of Intention
You may enter into a non-binding commitment to invest a certain amount
(which at your request, may include purchases made during the previous
90 days) in non-money market fund shares over a 13-month period. A portion
of your account may 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 the applicable sales charge reduction.
18
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) or American FundsLine OnLineSM (see below). In addition, you may
sell shares in amounts of $50 or more automatically. If you sell shares through
your investment dealer you may be charged for this service. Shares held for you
in your dealer's street name must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. Sale requests may be
made in writing, by telephone, including American FundsLine(R), by computer
using American FundsLine OnLineSM, or by fax. Sales by telephone, computer or
fax are limited to $50,000 in accounts registered to individual(s) (including
non-retirement trust accounts). In addition, checks must be made payable to the
registered shareholder(s) and mailed to an address of record that has been used
with the account for at least 10 days.
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), sale proceeds will be paid on or before
the seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
The fund may, with 60 days' written notice, close your account if due to a sale
of shares the account has a value of less than the minimum required initial
investment.
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature must be guaranteed by a member firm of a domestic stock exchange or
the National Association of Securities Dealers, Inc. that is an eligible
guarantor institution, bank, savings association, or credit union. A signature
guarantee is not currently required for any sale of $50,000 or less provided
the check is made payable to the registered shareholder(s) and is mailed to the
address of record on the account, and provided the address has been used with
the account for at least 10 days. Additional documentation may be required for
sale of shares held in corporate, partnership or fiduciary accounts.
19
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group
within 90 days after the date of the redemption or distribution. Redemption
proceeds of shares representing direct purchases in the money market funds are
excluded. Reinvestment will be at the next calculated net asset value after
receipt and acceptance by American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R) AND AMERICAN FUNDSLINE ONLINESM
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(R) or American
FundsLine OnLineSM. To use these services, call 800/325-3590 from a
TouchTone(TM) telephone or access The American Funds Web site on the Internet
at www.americanfunds.com.
TELEPHONE AND COMPUTER PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone or computer (including American
FundsLine(R) or American FundsLine OnLineSM) or fax purchase, sale and/or
exchange options (see below), 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 liabilities
(including attorney fees) which may be incurred in connection with the exercise
of these privileges provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
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 also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Dividend and capital gain reinvestments and purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
20
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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NOTES
21
<PAGE>
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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NOTES
22
<PAGE>
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THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
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NOTES
23
<PAGE>
THE TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<TABLE>
<CAPTION>
FOR SHAREHOLDER SERVICES FOR DEALER SERVICES
<C> <S>
American Funds American Funds
Service Company Distributors
800/421-0180 ext. 1 800/421-9900 ext. 11
FOR 24-HOUR INFORMATION
American American Funds
FundsLine(R) Internet Web site
800/325-3590 http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
------------------------------------------------------------
MULTIPLE TRANSLATIONS
This prospectus may be translated into other languages. In
the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation,
the English text shall prevail.
------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
Includes financial statements, detailed performance
information, portfolio holdings, a statement from portfolio
management and the independent accountants' report (in the
annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Contains more detailed information on all aspects of the
fund, including the fund's financial statements.
A current SAI has been filed with the Securities and
Exchange Commission ("SEC"). It is incorporated by
reference into this prospectus and is available along with
other related materials on the SEC's Internet Web site at
http://www.sec.gov.
CODE OF ETHICS
Includes a description of the fund's personal investing
policy.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary
Service Company of the fund
800/421-0180 ext. 1 333 South Hope Street
Los Angeles, CA 90071
This prospectus has been printed on recycled paper.
[LOGO OF RECYCLED PAPER]
24
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 1, 1997
This document is not a prospectus but should be read in conjunction with the
current prospectus dated November 1, 1997 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 13
Additional Information Concerning Taxes 14
Purchase of Shares 17
Redeeming Shares 23
Shareholder Account Services and Privileges 24
Execution of Portfolio Transactions 26
General Information 26
Investment Results 28
Description of Ratings for Debt Securities 31
Financial Statements attached
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
THE DESCRIPTIONS BELOW ARE INTENDED TO SUPPLEMENT THE MATERIAL IN THE
PROSPECTUS UNDER "INVESTMENT POLICIES AND RISKS."
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 political and corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers 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 defaults on its obligations to pay interest
or principal or enters 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
facilitiesOpinions 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 are secured
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.
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% of assets, 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; (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).
MUNICIPAL INFLATION-INDEXED BONDS -- The fund may invest in inflation-indexed
bonds issued by municipalities. Interest payments are made to bondholders
semi-annually and are made up of two components: a fixed "real coupon" or
spread, and a variable coupon linked to an inflation index. Accordingly,
payments will increase or decrease each period as a result of changes in the
inflation index. In the period of deflation payments may decrease to zero, but
in any event will not be less than zero.
ZERO COUPON BONDS -- Municipalities may issue zero coupon securities which are
debt obligations that do not entitle the holder to any periodic payments of
interest prior to maturity or a specified date when the securities begin paying
current interest. They are issued and traded at a discount from their face
amount or par value, which discount varies depending on the time remaining
until cash payments begin, prevailing interest rates, liquidity of the
security, and the perceived credit quality of the issuer.
PRE-REFUNDED BONDS -- From time to time, a municipality may refund a bond that
it has already issued prior to the original bond's call date by issuing a
second bond, the proceeds of which are used to purchase securities. The
securities are placed in an escrow account pursuant to an agreement between the
municipality and an independent escrow agent. The principal and interest
payments on the securities are then used to pay off the original bondholders.
For the purposes of diversification, pre-refunded bonds will be treated as
governmental issues.
FORWARD COMMITMENTS -- The fund may enter into commitments to purchase or sell
securities at a future date. When the fund purchases such securities, it
assumes the risk of any decline in value of the securities beginning on the
date of the agreement . When the fund agrees to sell such securities, it does
not participate in further gains or losses with respect to the securities
beginning on the date of the agreement. If the other party to such transaction
fails to deliver or pay for the securities, the fund could miss a favorable
price or yield opportunity, or could experience a loss.
As the fund's aggregate commitments under these transactions increase, the
opportunity for leverage similarly increases. The fund will not use these
transactions for the purpose of leveraging and will segregate liquid assets
which will be marked to market daily 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 segregated assets the fund
temporarily could be in a leveraged position (because it may have an amount
greater than its net assets subject to market risk). Should market values of
the fund's portfolio securities decline while the fund is in a leveraged
position, 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 additional cash to meet its
obligations thereunder.
PRIVATE PLACEMENTS -- Generally, municipal securities acquired in private
placements are subject to contractual restrictions on resale. Accordingly, all
private placements will be considered illiquid unless they have been
specifically determined to be liquid, taking into account factors such as the
frequency and volume of trading and the commitment of dealers to make markets
under procedures adopted by the fund's board of trustees.
REPURCHASE AGREEMENTS -- Although the fund has no current intention to do so
during the next 12 months, it may enter on a temporary basis into repurchase
agreements, under which it 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 Capital Research and
Management Company. 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, liquidation of 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. The fund does not
anticipate its portfolio turnover will exceed 100% annually. The fund's
portfolio turnover rate would equal 100% if each security in the fund's
portfolio were replaced once per year. See "Financial Highlights" in the
prospectus for the fund's portfolio turnover for each of the last 10 years.
INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES -- 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. None of the following
investment restrictions involving a maximum percentage of assets will be
considered violated unless the excess occurs immediately after, and is caused
by, an acquisition [or encumbrance of securities or assets of, or borrowings]
by the fund. 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 #4, the term "securities subject to
restrictions on disposition" includes only securities that are not readily
marketable due to contractual restrictions. Accordingly, the Fund can purchase
securities issued in private placements (including so-called 144A securities)
provided they are readily marketable.
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.
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.
NON-FUNDAMENTAL POLICIES -- The fund has adopted the following non-fundamental
investment policies: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 POSITION PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL COMPENSATION TOTAL NUMBER
AND AGE WITH PAST 5 YEARS (POSITIONS WITHIN THE COMPENSATION (INCLUDING OF FUND BOARDS
REGISTRANT ORGANIZATIONS LISTED MAY HAVE (INCLUDING VOLUNTARILY DEFERRED ON WHICH
CHANGED DURING THIS PERIOD) VOLUNTARILY DEFERRED COMPENSATION/1/) FROM ALL DIRECTOR
COMPENSATION/1/) FROM FUNDS MANAGED BY CAPITAL SERVES/2/
THE FUND DURING FISCAL RESEARCH AND
YEAR ENDED AUGUST 31, MANAGEMENT COMPANY/2/
1997 FOR THE YEAR ENDED
AUGUST 31, 1997
<S> <C> <C> <C> <C> <C>
H. Frederick Christie Director Private Investor. Former President $3,900 /3/ $163,500 18
P.O. Box 144 and Chief Executive Officer, The
Palos Verdes Estates, CA 90274 Mission Group (non-utility holding
Age 64 Company, subsidiary of Southern
California Edison Company)
+ Don R. Conlan Trustee President (Retired), The Capital none/4/ none/4/ 12
Age: 61 Group Companies, Inc.
1630 Milan Avenue
South Pasadena, CA 91030
Diane C. Creel Director CEO and President, $3,900 $43,000 12
100 W. Broadway The Earth Technology Corporation
Suite 5000 (international consulting engineering)
Long Beach, CA 90802
Age: 48
Martin Fenton, Jr. Director Chairman, Senior Resource Group $4,300 /3/ $132,600 16
4350 Executive Drive (management of senior living
Suite 101 centers)
San Diego, CA 92121-2116
Age: 62
Leonard R. Fuller Director President, Fuller & Company, Inc. $3,900/3/ $46,200 12
4337 Marina City Drive (financial management consulting
Suite 841 ETN firm)
Marina del Rey, CA 90292
Age: 51
+* Abner D. Goldstine President, Senior Vice President and Director, none/4/ none/4/ 12
Age: 67 PEO and Capital Research and Management
Director Company
+** Paul G. Haaga, Jr. Chairman of Executive Vice President and none/4/ none/4/ 14
Age: 48 the Board Director, Capital Research and
Management Company
Herbert Hoover III Director Private Investor $3,500 $68,000 14
1520 Circle Drive
San Marino, CA 91108
Age: 69
Richard G. Newman Director Chairman, President and CEO, $4,300 /3/ $98,000 13
3250 Wilshire Boulevard AECOM Technology Corporation
Los Angeles, CA 90010-1599 (architectural engineering)
Age: 62
Peter Valli Director Retired. Former Chairman and $4,300 /3/ $46,200 12
45 Sea Isle Drive CEO, BW/IP International Inc.
Long Beach, CA 90803 (industrial manufacturing)
Age: 70
</TABLE>
+ Directors who are considered "interested persons" of the fund 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.
* 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 ($7,774), Martin Fenton, Jr. ($9,858), Leonard
R. Fuller ($3,003), Richard G. Newman ($20,779) and Peter C. Valli ($16,015).
/4/ Don R. Conlan, 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)#
<TABLE>
<CAPTION>
AGE POSITION(S) HELD PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS WITH REGISTRANT PAST 5 YEARS
<S> <C> <C> <C>
Neil L. Langberg 44 Senior Vice Vice President - Investment Management
11100 Santa Monica Blvd. President Group, Capital Research and Management
Los Angeles, CA 90025 Company
Michael J. Downer 43 Vice President Senior Vice President - Fund Business
333 South Hope Street Management Group, Capital Research and
Los Angeles, CA 90071 Management Company
Mary C. Hall 39 Vice President Senior Vice President - Fund Business
135 South State College Blvd. Management Group, Capital Research and
Brea, CA 92821 Management Company
Mark R. Macdonald 38 Vice President Vice President - Investment Managemennt
11100 Santa Monica Blvd. Group, Capital Research and Management
Los Angeles, CA 90025 Company
Julie F. Williams 49 Secretary Vice President - Fund Business Management
333 South Hope Street Group, Capital Research and Management
Los Angeles, CA 90071 Company
Anthony W. Hynes, Jr. 34 Treasurer Vice President - Fund Business Management
135 South State College Blvd. Group, Capital Research and Management
Brea, CA 92821 Company
Kimberly S. Verdick 32 Assistant Assistant Vice President - Fund Business
333 South Hope Street Secretary Management Group, Capital Research and
Los Angeles, CA 90071 Management Company
Todd L. Miller 38 Assistant Assistant Vice President - Fund Business
135 South State College Blvd. Treasurer Management Group, Capital Research and
Brea, CA 92821 Management Company
</TABLE>
# Positions within the organizations listed may have changed during this period
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, 1997 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, (Los Angeles, San Francisco, New
York, Washington, D.C., London, Geneva, Singapore, Hong Kong and Tokyo), with a
staff of professionals, many of whom have years of investment experience. The
Investment Adviser is located at 333 South Hope Street, Los Angeles, Ca 90071,
and at 135 South State College Boulevard, Brea, CA 92821. 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. The Investment Adviser is a wholly owned subsidiary of the Capital
Group Companies, Inc.
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 May 31, 1998, 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 receives a fee at the annual rate of 0.30% on the first
$60 million of the fund's net assets, plus 0.21% on net assets from $60 million
to $1 billion, plus 0.18% on net assets from $1 billion to $3 billion, plus
0.16% on net assets over $3 billion, plus 3% of the first $3,333,333 of the
fund's monthly gross investment income, plus 2.50% of such income over
$3,333,333 but not exceeding $8,333,333 and 2.25% of such income in excess of
$8,333,333. Assuming net assets of $1.5 billion and gross investment income
levels of 3%, 4%, 5%, 6% and 7%, management fees would be 0.29%, 0.32%, 0.34%,
0.37% and 0.39%, respectively.
For the purpose of such computations under the Agreement, the fund's gross
investment income does not reflect any net realized gains or losses on the sale
of portfolio securities but does include original-issue discount as defined for
federal income tax purposes.
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, clerical
and bookkeeping functions of the fund, and provides suitable office space,
necessary small office equipment and utilities, as well as general purpose
accounting forms, supplies, and postage to be used at the offices of the fund.
The fund pays all expenses not assumed by the Investment Adviser, including,
but not limited to, custodian, stock transfer and dividend disbursing fees and
expenses; costs of designing, printing and mailing reports, prospectuses, proxy
statements, and notices to its shareholders; taxes; expenses of issuance and
redemption of shares (including stock certificates, registration and
qualification fees and expenses); legal and auditing expenses; compensation,
fees, and expenses paid to Directors unaffiliated with the Investment Adviser;
association dues; costs of stationery and forms prepared exclusively for the
fund; and costs of assembling and storing shareholder account data.
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, 1997, 1996, and 1995, the Investment
Adviser's total fees amounted to $5,567,000, $5,451,000, and $5,202,000,
respectively.
PRINCIPAL UNDERWRITER -- American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 8000 IH-10 West, San Antonio, TX
78230, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240, and 5300
Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the "Plan") pursuant to rule 12b-1 under the 1940 Act. 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, 1997 amounted to $632,000 after allowance of $2,563,000 to dealers.
During the fiscal years ended August 31, 1996 and 1995, the Principal
Underwriter retained $760,000 and $670,000, 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 due
to present or past affiliations with the Investment Adviser and related
companies may be considered to have a direct or indirect financial interest in
the operation of the Plan. 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 is committed to the
discretion of the Directors who are not "interested persons" during the
existence of the Plan. Plan expenditures are 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). During the fund's fiscal
year ended August 31, 1997, the fund paid or accrued $3,718,000 under the Plan
as compensation to dealers. As of August 31, 1997 accrued and unpaid
distribution expenses were $770,000.
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 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
The fund declares dividends from its net investment income daily and
distributes the accrued dividends to shareholders each month. The percentage
of the distribution that is tax-exempt may vary from distribution to
distribution. 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 original issue discount or market 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.
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; and (b) 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 certain tax-exempt obligations. Not
later than 60 days after the close of its taxable year, the fund will notify
each shareholder in writing 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
would 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
might 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 will 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 the 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 on assets held more than 18 months is 20%, and on assets held
more than one year and not more than 18 months 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.
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
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METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
See "Investment Minimums and $50 minimum (except where a lower minimum is noted
Fund Numbers" for initial under "Investment Minimums and Fund Numbers").
investment minimums.
BY CONTACTING Visit any investment dealer who Mail directly to your investment dealer's address printed on
YOUR is registered in the state where your account statement.
INVESTMENT the purchase is made and who
DEALER has a sales agreement with
American Funds Distributors.
BY MAIL Make your check payable to the Fill out the account additions form at the bottom of a recent
fund and mail to the address account statement, make your check payable to the fund,
indicated on the account write your account number on your check, and mail the
application. Please indicate an check and form in the envelope provided with your account
investment dealer on the statement.
account application.
BY TELEPHONE Please contact your investment Complete the "Investments by Phone" section on the
dealer to open account, then account application or American FundsLink Authorization
follow the procedures for Form. Once you establish the privilege, you, your financial
additional investments. advisor or any person with your account information can
call American FundsLineR and make investments by
telephone (subject to conditions noted in "Telephone and
Computer Purchases, Redemptions and Exchanges"
below).
BY COMPUTER Please contact your investment Complete the American FundsLink Authorization Form.
dealer to open account, then Once you establish the privilege, you, your financial advisor
follow the procedures for or any person with your account information may access
additional investments. American FundsLine OnLine(SM) on the Internet and make
investments by computer (subject to conditions noted in
"Telephone and Computer Purchases, Redemptions and
Exchanges" below).
BY WIRE Call 800/421-0180 to obtain your Your bank should wire your additional investments in the
account number(s), if necessary. same manner as described under "Initial Investment."
Please indicate an 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 FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER.
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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):
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FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
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(R) 1,000 35
Washington Mutual Investors Fund(SM) 250 01
BOND FUNDS
American High-Income Municipal Bond Fund(R) 1,000 40
American High-Income Trust(SM) 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(SM) 1,000 23
Limited Term Tax-Exempt Bond Fund of America(SM) 1,000 43
The Tax-Exempt Bond Fund of America(R) 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
___________
*Available only in certain states.
</TABLE>
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).
DEALER COMMISSIONS -- 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.)
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AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
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 purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 100 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.
American Funds Distributors, at its expense (from a designated percentage of
its income), will, during the current fiscal year, provide additional
compensation to dealers. Currently these payments are limited to the top one
hundred dealers who have sold shares of the fund or other funds in The American
Funds Group. These payments will be based on a pro rata share of a qualifying
dealer's sales. American Funds Distributors will, on an annual basis,
determine the advisability of continuing these payments.
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 100 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 made within twelve months of the purchase. (See
"Redeeming Shares--Contingent Deferred Sales Charge.") Investments by
retirement plans, foundations or endowments with $50 million or more in assets
may be made with no sales charge and are not subject to a 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)
annually in order to promote selling efforts and to compensate them for
providing certain services. 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 dealers;
(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 $50
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.
STATEMENT OF INTENTION -- The reduced sales charges and offering prices set
forth in the prospectus apply to purchases of $50,000 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 is 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.
AGGREGATION -- Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by 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 1940 Act, 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 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.
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. In the case of orders sent directly to the fund or American Funds
Service Company, an investment dealer MUST be indicated. 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 net asset value per share of money market funds
normally will remain constant at $1.00 based on the fund's current practice of
valuing their shares using the penny-rounding method in accordance with rules
of the Securities and Exchange Commission.
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, Martin Luther King, Jr.'s Birthday,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.
All portfolio securities of funds managed by Capital Research and Management
Company are valued, and the net asset value per share is determined, as
follows:
1. Equity securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the Investment Adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Fixed-income securities are valued at prices
obtained from a pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, such
securities will be valued at the mean quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type.
Securities with original maturities of one year or less having 60 days or
less to maturity are amortized to maturity based on their cost if acquired
within 60 days of maturity or, if already held on the 60th day, based on the
value determined on the 61st day. Forward currency contracts are valued at the
mean of representative quoted bid and asked prices.
Assets or liabilities initially expressed in terms of foreign currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith under
policies approved by the fund's Board. The fair value of all other assets is
added to the value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. 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.
REDEEMING SHARES
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By writing to American Funds Send a letter of instruction specifying the name of the fund, the
Service Company (at the number of shares or dollar amount to be sold, your name and
appropriate address indicated account number. You should also enclose any share certificates
under "Fund Organization and you wish to redeem. For redemptions over $50,000 and for certain
Management - Principal redemptions of $50,000 or less (see below), your signature must be
Underwriter and Transfer guaranteed by a member firm of a domestic stock exchange or the
Agent" in the prospectus) National Association of Securities Dealers, Inc. that is an eligible
guarantor institution, bank, savings association, or credit union. .
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 your investment If you redeem shares through your investment dealer, you may be
dealer charged for this service. SHARES HELD FOR YOU IN YOUR INVESTMENT
DEALER'S STREET NAME MUST BE REDEEMED THROUGH THE DEALER.
You may have a redemption You may use this option, provided the account is registered in the
check sent to you by using name of an individual(s), a UGMA/UTMA custodian, or a non-
retirement plan trust. These redemptions may not exceed $50,000
American FundsLine (R) per shareholder per day per fund account and the check must be
or American FundsLine made payable to the shareholder(s) of record and be sent to the
Online(SM) or by telephoning, address of record provided the address has been used with the
faxing, or telegraphing account for at least 10 days. See "Fund Organization and
American Funds Service Management - Principal Underwriter and Transfer Agent" in the
Company (subject to the prospectus and "Exchange Privilege" below for the appropriate
conditions noted in this section telephone or fax number.
and in "Telephone and
Computer Purchases
Redemptions and Exchanges"
below)
In the case of the money Upon request (use the account application for the money market
market funds, you may have funds) you may establish telephone redemption privileges (which will
redemptions wired to your bank enable you to have a redemption sent to your bank account) and/or
by telephoning American Funds check writing privileges. If you request check writing privileges, you
Service Company ($1,000 or will be provided with checks that you may use to draw against your
more) or by writing a check account. These checks may be made payable to anyone you
($250 or more) designate and must be signed by the authorized number of
registered shareholders exactly as indicated on your checking
account signature card.
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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, AND PROVIDED THE ADDRESS
HAS BEEN USED WITH THE ACCOUNT FOR AT LEAST 10 DAYS.
CONTINGENT DEFERRED SALES CHARGE -- A contingent deferred sales charge of 1%
applies to certain redemptions made within twelve months of purchase on
investments of $1 million or more and on any investment made with no initial
sales charge by any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 100 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.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN -- The automatic investment plan enables you to make
regular monthly or quarterly investments in shares through automatic charges to
your bank account. 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 dates you select. Bank accounts will be charged
on the day or a few days before investments are credited, depending on the
bank's capabilities, and you will receive a confirmation statement at least
quarterly. Participation in the plan will begin within 30 days after receipt
of the account application. If your 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. You may change the
amount of the investment or discontinue the plan at any time by writing to the
Transfer Agent.
AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- You 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 your 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 will
have the right, if you fail 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 toyou. These cross-reinvestments of
dividends and capital gain distributions will be at net asset value (without
sales charge).
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) or American FundsLine Online(SM)(see "American FundsLine(R) and
American FundsLine Online(SM)" below), or by telephoning 800/421-0180
toll-free, faxing (see "Transfer Agent" below for the appropriate fax numbers)
or telegraphing American Funds Service Company. (See "Telephone and Computer
Purchases, 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 simultaneously at the share prices next determined
after the exchange order is received. (See "Purchase of Shares--Price of
Shares.") 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
preceding 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 receiving 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 -- 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 your account. The Transfer Agent
arranges for the redemption by the fund of sufficient shares, deposited by you
with the Transfer Agent, to provide the withdrawal payment specified.
ACCOUNT STATEMENTS -- Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments , will be reflected on regular confirmation statements from
American Funds Service Company. Dividend and capital gain reinvestments and
purchases through automatic investment plans and certain retirement plans will
be confirmed at least quarterly.
AMERICAN FUNDSLINE(R) AND AMERICAN FUNDSLINE ONLINE(SM) -- You may check your
share balance, the price of your shares, or your most recent account
transaction, redeem shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(R) and American
FundsLine Online(SM). To use this service, call 800/325-3590 from a
TouchTone(TM) telephone or access the American Funds Website on the Internet at
www.americanfunds.com. Redemptions and exchanges through American FundsLine(R)
and American FundsLine Online(SM) are subject to the conditions noted above and
in "Redeeming Shares--Telephone and Computer Purchases, Redemptions and
Exchanges" below. You will need your fund number (see the list of funds in The
American Funds Group under "Purchase of 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.
TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES -- By using the
telephone (including American FundsLine(R) and American FundsLine Online(SM)),
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.
REDEMPTION OF SHARES - The fund's Articles of Incorporation permit the fund to
direct the Transfer Agent to redeem your shares if the shares through
redemptions, market decline or otherwise, have a value of less than $1000
(determined, for this purpose only as the greater of your cost or the current
net asset value of the shares, including any shares acquired through
reinvestment of income dividends and capital gain distributions), or are fewer
than ten shares. Prior notice of at least 60 days will be given to you before
the involuntary redemption provision is made effective with respect to your
account. You will have not less than 30 days from the date of such notice
within which to bring the account up to the minimum determined as set forth
above.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker (either directly or through its
correspondent clearing agents) is in a position to obtain the best price and
execution, the order is placed with that broker. This may or may not be a
broker who has provided investment research statistical, or other related
services to the Investment Adviser or has sold shares of the fund or other
funds served by the Investment Adviser. The fund does not consider that it has
an obligation to obtain the lowest available commission rate to the exclusion
of price, service and qualitative considerations.
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.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal year ended August 31, 1997
amounted to $739,000.
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, One Chase Manhattan Plaza,
New York, NY 10081, as Custodian.
TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the record of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. It was paid a fee of $454,000 for the fiscal
year ended August 31, 1997.
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 auditing and accounting.
SHAREHOLDER VOTING RIGHTS -- At any meeting of shareholders, duly called for
such purpose, 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, 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 Board of Directors.
PERSONAL INVESTING POLICY -- The Investment Adviser 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. You may obtain a summary of the personal investing policy by
contacting the Secretary of the fund.
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, 1997
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $12.27
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) $12.88
</TABLE>
INVESTMENT RESULTS
The fund's yield was 4.15% based on a 30-day (or one month) period ended
August 31, 1997, 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, 1997 was 6.87%.
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, 1997
were 4.20%, 6.05% and 7.43%, 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 319.6% compared with
360.7% 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, 1997, the fund
had a total return of 319.0% and the index showed a 338.5% return.Note that
past results are not an indication of future investment results.
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 Obligations bonds maturity 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, 1997
| |
<S> <C> <C>
Periods
Number of Years 9/1-8/31 Value
1 1996 - 1997 $10,420
2 1995 - 1996 10,990
3 1994 - 1996 11,951
4 1993 - 1996 11,934
5 1992 - 1996 13,413
6 1991 - 1996 14,869
7 1990 - 1996 16,601
8 1989 - 1996 17,405
9 1988 - 1996 19,195
10 1987 - 1997 20,476
11 1986 - 1997 20,703
12 1985 - 1997 25,694
13 1984 - 1997 29,902
14 1983 - 1997 32,116
15 1982 - 1997 37,360
16 1981 - 1997 46,952
17 1980 - 1997 42,764
18 1979*- 1997 41,961
</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, 1997)
<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 2,334 10,696
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 9,057 19,516
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 13,493 24,071
1991 1,621 14,165 24,165 10,762 326 15,800 26,888
1992 1,723 15,888 25,888 11,219 339 18,234 29,792
1993 1,773 17,661 27,661 11,838 577 21,077 33,492
1994 1,874 19,535 29,535 11,095 773 21,576 33,444
1995 2,011 21,546 31,546 11,371 792 24,192 36,355
1996 2,017 23,563 33,563 11,295 1,042 26,024 38,360
1997 2,131 25,693 35,693 11,686 1,193 29,082 41,961
</TABLE>
Includes reinvested dividends of $23,563 and reinvested capital gain
distributions of $1,146
* From inception on October 3, 1979
** Results assume deduction of the maximum sales charge of 4.75% from the
initial purchase payment.
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."
<TABLE>
THE TAX-EXEMPT BOND FUND OF AMERICA
Investment Portfolio, August 31, 1997
Geographic Breakdown
<S> <C> <C>
New York -- 12.51%
California -- 10.31%
Illinois -- 9.41%
Michigan -- 7.95%
Washington -- 7.29%
Pennsylvania -- 5.30%
Other States -- 41.16%
Cash & Short-Term Securities -- 6.07%
Aaa/AAA -- 32.26%
Aa/AA -- 17.20%
A/A -- 15.61%
Baa/BBB -- 23.22%
Below investment grade 5.64%
Cash & Short-Term Securities 6.07%
Principal Market
Amount Value
(000) (000)
Tax-Exempt Securities Maturing in More than
One Year - 93.93%
Alabama - 0.41%
Daughters of Charity, National Health System,
5.25% 2015 $4,000 $3,879
The Industrial Development Board of the City of
Mobile, Solid Waste Revenue Refunding Bonds (Mobile
Energy Services Co., LLC Projects), Series
1995, 6.95% 2020 2,500 2,723
Alaska - 1.22%
Housing Finance Corp.,
Collateralized Bonds (Veterans Mortgage
Program), Series 1992A-1, 6.75% 2032 4470 4696
Municipality of Anchorage:
1995 General Obligation Refunding General Purpose
Bonds, Series B, FGIC Insured, 6.00% 2012 2895 3178
Municipal Light & Power, Senior Lien Refunding Electric
Revenue Bonds, MBIA Insured, Series 1996, 6.50% 2014 5000 5750
City of Valdez, Marine Terminal Revenue Refunding
Bonds (BP Pipelines Inc. Project), Series 1993B,
5.50% 2028 6000 5843
Arizona - 0.46%
State Transportation Board, Subordinated Highway
Revenue Bonds, Series 1992B, 6.50% 2008
(Prerefunded 2002) 1850 2042
The Industrial Development Authority of the City
of Scottsdale, Hospital Revenue Refunding Bonds,
Scottsdale Memorial Hospitals, Series 1996A,
AMBAC Insured:
6.50% 2005 2270 2527
6.50% 2006 1200 1346
6.50% 2007 1290 1455
California - 10.31%
General Obligation Bonds:
6.75% 2006 1000 1150
5.25% 2016 7320 7207
Health Facilities Financing Authority,
Hospital Revenue Bonds (Downey Community Hospital), Series 1993,
5.75% 2015 4990 5023
Public Works Board, Lease Revenue Bonds,
California Community Colleges, 1994 Series B
(Various Community College Projects):
6.75% 2005 2505 2848
7.00% 2007 1315 1492
Statewide Communities Development Authority:
Children's Hospital of Los Angeles, MBIA Insured,
6.00% 2008 1715 1880
Kaiser Permanente Medical Care Program, Semi-Annual
Tender Revenue Bonds:
Series A, 7.00% 2018 1900 2030
1985 Tender Bonds, 5.55% 2025 5000 4944
St. Joseph Health System Obligated Group,
Certificates of Participation:
5.50% 2014 2000 2006
5.50% 2023 2700 2678
California Department of Water Resources, Central Valley Project,
Water System Revenue Bonds, Series Q, MBIA Insured, 5.375% 2027 2500 2458
Alameda Public Financing Authority, 1997 Revenue Bonds
(Marina Village Assessment District Bond Refinancing):
6.05% 2008 1000 1022
6.375% 2014 1000 1022
Anaheim Public Financing Authority, Lease Revenue Bonds (Anaheim
Public Improvements Project), Senior Lease Revenue Bonds,
1997 Series A, FSA Insured, 6.00% 2024 1000 1095
Association of Bay Area Governments Finance
Authority For Nonprofit Corporations, Certificates of Participation
(Stanford University Hospital),
Series 1993, 5.50% 2013 2000 2010
Castaic Lake Water Agency Financing Corporation,
Refunding Revenue Certificates of Participation
(Water System Improvement Projects), Series 1994A,
MBIA Insured, 7.00% 2011 2400 2896
Central Valley Financing Authority, Cogeneration
Project Revenue Bonds (Carson Ice-Gen Project), Series 1993:
6.00% 2009 3750 3897
6.10% 2013 1000 1039
Culver City Redevelopment Financing Authority, 1993
Tax Allocation Refunding Revenue Bonds, AMBAC Insured,
5.00% 2023 3635 3398
Long Beach Aquarium of the Pacific, Revenue Bonds
(Aquarium of the Pacific Project), 1995 Series A:
6.10% 2010 4000 4119
6.125% 2015 5500 5603
6.125% 2023 13000 13195
City of Los Angeles:
State Building Authority, Lease Revenue Refunding Bonds,
Department of General Services Lease, 1993 Series A:
5.375% 2006 3000 3145
5.50% 2007 7295 7703
Convention and Exhibition Center Authority,
Certificates of Participation:
7.375% 2018 (Prerefunded 1999) 1000 1078
7.00% 2020 (Prerefunded 1999) 2750 2946
Regional Airports Improvement Corp.,
Facilities Lease Refunding Revenue Bonds,
Issue of 1992, United Air Lines, Inc. (Los
Angeles International Airport), 6.875% 2012 2000 2163
Department of Water and Power, Electric Plant Revenue
Bonds, Issue of 1990, 7.10% 2031 (Subject to Crossover
Refunding 2001) 3000 3275
County of Los Angeles:
Capital Asset Leasing Corp., Certificates of
Participation (Marina Del Rey), Series A:
6.25% 2003 5500 5876
6.50% 2008 4750 5041
Metropolitan Transportation Authority,
Proposition C Sales Tax Revenue Bonds,
Second Series 1993B, AMBAC Insured, 5.25% 2023 1300 1250
Transportation Commission, Sales
Tax Revenue Bonds, Series 1989, 7.00% 2019 2000 2134
The Metropolitan Water District of Southern
California, Waterworks General Obligation Refunding
Bonds, 1993 Series A1, 5.50% 2010 3000 3114
Northern California Power Agency, Geothermal
Project #3, Special Revenue Bonds, 1993 Refunding
Series A, 5.60% 2006 3000 3088
County of Orange:
Aliso Viejo Special Tax Bonds
of Community Facilities District No. 88-1,
Series A of 1992:
7.15% 2006 (Prerefunded 2002) 2000 2292
7.35% 2018 (Prerefunded 2002) 10000 11548
Recovery Certificates of
Participation, 1996 Series A, MBIA Insured,
6.00% 2008 5000 5476
South Orange County, Public Financing Authority,
Special Tax Revenue Bonds, 1994 Series B (Junior
Lien Bonds):
6.65% 2003 1000 1038
6.75% 2004 1000 1039
City of Stockton, Mello-Roos Revenue Bonds, Series 1997A,
Community Facilities District No. 90-2 (Brookside Estates),
5.40% 2004(1) 500 500
Pleasanton Joint Powers Financing Authority,
Reassessment Revenue Bonds, 1993 Series A, 5.70% 2001 485 503
Riverside County Transportation Commission, Sales
Tax Revenue Bonds (Limited Tax Bonds), 1991
Series A, 6.50% 2009 (Prerefunded 2001) 3600 3956
Sacramento City Financing Authority, 1991 Revenue
Bonds, 6.80% 2020 (Prerefunded 2001) 5000 5592
Sacramento Cogeneration Authority, Cogeneration
Project Revenue Bonds:
Procter & Gamble Project, 1995 Series:
6.20% 2006 1000 1072
6.375% 2010 1000 1083
1995 Series:
6.00% 2002 1000 1058
6.00% 2003 2200 2339
County of Sacramento, Laguna Creek Ranch/Elliott Ranch
Community Facilities District No.1, Improvement Area No.2,
Special Tax Refunding Bonds, 6.30% 2021 500 500
San Francisco Bay Area Rapid Transit District,
Sales Tax Revenue Refunding Bonds, Series 1990,
AMBAC Insured, 6.75% 2009 3250 3507
Redevelopment Agency of the City and County of
San Francisco, Refunding Lease Revenue Bonds,
Series 1991 (George R. Moscone Convention
Center), 5.50% 2018 4000 3932
County of San Diego, Reassessment District No. 97-1
(4-S Ranch), Limited Obligation Improvement Bonds,
6.25% 2012 1000 993
The Regents of the University of California,
Various University of California Projects, 1993:
Series B, 5.375% 2009 2000 2075
Series A, 5.50% 2021 2000 1971
Colorado - 4.27%
Housing And Finance Authority:
Multi-Family Housing Insured
Mortgage Revenue Bonds, 1982 Series A, 9.00% 2025 1780 1796
Single-Family Housing Program Senior and Subordinate Bonds:
1996 Series C-2, 7.10% 2015 3000 3334
1997 Series A-3, 7.00% 2016 1750 1946
1997 Series B-3, 6.80% 2028 1000 1103
Student Obligation Bond Authority, Student Loan Revenue
Bonds, 1994 Series L, 6.00% 2001 1065 1114
Arapahoe County, Capital Improvement Trust Fund
Highway Revenue Bonds (E-470 Project):
6.90% 2015 (Prerefunded 2005) 5750 6702
6.95% 2020 (Prerefunded 2005) 20500 23964
City and County of Denver, Airport System Revenue Bonds,
Series 1992A:
7.25% 2025 (Prerefunded 2002) 5590 6406
7.25% 2025 (Prerefunded 2002) 14210 16285
The Regents of the University of Colorado, Master Lease
Purchase Agreement, Refunding Certificates of
Participation (Telecommunications and Cogeneration
Projects), Series 1996, AMBAC Insured, 6.00% 2005 5000 5368
Connecticut - 1.91%
Health and Educational Facilities Authority Revenue Bonds,
University of Hartford Issue, Series D, 6.75% 2012 2800 2846
Housing Finance Authority, Housing Mortgage Finance Program Bonds,
Subseries B-1, 6.25% 2011 1000 1048
Mashantucket (Western) Pequot Tribe, Special Revenue Bonds,
1996 Series A:
6.25% 2002 2000 2129
6.25% 2003 4000 4280
6.375% 2004 10700 11567
6.50% 2005 3000 3257
6.40% 2011 5000 5313
Delaware - 0.07%
Economic Development Authority, First Mortgage Revenue Bonds
(Peninsula United Methodist Homes, Inc. Issue), Series 1997A,
6.00% 2009 1000 1038
District of Columbia - 1.67%
General Obligation Bonds:
Series 1990 A, AMBAC Insured, 7.25% 2005
(Prerefunded 2000) 2500 2734
Series 1992 B, MBIA Insured:
6.125% 2003 1750 1877
6.30% 2010 2900 3142
AMBAC Insured, 5.20% 2004 1000 1025
Series 1993 A, AMBAC Insured, 5.875% 2005 3000 3199
Series 1993 B-1, AMBAC Insured, 5.50% 2009 3000 3124
Hospital Revenue Refunding Bonds
(Medlantic Healthcare Group, Inc. Issue):
Series 1992 A, 7.00% 2005 2000 2173
Series 1993 A, MBIA Insured:
6.00% 2011 3765 4057
5.25% 2012 2000 1988
Series 1997A, MBIA Insured:
5.10% 2008 1000 998
5.20% 2009 1000 997
Redevelopment Land Agency, Sports Arena Special Tax Revenue
Bonds, Series 1996, 5.625% 2010 1275 1267
Florida - 1.09%
Arbor Green Community Development District (City of Tampa,
Hillsborough County), Special Assessment Revenue Bonds,
Series 1996, 7.60% 2018 1000 1032
Broward County, Resource Recovery Revenue Bonds,
Series 1984:
North Project, 7.95% 2008 4500 4905
South Project, 7.95% 2008 2155 2347
The Crossing at Fleming Island Community Development
District (Clay County), Special Assessment Bonds,
Series 1995, 8.25% 2016 1105 1194
Mid-Bay Bridge Authority, Revenue Refunding Bonds:
Series 1993D, 6.125% 2022 500 511
Series 1991B, 8.50% 2022 (Subject to Crossover Refunding) 4000 4550
Northern Palm Beach County Improvement District, Water
Control and Improvement Bonds, Unit of Development No. 9A,
Series 1996A:
6.80% 2006 1145 1198
7.30% 2027 1500 1581
Georgia - 1.44%
Municipal Electric Authority:
General Power Revenue Bonds:
1992B Series, 6.50% 2012 1215 1356
CTFS-1992B Series, 6.375% 2016 1000 1098
Mel Power, Project One Subordinated Bonds, AMBAC Insured,
Series B:
6.00% 2007(1) 1995 2166
5.625% 2009(1) 1000 1049
City of Atlanta:
Airport Facilities Revenue
Refunding Bonds, Series 1994 A, AMBAC Insured,
6.50% 2009 1000 1142
Special Purpose Facilities
Revenue Refunding Bonds (Delta Air Lines, Inc.
Project), Series 1989 A, 7.50% 2019 4500 4795
Fulco Hospital Authority, Revenue Anticipation
Certificates:
St. Joseph's Hospital of Atlanta, Inc.,
Series 1994, 4.80% 2001 2305 2334
Georgia Baptist Health Care System
Project:
Series 1992 A:
6.40% 2007 1000 1056
6.25% 2013 2100 2173
6.375% 2022 1595 1650
Series 1992 B, 6.375% 2022 610 631
Development Authority of Fulton County, Special
Facilities Revenue Bonds (Delta Air Lines, Inc.
Project), Series 1992, 6.95% 2012 3115 3396
Hawaii - 0.12%
City and County of Honolulu, General Obligation Bonds, Refunding
and Improvement Series, 1993B, 5.00% 2013 2000 1966
Illinois - 9.41%
Build Illinois Bonds (Sales Tax Revenue Bonds),
Series O, 6.00% 2002 1000 1065
Civic Center Bonds (Special State Obligation Bonds),
Series 1991, AMBAC Insured, 6.25% 2020 6500 7227
Educational Facilities Authority Revenue
Bonds, Wesleyan University, Series 1993,
5.625% 2018 1490 1490
Health Facilities Authority:
Revenue Bonds, Series 1993:
OSF Healthcare System, 5.75% 2007 6760 6910
Rush-Presbyterian-St. Luke's Medical Center Obligated Group,
MBIA Insured, 5.25% 2020 3000 2861
Refunding Bonds:
Edward Hospital Project, Series 1993 A:
5.75% 2009 1100 1115
6.00% 2019 1435 1452
Advocate Health Care Network, Series 1997 A:
5.50% 2008 2110 2178
5.80% 2016 10000 10155
Revenue and Revenue Refunding Bonds:
Evangelical Hospitals Corp., Series C,
6.25% 2022 (Escrowed to Maturity) 4000 4438
Lutheran General Health, Series C, 6.00% 2018 2705 2860
Revenue Bonds, Series 1992 (Edward Hospital
Association Project), 7.00% 2022 1000 1073
Revenue Refunding Bonds (Fairview),
Series 1995 A:
6.25% 2001 1105 1126
6.50% 2006 770 794
7.40% 2023 1000 1045
Revenue Bonds, Series 1994 A (Northwestern Memorial
Hospital), 6.00% 2024 2000 2059
Housing Development Authority, Multi-Family Housing Bonds,
1992 Series A, 7.00% 2010 1490 1591
City of Chicago:
General Obligation Bonds, Project and Refunding,
Series 1995B, FGIC Insured, 5.125% 2025 4000 3794
The County of Cook, General Obligation Capital Improvement
Bonds, Series 1996, FGIC Insured:
6.00% 2006 3920 4282
6.50% 2011 4000 4623
Chicago-O'Hare International Airport:
General Airport Second Lien Revenue Refunding Bonds,
1993 Series C, MBIA Insured, 5.00% 2018 10000 9415
Special Facilities Revenue Bonds for United
Air Lines:
1984 Series C, 8.20% 2018 6645 7167
1988 Series B, 8.85% 2018 1865 2115
Special Facilities Revenue Refunding Bonds:
Delta Air Lines, Inc. Terminal, 6.45% 2018 4435 4636
Series 1994 (American Airlines, Inc. Project),
8.20% 2024 2750 3294
Metropolitan Pier and Exposition Authority, McCormick Place
Expansion Project Bonds, Series 1992A, 6.50% 2027
(Prerefunded 2003) 3910 4364
Metropolitan Water Reclamation District of Greater
Chicago, Series B:
Capital Improvement Bonds, 5.25% 2004 5000 5183
Refunding Bonds, 5.30% 2005 5325 5530
Sales Tax Revenue Bonds, Series 1997,
FGIC Insured, 5.375% 2027 5000 4902
School Reform Board of Trustees of the Board of Education
of the City of Chicago, Unlimited Tax General Obligation Bonds
(Dedicated Tax Revenues), Series 1997, AMBAC Insured, 6.75% 2012 4000 4691
Skyway Toll Bridge Refunding Revenue Bonds,
Series 1994:
6.50% 2010 (Prerefunded 2004) 13250 14745
6.75% 2014 (Prerefunded 2004) 6500 7321
Water Revenue Bonds, Refunding
Series 1993, FGIC Insured:
6.50% 2011 4435 5001
5.50% 2025 2565 2386
Regional Transportation Authority, Cook, Du Page,
Kane, Lake, McHenry and Will Counties,
General Obligation Bonds:
Series 1994D, FGIC Insured, 7.75% 2019 4500 5843
Series 1990A, AMBAC Insured, 7.20% 2020 1000 1236
Indiana - 2.95%
Educational Facilities Authority, Educational
Facilities Revenue Bonds (University of Evansville
Project), Series 1996, 5.25% 2005 1000 1009
Health Facility Financing Authority, Hospital Revenue Bonds
(Clarian Health Partners, Inc.), Series 1996A, 5.50% 2016 11000 10862
Housing Finance Authority, Single Family Mortgage
Refunding Revenue Bonds, 1992 Series A, 6.75% 2010 1275 1348
State Office Building Commission, Correctional
Facilities Program Revenue Bonds, Series 1995B,
AMBAC Insured, 6.25% 2012 8490 9530
Transportation Finance Authority, Airport
Facilities Lease Revenue Bonds, Series A:
6.50% 2007 3245 3538
6.50% 2007 (Prerefunded 2002) 3755 4162
6.75% 2011 (Prerefunded 2002) 2400 2688
City of East Chicago, Pollution Control Refunding
Revenue Bonds (Inland Steel Co. Project No. 11),
Series 1994, 7.125% 2007 3000 3272
Hospital Authority of the City of Fort Wayne,
Revenue Bonds (Parkview Memorial Hospital, Inc.
Project), Series 1992:
6.375% 2013 6000 6341
6.40% 2022 2000 2103
Indianapolis Local Public Improvement Bond Bank,
Series 1992 D Bonds, 6.60% 2007 1960 2207
Iowa - 0.13%
Finance Authority Single Family Mortgage Bonds, 1997 Series F,
5.55% 2016 2000 1993
Kentucky - 0.24%
Higher Education Student Loan Corp., Insured
Student Loan Revenue Bonds, 1994 Series B,
6.20% 1999 1140 1186
Kenton County Airport Board, Special Facilities
Revenue Bonds (Delta Air Lines, Inc. Project):
Series 1985, 7.80% 2015 1000 1073
1992 Series B, 7.25% 2022 1350 1481
Louisiana - 3.92%
Health Education Authority, Revenue Bonds (Lambeth House Project),
Series 1996, 9.00% 2026 9000 9616
Lake Charles Harbor and Terminal District, Port
Facilities Revenue Refunding Bonds (Trunkline
LNG Co. Project), Series 1992, 7.75% 2022 28000 32020
Offshore Terminal Authority, Deepwater Port
Refunding Revenue Bonds (LOOP INC. Project):
First Stage Series B:
5.40% 1998 3150 3195
6.25% 2004 5600 6063
First Stage Series E:
7.45% 2004 1000 1096
7.60% 2010 1000 1093
Public Facilities Authority, Fixed Rate Health and
Education Capital Facilities Revenue Bonds, AMBAC Insured,
Remarketing 6/2/97:
Series 1985A-1, 5.00% 2015 1500 1534
Series 1985B-1, 5.00% 2015 5000 5114
Parish of St. Charles, Adjustable/Fixed-Rate
Pollution Control Revenue Bonds (Louisiana
Power & Light Co. Project),
Series 1984, 8.25% 2014 2490 2696
Maine - 0.20%
Housing Authority, Mortgage Purchase
Bonds, 1994 Series C-1, 5.90% 2015 3115 3201
Maryland - 1.89%
Community Development Administration, Department
of Housing and Community Development, Single
Family Program Bonds:
1990 First Series, 7.60% 2017 5920 6190
1997 First Series, 5.25% 2005 5815 5948
Health and Higher Educational Facilities Authority:
Revenue Bonds, Howard County General Hospital
Issue, Series 1993:
5.50% 2013 2300 2277
5.50% 2021 6225 5962
Project and Refunding Revenue Bonds,
Peninsula Regional Medical Center Issue, Series 1993,
5.25% 2012 1000 993
Calvert County, Maryland Economic Development
Revenue Bonds (Asbury-Solomons Island Facility),
Series 1995, 8.625% 2024 2500 2798
Johns Hopkins Hospital Issue, Revenue Refunding
Bonds, Series 1993, 5.00% 2023 2000 1894
Prince George's County, Hospital Revenue Bonds,
Dimensions Health Corp. Issue:
Series 1992, 7.25% 2017 (Prerefunded 2002) 750 853
5.30% 2024 3305 3168
Massachusetts - 2.40%
General Obligation Bonds Consolidated Loan of
1989, Series D, MBIA Insured, 7.00% 2009
(Prerefunded 1999) 1000 1076
Massachusetts Bay Transportation Authority, General
Transportation System Bonds, 1994 Series A
Refunding Bonds, 7.00% 2007 10110 11767
Health and Educational Facilities Authority,
Revenue Bonds, Brigham and Women's Hospital Issue,
Series D, 6.75% 2024 7000 7566
Housing Finance Agency, Single Family Housing Revenue Bonds,
Series 39, 6.50% 2014 1425 1475
Water Resources Authority:
General Revenue Bonds, 1990 Series A, 7.50% 2009
(Prerefunded 2000) 9500 10433
General Revenue Refunding Bonds, 1993 Series B,
5.25% 2009 2500 2518
Boston City Hospital (FHA Insured Mortgage),
7.625% 2021 980 1084
The New England Loan Marketing Corp.,
Student Loan Refunding Bonds:
1992 Series A, 6.50% 2002 1000 1079
1993 Series G, 5.20% 2002 1200 1211
Michigan - 7.95%
State Hospital Finance Authority Hospital Revenue Refunding Bonds:
Daughters of Charity, National Health System, 5.50% 2005 1750 1827
Genesys Health System Obligated Group, Series 1995A:
7.10% 2002 2055 2237
7.20% 2003 1000 1103
8.00% 2005 8880 10260
8.10% 2013 5000 5855
8.125% 2021 4500 5240
7.50% 2027 3020 3368
McLaren Obligated Group, Series 1993A, 5.375% 2013 2985 2936
Sinai Hospital of Greater Detroit, Series 1995:
6.625% 2016 5750 6163
6.70% 2026 1680 1804
Pontiac Osteopathic, Series 1994 A:
6.00% 2014 3500 3556
6.00% 2024 3400 3431
State Housing Development Authority, Rental Housing
Revenue Bonds, 1994 Series A:
6.20% 2003 1600 1679
AMBAC Insured, 6.40% 2005 1850 1988
Job Development Authority, Pollution
Control Revenue Bonds (Chrysler Corp.
Project), Series 1984, 5.70% 1999 7000 7194
City of Detroit,
General Obligation Revenue Bonds (Unlimited Tax):
Series 1995-A, 5.60% 2001 4250 4377
Series 1995-B:
6.25% 2001 6585 6925
6.75% 2003 8675 9486
7.00% 2004 2500 2789
6.25% 2005 2625 2827
6.25% 2008 1730 1851
6.25% 2009 1195 1271
6.25% 2010 1250 1322
Downtown Development Authority,
Tax Increment Bonds (Development Area No. 1 Projects),
Series 1996C:
6.20% 2017 9310 9782
6.25% 2025 4265 4477
City of Royal Oak Hospital Financing Authority,
Hospital Revenue Refunding Bonds (William Beaumont
Hospital), Series 1993 G, 5.25% 2019 8000 7765
Charter County of Wayne, Special Airport Facilities
Revenue Refunding Bonds (Northwest Airlines, Inc.
Facilities), Series 1995, 6.75% 2015 13985 15160
Minnesota - 0.44%
Housing Finance Agency:
Housing Development Bonds, 1991 Series A, 6.85% 2007 2535 2673
Single Family Mortgage Bonds, 1994 Series E,
Remarketing 3/12/96, 5.60% 2013 2220 2249
Regents of the University of Minnesota, General
Obligations Bonds, Series 1996A, 5.50% 2006 2000 2113
Mississippi - 0.58%
Claiborne County, Adjustable/Fixed-Rate Pollution
Control Revenue Bonds (Middle South Energy, Inc.
Project), Series C, 9.875% 2014 8500 9219
Nevada - 0.24%
City of Henderson, Local Improvement
District No. T-10 (Seven Hills) Limited Obligation
Improvement Bonds, 7.50% 2015 1500 1548
General Obligation (Limited Tax) Bonds, Series A-2, 6.00% 2011 2135 2340
New Hampshire - 0.19%
Business Finance Authority, Pollution Control
Refunding Revenue Bonds (The United Illuminating
Co. Project), Series A 1993, 5.875% 2033 2985 2944
New Jersey - 1.36%
Economic Development Authority, First
Mortgage Revenue Fixed Rate Bonds:
Fellowship Village Project, Series 1995A, 9.25% 2025 7000 8316
Winchester Gardens at Ward Homestead Project,
Series 1996A:
8.50% 2016 4000 4236
8.625% 2025 3500 3725
Housing and Mortgage Finance Agency,
Section 8 Bonds, 1991 Series A:
6.80% 2005 2570 2757
6.85% 2006 2500 2677
New Mexico - 0.20%
Mortgage Finance Authority, Single Family Mortgage
Purchase Refunding Senior Bonds, 1992 Series
A-1, 6.85% 2010 3040 3188
New York - 12.51%
Dormitory Authority:
State University Educational Facilities Revenue
Refunding Bonds:
Series B, 5.70% 2004 1485 1559
Series 1990 A, 7.50% 2013 3500 4297
Series 1990 B:
7.50% 2011 1720 2063
7.00% 2016 1000 1078
Court Facilities, Lease Revenue Bonds, Series 1993A,
5.50% 2010 4000 4032
City University System, Consolidated Second
General Resolution Revenue Bonds:
Series 1990 F, FGIC Insured, 7.50% 2020
(Prerefunded 2000) 7100 7852
Series G, 5.00% 2002 2000 2035
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 6000 6413
Series 1991 E, 6.875% 2010 1500 1650
Series 1990 A, 7.50% 2012 500 552
Housing Finance Agency, Health Facilities Revenue Bonds
(New York City), 1996 Series A Refunding, 6.375% 2003 5000 5399
Local Government Assistance Corp.:
Series 1991 A, 7.00% 2016 (Prerefunded 2001) 7000 7756
Series 1991 B, 7.50% 2020 (Prerefunded 2001) 6925 7788
Series 1991 C, 0% 2005 5000 3486
Series 1991 D:
7.00% 2011 (Prerefunded 2002) 2000 2249
7.00% 2018 (Prerefunded 2002) 8650 9726
6.75% 2021 (Prerefunded 2002) 1350 1504
Series 1992 C, 5.50% 2022 1000 984
State Medical Care Facilities Finance Agency:
Mental Health Services Facilities Improvement
Revenue Bonds:
1991 Series A, 7.50% 2021 (Prerefunded 2001) 3645 4085
1994 Series A, 5.10% 2003 1720 1753
1997 Series B, 5.30% 2004 2220 2282
Series D, 5.25% 2023 1000 939
Series 1997B:
6.00% 2005 1000 1067
6.00% 2007 1750 1880
5.60% 2008 1300 1345
5.70% 2009 2795 2873
St. Luke's-Roosevelt Hospital Center FHA-Insured Mortgage
Revenue Bonds, 1993 Series A, 5.60% 2013 9380 9578
Metropolitan Transit Authority, Transit Facilities
Service Contract Bonds, Series O and P,
5.375% 2002 4000 4135
Urban Development Corp., Correctional
Capital Facilities Revenue Bonds:
Series 1993 A, Refunding Series, 5.30% 2005 2800 2865
Series 2, 6.50% 2021 (Prerefunded 2001) 3700 3959
Battery Park City Authority, Revenue Refunding
Bonds, Series 1993 A:
5.00% 2013 5000 4817
5.25% 2017 2500 2418
4.75% 2019 18000 16028
City of New York, General Obligation Bonds:
Fiscal 1992 Series C, 6.50% 2004 2500 2696
Fiscal 1992 Series H:
6.875% 2002 (Escrowed to Maturity) 285 313
6.875% 2002 1615 1755
Fiscal 1995 Series F:
6.375% 2006 3000 3261
6.60% 2010 2000 2176
6.625% 2025 1500 1634
Fiscal 1993 Series A, 6.25% 2003 2200 2365
Fiscal 1991 Series B, 8.25% 2006 1500 1832
Fiscal 1995 Series E:
6.50% 2004 4550 4946
MBIA Insured, 6.20% 2008 3000 3311
Fiscal 1996 Series E, 6.50% 2006 7500 8230
Fiscal 1996 Series I, 6.50% 2006 7000 7687
Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds:
Fiscal 1991 Series C, 7.75% 2020 (Prerefunded 2001) 5000 5666
Fiscal 1994 Series B:
4.875% 2002 3000 3044
5.50% 2019 2000 1985
Transit Authority, Transit
Facilities Revenue Bonds (Livingston Plaza
Project), Series 1990, FSA Insured, 7.50% 2020
(Prerefunded 2000) 4000 4370
Triborough Bridge and Tunnel Authority, General
Purpose and Revenue Bonds:
Series S, 7.00% 2021 (Prerefunded 2001) 11400 12523
Series Y, 6.00% 2012 1000 1095
North Carolina - 1.51%
Eastern Municipal Power Agency, Power System Revenue
Bonds:
Series 1993 B:
6.00% 2006 3000 3169
7.25% 2007 5000 5735
7.00% 2008 10045 11373
6.00% 2026 1700 1754
Series 1993 C, 5.00% 2021 2300 2053
Ohio - 0.12%
County of Franklin, Hospital Facilities Revenue
Refunding and Improvement Bonds (Doctors Hospital
Project), 5.60% 2006 1750 1854
Oklahoma - 0.87%
Health System Revenue
Bonds, Baptist Medicine Center of Oklahoma,
Series 1995 C, AMBAC Insured, 6.375% 2009 2500 2761
State Industrial Authority, Health System
Revenue Refunding Bonds (Obligated Group consisting
of INTEGRIS Baptist Medical Center, Inc., INTEGRIS
South Oklahoma City Hospital Corp. and INTEGRIS
Rural Health, Inc.), AMBAC Insured, Series 1995D:
6.00% 2009 2500 2700
6.00% 2010 5020 5395
Tulsa Industrial Authority, Hospital Revenue
and Refunding Bonds,
St. John Medical Center Project, Series 1996,
5.375% 2017 3000 2970
Pennsylvania - 5.30%
Convention Center Authority, Refunding
Revenue Bonds, 1994 Series A, 6.25% 2004 10000 10583
Higher Educational Facilities Authority, Revenue
Bonds (Thomas Jefferson University), 1992
Series A, 6.625% 2009 1250 1363
Housing Finance Authority, Single Family Mortgage
Revenue Bonds,
Series 1992-33, 6.85% 2009 1000 1065
Industrial Development Authority,
Economic Development Revenue Bonds, Series 1994,
AMBAC Insured, 7.00% 2007 1750 2052
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) 4500 4944
6.50% 2021 (Prerefunded 2002) 3000 3296
Series A of 1993, 5.00% 2021 8000 7397
Frankford Hospital, Series A:
6.00% 2014 2705 2758
6.00% 2023 4000 4054
Hospital Authority of Philadelphia, Hospital
Revenue Bonds (Temple University Hospital):
Series of 1993 A, 6.50% 2008 15500 17028
5.70% 2009 1000 1014
Series of 1983, 6.625% 2023 15385 16521
City of Pottsville Hospital Authority, Hospital
Revenue Bonds (The Pottsville Hospital and Warne
Clinic), Series of 1994, 7.25% 2024 8500 9091
Scranton-Lackawanna Health and Welfare Authority,
Hospital Revenue Bonds (Moses Taylor Hospital Project),
Series 1997:
6.05% 2010 1000 1016
6.15% 2012 2245 2273
Rhode Island - 1.81%
Convention Center Authority, Refunding Revenue
Bonds, MBIA Insured, 1993 Series B, 5.00% 2008 2790 2822
Depositors Economic Protection Corp., Special
Obligation Bonds:
1993 Series A, MBIA Insured:
5.75% 2012 4850 5195
6.25% 2016 4500 4978
1992 Series A, FSA Insured, 6.625% 2019
(Prerefunded 2002) 1000 1112
1993 Series A (Escrowed to Maturity):
6.375% 2022 7000 7889
5.75% 2021 1210 1260
5.75% 2021 2715 2828
Housing and Mortgage Finance Corporation,
Homeownership Opportunity Bonds, Series 3-A,
7.80% 2010 2500 2677
South Dakota - 0.09%
Housing Development Authority,
Homeownership Mortgage Bonds, 1995 Series A and B,
6.00% 2023 1305 1350
Tennessee - 2.27%
Health and Educational Facilities Board of the
Metropolitan Government of Nashville and Davidson
County (Blakeford Project), 9.25% 2024 6600 7417
Memphis-Shelby County Airport Authority, Special
Facilities Revenue Bonds, Refunding Series 1992
(Federal Express Corp.), 6.75% 2012 26375 28788
Texas - 2.86%
National Research Laboratory Commission, General
Obligation Bonds, Series 1990 (Superconducting
Super Collider Project), 7.125% 2020
(Prerefunded 2000) 14450 15738
Dallas/Fort Worth International Airport
Facility Improvement Corp.:
American Airlines, Inc., Revenue Bonds, Series 1995,
6.00% 2014 2590 2669
Delta Air Lines, Inc., Revenue Refunding Bonds,
Series 1993, 6.25% 2013 2400 2497
Harris County Health Facilities Development
Corp., SCH Health Care System Revenue Bonds
(Sisters of Charity of the Incarnate Word, Houston):
Series 1991A, 7.10% 2021 (Prerefunded 2001) 8000 8907
Series 1997B, 6.25% 2027 1500 1664
Hidalgo County Health Services Corp., Hospital Revenue
Bonds (Mission Hospital, Inc. Project), Series 1996:
7.00% 2008 1000 1089
6.75% 2016 1740 1839
Northeast Medical Center, Hospital Authority, County of Humble,
Revenue Bonds, FSA Insured, 6.25% 2012 1000 1104
Northside Independent School District (Bexar,
Medina and Bandera Counties), Unlimited
Tax School Building Bonds, Series 1991, 6.375% 2008
(Prerefunded 2001) 3500 3731
Tomball Hospital Authority, Hospital Revenue
Refunding Bonds, Series 1993, 6.125% 2023 6250 6350
Utah - 1.47%
Housing Finance Agency, Single Family Mortgage
Bonds, 1995 Issue E (Federally Insured or
Guaranteed Mortgage Loans), 5.50% 2024 1415 1438
Intermountain Power Agency:
Special Obligation Refunding Bonds,
5th Crossover Series 1987B,
FGIC Insured, 7.00% 2015 7000 7157
1997 Series A, AMBAC Insured, 6.50% 2011 1435 1650
Salt Lake City, Hospital Revenue Bonds, Series
1992 (IHC Hospitals, Inc.):
5.50% 2021 8100 8016
6.25% 2023 5000 5229
Vermont - 0.02%
Housing Finance Agency, Single Family
Housing Bonds, Series 4, 5.75% 2012 290 295
Virginia - 1.23%
Housing Development Authority, Commonwealth Mortgage
Bonds:
Series D, Subseries D-3, Remarketing 5/30/96:
6.00% 2012 1430 1491
6.00% 2012 1470 1533
6.05% 2013 1510 1578
6.05% 2013 1555 1625
Series D, Subseries D-4, Remarketing 7/16/96:
6.00% 2009 1180 1239
6.00% 2009 1220 1281
6.05% 2010 1255 1316
6.05% 2010 1290 1353
Industrial Development Authority of Fairfax
County, Hospital Revenue Refunding Bonds (Inova
Health System Hospitals Project), Series 1993A:
4.80% 2005 1850 1857
5.00% 2011 1300 1281
5.00% 2023 1200 1125
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 1000 1146
Industrial Development Authority of the City of
Norfolk, Hospital Revenue Bonds (Sentara
Hospitals-Norfolk Project), Series 1991,
6.50% 2013 2500 2706
Washington - 7.29%
General Obligation, Series B:
5.50% 2010 2000 2101
5.50% 2018 13100 13492
Health Care Facilities Authority, Revenue Bonds,
Refunding Series 1997A (Virginia Mason Medical Center),
MBIA Insured:
6.00% 2005 2325 2506
6.00% 2007 1500 1629
Public Power Supply System:
Nuclear Project No. 1 Refunding Revenue Bonds,
Series 1989A:
7.50% 2015 (Prerefunded 1999) 1820 1962
6.00% 2017 2000 2006
Nuclear Project No. 2 Refunding Revenue Bonds:
Series 1990A, 7.375% 2012 (Prerefunded 2000) 17335 19063
Series 1990C, 7.30% 2000 1800 1934
Series 1992A, 5.90% 2004 3850 4079
Series 1993B, FSA Insured, 5.65% 2008 3030 3188
Series 1994A:
6.00% 2007 19900 21342
5.25% 2008 5000 5012
Nuclear Project No. 3 Refunding Revenue Bonds:
BIG Insured, 7.25% 2016 (Prerefunded 1999) 5000 5369
Series 1989 B:
7.25% 2015 (Prerefunded 2000) 5450 5911
FGIC Insured, 7.00% 2005 14400 15476
5.375% 2015 5000 4874
7.125% 2016 5250 6215
Wisconsin - 1.23%
Health and Educational Facilities Authority,
Revenue Bonds:
Children's Hospital Project, Series 1993, FGIC Insured,
5.50% 2006 2000 2102
Medical College of Wisconsin, Series 1993, 5.95% 2015 3000 3062
Housing and Economic Development Authority, Housing
Revenue Bonds, 6.40% 2003 3480 3663
Pollution Control and Industrial Development Revenue
Bonds (General Motors Corp. Projects), City
of Janesville, Series 1984, 5.55% 2009 3000 3080
Public Power Incorporated System,
Power Supply System Revenue Bonds, Series
1990 A, AMBAC Insured, 7.40% 2020
(Prerefunded 2000) 500 551
City of Superior, Limited Obligation
Refunding Revenue Bonds (Midwest Energy Resources
Co. Project), Series E-1991 (Collateralized),
FGIC Insured, 6.90% 2021 6000 7210
Wyoming - 0.09%
Community Development Authority, Single Family
Mortgage Bonds, 1989 Series A, 7.90% 2017 405 419
Student Loan Corp., Student Loan Revenue
Refunding Bonds, Series 1991, 6.25% 1999 950 987
Guam - 0.19%
General Obligation Bonds, 1995 Series A, 5.625% 2002 3000 3036
-----------
1496327
-----------
Tax-Exempt Securities Maturing in
One Year or Less - 4.95%
State of Colorado, Tax and Revenue Anticipation Notes,
1997 Series A, 4.50% 6/26/98 3800 3821
State of California, County of Contra Costa, Tax and Revenue
Anticipation Notes, 1997-1998 Series A, 4.50% 7/1/98 11400 11465
Harris County Toll Road (Texas), Unlimited Tax and Subordinate Lein Revenue,
Bonds, Series 1984,
10.375% 2014 (Prerefunded 1998) 1000 1027
State of Texas, City of Houston, Tax and Revenue Anticipation Notes,
Series 1997, 4.50% 6/30/98 7000 7039
State of California, Los Angeles County, Tax and Revenue
Anticipation Notes, Series A, 4.50% 6/30/98 23300 23432
State of Michigan, Full Faith and Credit General Obligation
Notes, 4.50% 9/30/97 11050 11056
State of New Mexico, 1997-98 Tax and Revenue Ancticipation Notes,
Series 1997, 4.50% 6/30/98 1500 1508
City of New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds,
Fiscal 1989 Series B, FGIC Insured,
7.625% 2017 (Prerefunded 1998) 3000 3134
State of North Carolina, Raleigh-Durham Airport Authority, Special
Facility Refunding Revenue Bonds (American Airlines, Inc. Project),
Series B, 3.75% 11/1/15(2) 500 500
State of Pennsylvania, School District of Philadelphia, Tax and
Revenue Anticipation Notes, Series of 1997-1998,
4.50% 6/30/98 6000 6031
City of Saint Paul (Minnesota), Housing and Redevelopment Authority,
Hospital Facility Revenue Bonds (Healtheast Project),
Series 1987-B:
9.75% 2017 (Subject to Crossover Prerefunding 1997) 3005 3092
9.75% 2017 (Subject to Crossover Prerefunding 1997) 495 509
State of Arizona, Salt River Project Agricultural Improvement and
Power District, Electric System Revenue Bonds,
Refunding Series A, 7.875% 2028 (Prerefunded 1998) 1000 1033
The Regents of the University of California,
Revenue Bonds, Series A, MBIA Insured, 6.90% 2015
(Prerefunded 1997) 1500 1530
Commonwealth Transportation Board, Commonwealth of
Virginia Transportation Contract Revenue Bonds,
Series 1988 (Route 28 Project), 7.80% 2016
(Prerefunded 1998) 3500 3639
-----------
78816
-----------
TOTAL TAX-EXEMPT SECURITIES (cost: $1,462,874,000) 1575143
Excess of cash and receivables over payables 17956
-----------
NET ASSETS $1,593,099
======
(1)Represents a when-issued security.
(2)Coupon rate changes periodically.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
The Tax-Exempt Bond Fund of America
Financial Statements
<S> <C> <C>
Statement of Assets and Liabilities
at August 31, 1997 (dollars in thousands)
Assets:
Tax-exempt securities (cost: $1,462,874) $1,575,143
Cash 84
Receivables for--
Sales of fund's shares 4,147
Accrued interest 22,358 26,505
------------------ ------------------
1,601,732
Liabilities:
Payables for--
Purchases of investments 3,689
Repurchases of fund's shares 785
Dividends payable 2,839
Management services 483
Accrued expenses 837 8,633
------------------ ------------------
Net Assets at August 31, 1997--
Equivalent to $12.27 per share on
129,790,898 shares of $1 par value
capital stock outstanding (authorized
capital stock--200,000,000 shares) $1,593,099
===========
Statement of Operations
For the year ended August 31, 1997
(dollars in thousands)
Income:
Investment Income:
Interest on tax-exempt securities $90,918
Expenses:
Management services fee $5,567
Distribution expenses 3,718
Transfer agent fee 454
Reports to shareholders 121
Registration statement and prospectus 157
Postage, stationery and supplies 147
Directors' fees 24
Auditing and legal fees 39
Custodian fee 60
Taxes other than federal income tax 23
Other expenses 85 10,395
------------------
Net investment income 80,523
------------------
Realized Gain and Increase in Unrealized
Appreciation on Investments:
Net realized gain 3,847
Net unrealized appreciation on investments:
Beginning of year 59,520
End of year 112,269
------------------
Net change in unrealized appreciation
on investments 52,749
------------------
Net realized gain and increase in
unrealized appreciation on investments 56,596
------------------
Net Increase in Net Assets Resulting
from Operations $137,119
===========
Statement of Changes in Net Assets
(dollars in thousands)
Year ended August 31
1997 1996
------------------ ------------------
Operations:
Net investment income $ 80,523 $ 79,143
Net realized gain on investments 3,847 7,208
Increase in unrealized appreciation
on investments 52,749 (7,326)
------------------ ------------------
Net increase in net assets
resulting from operations 137,119 79,025
------------------ ------------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (80,789) (79,078)
Distributions from net realized gain on
investments (4,359) (10,310)
------------------ ------------------
Total dividends and distributions (85,148) (89,388)
------------------ ------------------
Capital Share Transactions:
Proceeds from shares sold:
20,390,763 and 24,816,640
shares, respectively 246,583 298,087
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
4,336,074 and 4,705,048 shares,
respectively 52,363 56,559
Cost of shares repurchased:
19,372,679 and 24,383,250
shares, respectively (233,780) (292,301)
------------------ ------------------
Net increase in net assets
resulting from capital share
transactions 65,166 62,345
------------------ ------------------
Total Increase in Net Assets 117,137 51,982
Net Assets:
Beginning of year 1,475,962 1,423,980
------------------ ------------------
End of year $1,593,099 $1,475,962
=========== ===========
See Notes to Financial Statements
</TABLE>
<PAGE>
Notes to Financial Statements
1. The Tax-Exempt Bond Fund of America, Inc. (the "fund") is registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund seeks a high level of federally tax-free current
income, consistent with the preservation of capital, through a diversified
portfolio of municipal bonds. 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 adviser deems it appropriate to do so,
securities will be valued at the mean of their representative quoted bid and
asked prices or, if such prices are not available, at the mean of such prices
for securities of comparable maturity, quality and type. Securities for which
market quotations are not readily available are valued at fair value by the
Board of Directors or a committee thereof. All securities with 60 days or less
to maturity are valued at amortized cost, which approximates market value.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. 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. Amortization of market discounts on
securities is recognized upon disposition, subject to applicable tax
requirements. Dividends to shareholders are declared daily after the
determination of the fund's net investment income and paid to shareholders
monthly.
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, 1997, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $112,269,000, of which $113,051,000
related to appreciated securities and $782,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended August 31, 1997. The cost of
portfolio securities for book and federal income tax purposes was
$1,462,874,000 at August 31, 1997.
3. The fee of $5,567,000 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; 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.
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, 1997,
distribution expenses under the Plan were $3,718,000. As of August 31, 1997,
accrued and unpaid distribution expenses were $770,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $454,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $632,000 (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 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,
1997, aggregate amounts deferred and earnings thereon were $57,000.
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, 1997, accumulated undistributed net realized gain on
investments was $3,576,000 and additional paid-in capital was $1,347,447,000.
The fund made purchases and sales of investment securities of
$258,311,000 and $210,874,000 respectively, during the year ended August 31,
1997.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $60,000 includes $5,000 that was paid by these credits
rather than in cash.
<PAGE>
<TABLE>
Per-Share Data and Ratios
Year Ended August 31
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
Net Asset Value, Beginning
of Year $11.86 $11.94 $11.65 $12.43 $11.78
------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income .64 .64 .68 .67 .68
Net realized and
unrealized gain
(loss) on investments .45 .01 .29 (.69) .73
------- ------- ------- ------- -------
Total income from
investment operations 1.09 .65 .97 (.02) 1.41
------- ------- ------- ------- -------
Less Distributions:
Dividends from net
investment income (.64) (.64) (.68) (.68) (.68)
Distributions from net
realized gains (.04) (.09) - (.08) (.08)
------- ------- ------- ------- -------
Total distributions (.68) (.73) (.68) (.76) (.76)
------- ------- ------- ------- -------
Net Asset Value, End of Year $12.27 $11.86 $11.94 $11.65 $12.43
======= ======= ======= ======= =======
Total Return* 9.39% 5.51% 8.70% (.14)% 12.42%
Ratios/Supplemental Data:
Net assets, end of year
(in millions) $1,593 $1,476 $1,424 $1,385 $1,327
Ratio of expenses to average
net assets .68% .68% .66% .69% .71%
Ratio of net income to
average net assets 5.27% 5.35% 5.87% 5.53% 5.62%
Portfolio turnover rate 14.39% 26.89% 49.28% 22.40% 15.55%
*Calculated without deducting a sales charge. The maximum
sales charge is 4.75% of the fund's offering price.
</TABLE>
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, 1997, the results of its operations,
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, 1997 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.
/s/ Price Waterhouse LLP
Los Angeles, California
September 30, 1997
Tax Information (Unaudited)
During the fiscal year ended August 31, 1997 the fund paid 64.0 cents per share
of exempt-interest distributions within the meaning of Section 852(b)(5)(A) of
the Internal Revenue Code and 3.5 cents per share of capital gain distributions
within the meaning of Section 852(b)(3)(C) of the Internal Revenue Code.
This information is given to meet certain requirements of the Internal Revenue
Code and should not be used by shareholders for preparing their income tax
returns. For tax return preparation purposes, please refer to the calendar
year-end information you receive from the fund's transfer agent.
<PAGE>
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. Copy of Articles of Incorporation (September 1979) and copy of Articles
Supplementary Increasing Authorized Stock as authorized by Section 2-105(c) of
the Maryland General Corporation Law (September 1987).
2. Copy of By-laws.
3. None.
4. Copy of specimen share certificate.
5. Copy of Investment Advisory and Service Agreement dated March 1, 1994.
6. Copy of Principal Underwriting Agreement dated April 1, 1989, form of
Selling Group Agreement, Supplemental Selling Group Agreement, Bank Selling
Group Agreement, Hold Harmless Agreement, and State Addendum to Selling Group
Agreement.
7. None
8. Copy of form of Global Custody Agreement.
9. On file (see SEC file nos. 811-3624 and 2-49291, Post-Effective Amendment
No. 21 and Amendment No. 21 on Form N-1A filed 10/31/95).
10. Not applicable to this filing.
11. Consent of independent accountants.
12. None.
13. Copy of investment letter from the Investment Adviser relating to initial
shares dated September 3, 1979.
14. Copies of the model plan used in the establishment of any retirement plan
- - not applicable.
15. Copy of Plan of Distribution (12b-1) dated August 17, 1989.
16. On file (see SEC file nos. 811-3624 and 2-49292, Post-Effective Amendment
No. 22 and Amendment No. 22 filed 12/23/96).
17. Financial data schedule (EDGAR).
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of August 31, 1997.
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
<S> <C>
Capital Stock 32,272
($1.00 par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under Investment Advisor/Mutual fund Errors
and Omissions Policies 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 Registrant itself if 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).
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 L. Abzug Regional Vice President None
27304 Park Vista Road
Van Nuys, CA 91301
John A. Agar Regional Vice President None
1501 N. University, Suite 227A
Little Rock AR 72207
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
S Richard L. Armstrong Assistant Vice President None
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
B Carl R. Bauer Assistant Vice President None
Michelle A. Bergeron Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
Joseph T. Blair Senior Vice President None
27 Drumlin Road
West Simsbury, CT 06092
John A. Blanchard Regional Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
P.O. Box 1665
Brentwood, TN 37024-1665
Michael L. Brethower Vice President None
2320 North Austin Avenue
Georgetown, TX 78626
C. Alan Brown Regional Vice President None
4129 Laclede Avenue
St. Louis, MO 63108
L Daniel C. Brown Senior Vice President None
H J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Senior Vice President None
609 W. Littleton Blvd., Suite 310
Littleton, CO 80121
Christopher J. Cassin Senior Vice President None
111 W. Chicago Avenue, Suite G3
Hinsdale, IL 60521
Denise M. Cassin Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director, Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th St. Ste. 12K
New York, NY 10023
S David Coolbaugh Assistant Vice President None
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Senior Vice President None
4116 Woodbine Street
Chevy Chase, MD 20815
L Carl D. Cutting Vice President None
Daniel J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P. O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Senior Vice President None
325 E. Eisenhower Parkway
Suite 106, #16
Ann Arbor, MI 48108
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
L Michael J. Downer Secretary Vice President
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Vice President None
L Paul H. Fieberg Senior Vice President None
John Fodor Vice President None
15 Latisquama Road
Southborough, MA 01772
L Mark P. Freeman, Jr. Director, President None
Clyde E. Gardner Senior Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Vice President None
12210 Taylor Road
Plain City, OH 43064
L Paul G. Haaga, Jr. Director Chairman of the Board
B Mariellen Hamann Assistant Vice President None
David E. Harper Senior Vice President None
R.D. 1, Box 210, Rte 519
Frenchtown, NJ 08825
Ronald R. Hulsey Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Regional Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33483
L Robert L. Johansen Vice President, Controller None
Michael J. Johnston Chairman of the Board None
630 Fifth Avenue, 36th Floor
New York, NY 10111
B Damien M. Jordan Vice President None
V. John Kriss Senior Vice President None
P. O. Box 274
Surfside, CA 90743
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
B Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
1940 Blake Street, #303
Denver, CO 80202
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - Institutional None
Investment Services
S Stella Lopez Vice President None
LW Robert W. Lovelace Director None
Steve A. Malbasa Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Littleton, CO 80121
L J. Clifton Massar Director, Senior Vice President None
L E. Lee McClennahan Senior Vice President None
L Jamie R. McCrary Assistant Vice President None
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
L R. William Melinat Vice President - Institutional None
Investment Services
David R. Murray Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
P. O. Box 470528
Charlotte, NC 28247-0528
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
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 Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
B Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, S.E.
Mercer Island, WA 98040
L John O. Post, Jr. Vice President None
S Richard P. Prior Assistant Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
George S. Ross Senior Vice President None
55 Madison Avenue
Morristown, NJ 07962
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30008 Oakland Hills Drive
Georgetown, TX 78628
Christopher Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30005
Richard R. Samson Vice President None
4604 Glencoe Avenue, Ste. 4
Marina del Rey, CA 90292
Joseph D. Scarpitti Regional Vice President None
31465 St. Andrews
Westlake, OH 44145
L Daniel B. Seivert Assistant Vice President None
L R. Michael Shanahan Director None
David W. Short Director, Senior Vice President None
1000 RIDC Plaza, Suite 212
Pittsburgh, PA 15238
William P. Simon, Jr. Senior Vice President None
554 Canterbury Lane
Berwyn, PA 19312
L John C. Smith Vice President - None
Institutional Investment Services
L Mary E. Smith Vice President - Institutional Investment Services None
Rodney G. Smith Vice President None
100 N. Central Expressway, Suite 1214
Richardson, TX 75080
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
L Kristen J. Spazafumo Assistant Vice President None
Daniel S. Spradling Senior Vice President None
4 West Fourth Avenue, Suite 406
San Mateo, CA 94402
B Max D. Stites Vice President None
Thomas A. Stout Regional Vice President None
12913 Kendale Lane
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
L Drew W. Taylor Assistant Vice President None
S James P. Toomey Vice President None
I Christopher E. Trede Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
60 Reedland Woods Way
Tiburon, CA 94920
H Andrew J. Ward Vice President None
L David M. Ward Vice President - Institutional None
$Investment Services
Thomas E. Warren Regional Vice President None
1701 Starling Drive
Sarasota, FL 34231
L J. Kelly Webb Senior Vice President, Treasurer None
Gregory J. Weimer Vice President None
125 Surrey Drive
Canonsburg, PA 15317
B Timothy W. Weiss Director None
N. Dexter Williams Senior Vice President None
25 Whitside Court
Danville, CA 94526
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Vice President None
H Marshall D. Wingo Director, Senior Vice President None
L Robert L. Winston Director, Senior Vice President None
Laurie B. Wood Regional Vice President None
3500 W. Camino de Urania
Tucson, AZ 85741
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
320 Robinson Drive
Tustin Ranch, CA 92782
</TABLE>
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
B Business Address, 135 South State College Boulevard, Brea, CA 92821
S Business Address, 8000 IH-10 West, Suite 1400, San Antonio, TX 78230
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(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 92821.
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.
<PAGE>
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 27th
day of October, 1997.
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 27, 1997, by the
following persons in the capacities indicated.
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/ Anthony W. Hynes, Jr. Treasurer
(Anthony W. Hynes, Jr.)
(3) Directors:
H. Frederick Christie* Director
Don R. Conlan*/1/ Director
Diane C. Creel* Director
Martin Fenton, Jr.* Director
Leonard R. Fuller* Director
/s/ Abner D. Goldstine President and Director
(Abner D. Goldstine)
/s/ Paul G. Haaga, Jr. Chairman of the Board
(Paul G. Haaga, Jr.)
Herbert Hoover III* Director
Richard G. Newman* Director
Peter C. Valli* Director
*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact
/1/ Power of Attorney attached hereto.
Counsel represents that this amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of Rule
485(b).
/s/ Michael J. Downer
Michael J. Downer
The Tax-exempt Bond Fund Of America, Inc. -- C-13
<PAGE>
POWER OF ATTORNEY
I, Don R. Conlan, 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 Michael J. Downer, Paul G. Haaga, Jr., Mary C. Hall,
Anthony W. Hynes, 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/or 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 16th day of January, 1997.
/s/ Don R. Conlan
Don R. Conlan, Director
ARTICLES OF INCORPORATION
OF
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
THIS IS TO CERTIFY:
I.
I, the undersigned, James W. Ratzlaff, whose mailing address is 333
South Hope Street, Los Angeles, California, 90071, being at least 18 years of
age, hereby form a corporation under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations.
II.
NAME
The name of the corporation (hereinafter called the Corporation) is
The Tax-Exempt Bond Fund of America, Inc.
III.
PURPOSES AND POWERS
The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it are as
follows:
(1) To conduct and carry on the business of an investment company of the
general management type.
(2) To hold, invest and reinvest its assets, and in connection therewith
to hold part or all of its assets in cash, and to purchase, subscribe for or
otherwise acquire, hold for investment or otherwise, sell, assign, negotiate,
transfer, exchange, pledge, lend or otherwise dispose of or realize upon,
securities (which term "securities" shall for the purposes of these Articles of
Incorporation, without limitation of the generality hereof, be deemed to
include any bonds, debentures, notes, certificates of deposit, mortgages,
obligations, evidences of indebtedness, stocks, shares, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or in any property or assets, or in general any
interest or instrument commonly known as a security) created, issued or
guaranteed by any persons, firms, associations, corporations, syndicates,
combinations, organizations, governments or political subdivisions, agencies or
instrumentalities thereof; and to exercise, as owner or holder of any
securities ' all rights, powers and privileges in respect thereof; and to do
any and all acts and things for the preservation, protection, improvement
and/or enhancement in value of any and all of its assets.
(3) To issue and sell shares of its own Capital Stock in such amounts and
on such terms and conditions, for such purposes and for such amount or kind of
consideration (including, without limitation, securities) now or hereafter
permitted by the laws of the State of Maryland and by these Articles of
Incorporation, as its Board of Directors may determine.
(4) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its Capital Stock, in any manner and
to the extent now or hereafter permitted by the laws of the State of Maryland
and by these Articles of Incorporation.
(5) To conduct its business at one or more offices in any part of the
world, without restriction or limit as to extent.
(6) To borrow or raise money for any purpose and from time to time draw,
make, accept, endorse, execute, issue or assume promissory notes, drafts, bills
of exchange and other negotiable and nonnegotiable instruments and evidences of
indebtedness and to pledge or hypothecate the assets of the Corporation in
connection therewith.
(7) To consolidate or merge with, enter into a share exchange with, or
acquire the assets of, any other company, whether incorporated or
unincorporated, and to do all acts and things necessary or incidental to
effectuate such consolidation, merger, share exchange or acquisition.
(8) To carry out all or any of the foregoing objects and purposes as
principal or agent, and alone or with associates or, to the extent now or
hereafter permitted by the laws of the State of Maryland, as a member of, or as
the owner or holder of any security of, or interest in, any firm, association,
corporation, trust or syndicate; and in connection therewith to make or enter
into such deeds or contracts with any persons, firms, associations,
corporations, syndicates, governments or political subdivisions or agencies or
instrumentalities thereof, and to do such acts and things and to exercise such
powers, as a natural person could lawfully make, enter into, do or exercise.
(9) To do any and all such further acts or things and to exercise any and
all such further powers or rights as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of all or any of the foregoing purposes or objects.
The foregoing objects and purposes shall , except as otherwise
expressly provided, be in no way limited or restricted by reference to, or
inference from, the terms of any other clause of this or any other Article of
these Articles of Incorporation, and shall each be regarded as independent and
construed as powers as well as objects and purposes, and the enumeration of
specific purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the general powers of
the Corporation now or hereafter conferred by the laws of the State of
Maryland, nor shall the expression of one thing be deemed to exclude another,
though it be of like nature, not expressed; provided, however, that the
Corporation shall not have power to carry on within the State of Maryland any
business whatsoever the carrying on of which would preclude it from being
classified as an ordinary business corporation under the laws of said State.
IV.
PRINCIPAL OFFICE AND PLACE OF BUSINESS
The post office address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Incorporated, First Maryland
Building, 25 South Charles Street, Baltimore, Maryland 21201.
The Corporation's resident agent is The Corporation Trust
Incorporated, whose post office address is First Maryland Building, 25 South
Charles Street, Baltimore, Maryland 21201. Said resident agent is a
corporation of the State of Maryland.
V.
CAPITAL STOCK
(1) The total number of shares of stock of all classes which the
Corporation has authority to issue is two million (2,000,000) shares of Capital
Stock of the par value of $1 each, all of one class, and of the aggregate par
value of two million dollars ($2,000,000).
(2) Any fractional share shall carry proportionately all the rights
of a whole share, excepting any right to receive a certificate evidencing such
fractional share, but including the right to vote and the right to receive
dividends.
(3) All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of these Articles of Incorporation
and the Corporation's By-Laws, as amended from time to time.
(4) All shares of the Capital Stock of the Corporation now or
hereafter authorized shall be "subject to redemption" and "redeemable" in the
sense used in the General Laws of the State of Maryland authorizing the
formation of corporations, at the redemption price for any such shares,
determined in the manner provided for by these Articles of Incorporation. In
the absence of any specification as to the purpose for which shares of the
Capital Stock of the Corporation are redeemed or repurchased by it, all shares
so redeemed or repurchased shall be deemed to be "purchased for retirement" in
the sense contemplated by the laws of the State of Maryland and the number of
the authorized shares of the Capital Stock of the Corporation shall not be
reduced by the number of any shares redeemed or repurchased by it.
(5) At all meetings of stockholders of the Corporation, each
stockholder shall be entitled to one vote for each share of stock standing in
such holder's name on the books of the Corporation on the date, fixed in
accordance with the By-Laws, for determination of stockholders entitled to vote
at such meeting. The presence in person or by proxy of the holders of a
majority of the shares of Capital Stock of the Corporation outstanding and
entitled to vote thereat shall constitute a quorum at any meeting of the
stockholders. If at any meeting of the stockholders there shall be less than a
quorum present, the stockholders present at such meeting may, without further
notice, adjourn the same from time to time until a quorum shall attend.
(6) Notwithstanding any provision of law requiring any action to be
taken or authorized by the affirmative vote of the holders of a majority or
other designated proportion of the shares, or to be otherwise taken or
authorized by a vote of the stockholders, such action shall be effective and
valid if taken or authorized by the affirmative vote of the holders of a
majority of the total number of shares outstanding and entitled to vote thereon
pursuant to the provisions of these Articles of Incorporation and the By-Laws
of the Corporation.
(7) No holder of stock of the Corporation shall, as such holder,
have any preemptive right to purchase or subscribe for any shares of the
Capital Stock of the Corporation of any class or any other security of the
Corporation which it may issue or sell (whether out of the number of shares
authorized by these Articles of Incorporation, or out of any shares of the
Capital Stock of the Corporation acquired by it after the issue thereof, or
otherwise) other than such right, if any, as the Board of Directors, in its
discretion, may determine.
(8) The stockholders of the Corporation shall not be liable for, and
their private property shall not be subject to claim, levy or other encumbrance
on account of debts or liabilities of the Corporation, to any extent
whatsoever.
(9) The Corporation shall be entitled to treat the person in whose
name any share of the Capital Stock of the Corporation is registered as the
owner thereof for purposes of dividends and other distributions in the course
of business or in the course of recapitalization, consolidation, merger,
reorganization, liquidation, sale of the property and assets of the
Corporation, or otherwise, and for the purpose of votes, approvals and consents
by stockholders, and for the purpose of notices to stockholders, and for all
other purposes whatever; and the Corporation shall not be bound to recognize
any equitable or other claim to or interest in such share, on the part of any
other person, whether or not the Corporation shall have notice thereof, save as
expressly required by statute.
VI.
PROVISIONS FOR DEFINING,
LIMITING AND REGULATING CERTAIN
POWERS OF THE CORPORATION AND OF
THE DIRECTORS AND STOCKHOLDERS
(1) The number of directors of the Corporation shall be three (3),
and the names of those who shall act as such until the first annual meeting or
until their successors are duly chosen and qualify are as follows:
Abner D. Goldstine
William C. Newton
James W. Ratzlaff
however, the By-Laws of the Corporation may fix the number of directors at a
number greater than that named in these Articles of Incorporation and may
authorize the Board of Directors, by the vote of a majority of the entire Board
of Directors, to increase or decrease the number of directors fixed by these
Articles of Incorporation or by the By-Laws within limits specified in the
By-Laws and to fill the vacancies created by any such increase in the number of
directors; provided that in no case shall the authorized number of directors be
less than three (3). The directors of the Corporation need not be stockholders
of the Corporation.
(2) Any director, or any officer elected or appointed by the Board
of Directors or by any committee of said Board or by the stockholders or
otherwise, may be removed at any time, with or without cause, by the Board of
Directors or by any committee or superior officer upon which or whom said power
of removal may be conferred, in such lawful manner as may be provided in the
By-Laws of the Corporation or as may otherwise be provided by the law of the
State of Maryland.
(3) Both stockholders and directors of the Corporation shall have
power, if the By-Laws so provide, to hold their meetings and to have one or
more offices within or without the State of Maryland and to keep the books of
the Corporation outside of the State of Maryland at such places as may from
time to time be designated by the Board of Directors.
(4) The Board of Directors of the Corporation shall have the power
to issue and sell, or cause the issuance and sale of, shares of the
Corporation's Capital Stock in such amounts and on such terms and conditions,
for such purposes and for such amount or kind of consideration (including,
without limitation, securities) now or hereafter permitted by the laws of the
State of Maryland and by these Articles of Incorporation, as the Board of
Directors may determine.
(5) In addition to the powers and authority hereinbefore,
hereinafter or by statute expressly conferred upon them, the Board of Directors
may exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the express
provisions of the laws of the State of Maryland, of these Articles of
Incorporation and of the By-Laws of the Corporation.
(6) Any director or officer, individually, or any firm of which any
director or officer may be a member, or any corporation, trust or association
of which any director or officer may be an officer or director or in which any
director or officer may be directly or indirectly interested as the holder of
any amount of its capital stock or otherwise, may be a party to, or may be
financially or otherwise interested in, any contract or transaction of the
Corporation, and in the absence of fraud no contract or other transaction shall
be thereby affected or invalidated if (a) the fact of the common directorship
or interest is disclosed or known to (i) the Board of Directors or a committee
of the Board, and the Board or committee authorizes, approves or ratifies the
contract or transaction by the affirmative vote of a majority of disinterested
directors, even if the disinterested directors constitute less than a quorum,
or (ii) the stockholders entitled to vote, and the contract or transaction is
authorized, approved, or ratified by a majority of the votes cast by the
stockholders entitled to vote other than the votes of shares owned of record or
beneficially by the interested director or corporation, firm, or other entity,
or (b) the contract or transaction is fair and reasonable to the Corporation.
Common or interested directors or the stock owned by them or by an interested
corporation, firm, or other entity may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or a committee of the Board
or at a meeting of the stockholders, as the case may be, at which the contract
or transaction is authorized, approved, or ratified.
In furtherance and not in limitation of the foregoing, the Board of
Directors of the Corporation is expressly authorized to contract for management
services of any nature, with respect to the conduct of the business of the
Corporation, with any entity, person or company, incorporated or
unincorporated, on such terms as the Board of Directors may deem desirable.
Any such contract may provide for the rendition of management services of any
nature with respect to the conduct of the business of the Corporation, and for
the management or direction of the business and activities of the Corporation
to such extent as the Board of Directors may determine., whether or not the
procedure involves delegation of functions usually or customarily performed by
the Board of Directors or officers of the Corporation. The Board of Directors
is further expressly authorized to contract with any person or company on such
terms as the Board of Directors may deem desirable for the distribution of
shares of the Corporation and to contract for other services, including,
without limitation, services as transfer agent for the Corporation's shares,
with any entity, person or company, incorporated or unincorporated, on such
terms as the directors may deem desirable. Any entity, person or company which
enters into one or more of such contracts may also perform similar or identical
services for other investment companies and other persons and companies without
restriction by reason of the relationship with the Corporation.
The procedures in this Section do not apply to the fixing by the
Board of Directors of reasonable compensation for a director, whether as a
director or in any other capacity.
(7) The Corporation shall provide any indemnification required by
the laws of the State of Maryland and shall indemnify directors, officers,
agents and employees as follows:
(a) The Corporation shall indemnify any director or officer of
the corporation who was or is a 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 such director
or officer or an 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, partnership, joint venture, trust or other enterprise,
against 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 if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any director or officer of
the Corporation who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was such director or officer or an 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, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation, except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that the court in which such action or suit was brought, or any
other court having jurisdiction in the premises, shall determine upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
(c) To the extent that a director or officer of the Corporation
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subparagraph (a) or (b) above or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity for the determination as to the
standard of conduct as provided in subparagraph (d).
(d) Any indemnification under subparagraph (a) or (b) (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director or
officer is proper in the circumstances because he has met the applicable
standard of conduct set forth in subparagraph (a) or (b). Such determination
shall be made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable,
such a quorum of disinterested directors so directs, by independent legal
counsel (who may be regular counsel for the Corporation) in a written opinion;
and any determination so made shall be conclusive.
(e) Expenses incurred in defending a civil or criminal action,
writ or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding, as authorized in the particular
case, upon receipt of an undertaking by or on behalf of the director or officer
to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as authorized herein.
(f) Agents and employees of the Corporation who are not
directors or officers of the Corporation may be indemnified under the same
standards and procedures set forth above, in the discretion of the Board of
Directors.
(g) Any indemnification pursuant to this paragraph shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
and shall continue as to a person who has ceased to be a director or officer
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
(h) Nothing in these Articles of Incorporation or in the
By-Laws shallbe 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.
VII.
REPURCHASES AND REDEMPTION
(1) The Corporation shall on the request of any registered owner of
its shares redeem such shares, at the price, in the manner and on the terms and
conditions set forth below:
(a) The certificates for shares to be redeemed must be tendered
to the Corporation or its designated agent for redemption during business hours
on a day on which the New York Stock Exchange is open for a normal business
day, at an office or offices designated by the Board of Directors for receipt
of such tenders. The certificates must be properly endorsed and in proper form
for transfer. Redemption of such shares by the Corporation is subject to such
reasonable requirements as may be imposed by the Corporation or the
Corporation's Transfer Agent. Shares tendered on business days on which such
Exchange is not open for a normal business day will be considered to have been
tendered on the next succeeding day on which such Exchange is open for a normal
business day.
(b) The redemption price of the shares shall be a sum equal to
100% of their net asset value as first determined subsequent to said tender,
said determination of net asset value to be made in the manner and at the time
hereinafter set forth.
(c) The net asset value of the Corporation's shares, for the
purpose of computing the offering price of the shares and the price at which
the shares shall be redeemed by the Corporation, shall be determined as of the
close of the New York Stock Exchange, or such other time as shall lawfully be
set by the Board of Directors, in the following manner:
(i) Securities owned by the Corporation shall be valued at
market value or, in the absence of readily available market quotations, at fair
value, both as determined in good faith by, or pursuant to methods approved by,
the Board of Directors. In determining market value or fair value of some or
all of the Corporation's securities, the Corporation may, but is not required
to, use a securities pricing system or systems to the extent the Board of
Directors deems appropriate, including, but not limited to, systems which seek
to determine values of particular securities by various methods including
evaluations from brokers or dealers, general market information or comparisons
to the market values of other securities having varying characteristics of
quality, yield, maturity and other factors.
(ii) There shall be deducted from the total assets of the
Corporation so determined, the liabilities of the Corporation, including proper
accruals of interest or taxes and other expense items, and reserves for
contingent or undetermined liabilities.
(iii) The net asset value of the Corporation so obtained
shall then be divided by the total number of shares outstanding (excluding
treasury shares) and the result, rounded to the nearest cent, shall be the net
asset value per share of Capital Stock.
(d) The redemption price (100% of net asset value) shall be
paid in cash or by check on current funds and shall be paid on or before the
seventh day following the day on which shares are properly tendered for
redemption.
(e) Redemption is conditional upon the Corporation having funds
legally available therefor.
(f) The Corporation may at any time repurchase shares of its
Capital Stock in the open market, or at private sale, or otherwise, out of
funds legally available therefor, at a price based upon but not exceeding the
net asset value last determined prior to the purchase at such times as may be
established by the Board of Directors consistent with any applicable rules
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended.
(g) The obligations set forth in this Article VII may be
suspended for any period during which the New York Stock Exchange shall be
closed other than for customary weekend and holiday closings or during which
trading on such Exchange is restricted or during which an emergency exists as a
result of which the disposal by the Corporation of securities owned by it is
not reasonably practicable, or it is not reasonably practicable for the
Corporation fairly to determine the value of its net assets, or for any period
which may be permitted by the Securities and Exchange Commission or any
successor governmental authority.
(2) In addition, the shares of Capital Stock of the Corporation
owned by any stockholder may be redeemed at net asset value by the Corporation
without the consent or approval of such stockholder, if (a) the shares owned by
such stockholder have a value (determined, for the purpose of this sentence
only, as the greater of the stockholder's cost or the then net asset value of
the shares, including the reinvestment of income dividends and capital gain
distributions, if any) of less than $1,000 or (b) such stockholder owns less
than ten (10) shares of Capital Stock of the Corporation, whenever in the
judgment of the Board of Directors, the redemption of such shares is in the
economic best interests of the Corporation, or necessary for the Corporation's
business success and general welfare, in order to reduce disproportionate or
unduly burdensome expenses, to achieve efficiencies in administration or to
eliminate or reduce excessive expenditures or difficulties in servicing,
accounting or reporting requirements with respect to the accounts of
stockholder.
(3) The right of the holder of shares of Capital Stock redeemed or
repurchased by the Corporation as provided in this Article VII to receive
dividends thereon and all other rights of such holder with respect to such
shares shall forthwith cease and terminate from and after the time as of which
the redemption or repurchase price of such shares has been determined, except
the right of such holder to receive (a) the redemption or repurchase price of
such shares from the Corporation or its designated agent and (b) any unpaid
dividend or distribution to which such holder had previously become entitled as
the record holder of such shares on the record date for such dividend or
distribution.
VIII.
DETERMINATION BINDING
(1) Any determination made in good faith, so far as accounting
matters are involved, in accordance with accepted accounting practice by or
pursuant to the direction of the Board of Directors as to (a) the amount of the
assets, obligations or liabilities of the Corporation, (b) the amount of the
net income of the Corporation from dividends and interest for any period or
amounts at any time legally available for the payment of dividends, (c) the
amount of any reserves or charges set up and the propriety thereof, (d) the
time of or purpose for creating any reserves or charges, (e) the use,
alteration or cancellation of any reserves or charges (whether or not any
obligation or liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged), (f) the price or closing bid or asked price
of any security owned or held by the Corporation, (g) the market value or fair
value of any security or any other asset owned by the Corporation, (h) the
number of shares of the Corporation outstanding or deemed to be outstanding,
(i) the impracticability or impossibility of liquidating securities in orderly
fashion, (j) the method of payment for any such shares repurchased or (k) any
other matters relating to the issue, sale, redemption, repurchase, and/or other
acquisition or disposition of securities or shares of the Capital Stock of the
Corporation, and any reasonable determination made in good faith by the Board
of Directors as to whether any transaction constitutes a purchase of any
securities on "margin", a sale of any securities "short", or an underwriting of
the sale of, or a participation in any underwriting or selling group in
connection with the public distribution of, any securities, shall be final and
conclusive, and shall be binding upon the Corporation and all holders of shares
of its Capital Stock, past, present and future. Shares of the Capital Stock of
the Corporation are issued and sold on the condition and understanding that any
and all such determinations shall be binding as aforesaid.
(2) No provision of these Articles of Incorporation shall be
effective to (a) require a waiver of compliance with any provision of the
Securities Act of 1933 or the Investment Company Act of 1940, as amended, or of
any valid rule, regulation or order of the Securities and Exchange Commission
thereunder, or (b) protect or purport to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders to
which such person would otherwise be subject by reason of willful malfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such person's office.
IX.
PERPETUAL EXISTENCE
The Corporation shall have perpetual existence.
X.
AMENDMENT
From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed (including any amendment
which changes the terms of any of the outstanding stock by classification,
reclassification or otherwise), upon the vote of the holders of a majority of
the shares of Capital Stock of the Corporation at the time outstanding and
entitled to vote, and other provisions which might under the statutes of the
State of Maryland at the time in force be lawfully contained in the Articles of
Incorporation, may be added or inserted upon the vote of the holders of a
majority of the shares of Capital Stock of the Corporation at the time
outstanding and entitled to vote, and all rights at any time conferred upon the
stockholders of the Corporation by these Articles of Incorporation are granted
subject to the provisions of this Article X.
The term "these Articles of Incorporation" as used herein and in the
By-Laws of the Corporation shall be deemed to mean these Articles of
Incorporation as from time to time amended and restated.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation on
this 18th day of July, 1979.
WITNESS:
/S/ Marcia M. Ferris /S/ James W. Ratzlaff
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
ARTICLES SUPPLEMENTARY
INCREASING AUTHORIZED STOCK
AS AUTHORIZED BY SECTION 2-105(c) OF
THE MARYLAND GENERAL CORPORATION LAW
The Tax-Exempt Bond Fund of America, Inc., a Maryland corporation (the
"Corporation") having its principal address at 32 South Street, Baltimore,
Maryland 21202, hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: In accordance with Section 2-105(c) of the Maryland General
Corporation Law, the Board of Directors has increased the authorized Capital
Stock of the corporation to 200,000,000 shares of Common Stock (par value $1.00
per share).
SECOND: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940.
THIRD: (a) As of immediately before the increase the total number of
shares of stock of all classes which the Corporation has authority to issue is
50,000,000 shares of Common Stock (par value $1.00 per share).
(b) As increased the total number of shares of stock of all classes
which the Corporation has authority to issue is 200,000,000 shares of Common
Stock (par value $1.00 per share).
(c) The aggregate par value of all shares having a par value is
$50,000,000 before the increase and $200,000,000 as increased.
IN WITNESS WHEREOF, The Tax-Exempt Bond Fund of America, Inc., has caused
these Articles Supplementary to be signed and acknowledged in its name and on
its behalf by its Vice President and its corporate seal to be hereto affixed
and attested by its Secretary on this 23rd day of September, 1987.
ATTEST: THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
By By
Julie F. Williams Thomas E. Terry
Secretary Vice President
THE UNDERSIGNED, Vice President of The Tax-Exempt Bond Fund of America,
Inc., who executed on behalf of said Corporation the foregoing Articles
Supplementary to the Charter, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the foregoing
Articles Supplementary to the Charter to be the corporate act of said
Corporation, and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects under penalty of
perjury.
Dated: September 23, 1987 By:
Thomas E. Terry
Vice President
BY-LAWS
OF
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
ARTICLE I
STOCKHOLDERS
Section 1.01. Annual Meetings. The Corporation is not required to hold
an annual meeting in any year in which the election of directors is not
required to be acted upon under the Investment Company Act of 1940, as amended
(the "1940 Act"). If the election of directors is required to be acted upon
under the 1940 Act then such meeting (or the first such meeting in any year)
shall be designated as the annual meeting of stockholders for that year. If
the 1940 Act requires the Corporation to hold a meeting of stockholders to
elect directors, the meeting shall, unless otherwise required by the 1940 Act,
be held no later than 120 days after the occurrence of the event requiring the
meeting. Except as the Charter or statute provides otherwise, any business may
be considered at an annual meeting without the purpose of the meeting having
been specified in the notice. Failure to hold an annual meeting does not
invalidate the Corporation's existence or affect any otherwise valid corporate
acts.
Section 1.02. Special Meetings. At any time in the interval between
annual meetings, special meetings of the stockholders may be called by the
Chairman of the Board or the President or by a majority of the Board of
Directors by vote at a meeting or in writing with or without a meeting, or, in
writing by those stockholders holding a majority of the outstanding shares of
common stock of the Corporation.
Section 1.03. Place of Meetings. Meetings of the stockholders for the
election of directors shall be held at such place either within or without the
State of Maryland as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. Meetings of stockholders
for any other purpose may be held at such time and place, within or without the
State of Maryland, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 1.04. Notice of Meetings. Not less than ten days nor more than
ninety days before the date of every stockholders' meeting, the Secretary shall
give to each stockholder entitled to vote at such meeting, written or printed
notice stating the time and place of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, either by
mail or by presenting it to him personally or by leaving it at his residence or
usual place of business. If mailed, such notice shall be deemed to be given
when deposited in the United States mail addressed to the stockholder at his
post office address as it appears on the records of the Corporation, with
postage thereon prepaid.
Notwithstanding the foregoing provision, a waiver of notice in writing,
signed by the person or persons entitled to such notice and filed with the
records of the meeting, whether before or after the holding thereof, or actual
attendance at the meeting in person or by proxy, shall be deemed equivalent to
the giving of such notice to such persons. Any meeting of stockholders, annual
or special, may adjourn from time to time to reconvene at the same or some
other place, and no notice need be given of any such adjourned meeting other
than by announcement at the meeting.
Section 1.05. Quorum. At any meeting of stockholders the presence in
person or by proxy of stockholders entitled to cast a majority of the votes
thereat shall constitute a quorum; but this Section shall not affect any
requirement under statute or under the Articles of Incorporation of the
Corporation for the vote necessary for the adoption of any measure. In the
absence of a quorum the stockholders present in person or by proxy, by majority
vote and without notice, may adjourn the meeting from time to time until a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting as originally called.
Section 1.06. Votes Required. A majority of the votes cast at a meeting
of stockholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting, unless more than a majority of votes cast is required by
statute or by the Articles of Incorporation. Each outstanding share of stock
shall be entitled to one vote on each matter submitted to a vote at a meeting
of stockholders and fractional shares shall be entitled to corresponding
fractions of one vote on such matters.
Section 1.07. Proxies. A stockholder may vote the shares owned of record
by him either in person or by proxy executed in writing by the stockholder or
by his duly authorized attorney- in-fact. No proxy shall be valid after eleven
months from its date, unless otherwise provided in the proxy. Every proxy
shall be in writing, subscribed by the stockholder or his duly authorized
attorney, and dated, but need not be sealed, witnessed or acknowledged.
Section 1.08. List of Stockholders. At each meeting of stockholders, a
full, true and complete list in alphabetical order of all stockholders entitled
to vote at such meeting, certifying the number of shares held by each, shall be
made available by the Secretary.
Section 1.09. Voting. In all elections for directors every stockholder
shall have the right to vote, in person or by proxy, the shares owned of record
by him, for as many persons as there are directors to be elected and for whose
election he has a right to vote. At all meetings of stockholders, unless the
voting is conducted by inspectors, the proxies and ballots shall be received,
and all questions regarding the qualification of voters and the validity of
proxies and the acceptance or rejection of votes shall be decided by the
chairman of the meeting. If demanded by stockholders, present in person or by
proxy, entitled to cast 10% in number of votes, or if ordered by the chairman,
the vote upon any election or question shall be taken by ballot. Upon like
demand or order, the voting shall be conducted by two inspectors in which event
the proxies and ballots shall be received, and all questions regarding the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided, by such inspectors. Unless so demanded or
ordered, no vote need be by ballot, and voting need not be conducted by
inspectors. Inspectors may be elected by the stockholders at their annual
meeting, to serve until the close of the next annual meeting and their election
may be held at the same time as the election of directors. In case of a
failure to elect inspectors, or in case an inspector shall fail to attend, or
refuse or be unable to serve, the stockholders at any meeting may choose an
inspector or inspectors to act at such meeting, and in default of such election
the chairman of the meeting may appoint an inspector or inspectors.
Section 1.10. Action by Stockholders Other than at a Meeting. Any action
required or permitted to be taken at any meeting of stockholders may be taken
without a meeting, if a consent in writing, setting forth such action, is
signed by all the stockholders entitled to vote on the subject matter thereof
and any other stockholders entitled to notice of a meeting of stockholders (but
not to vote thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed with the
records of the Corporation.
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. Powers. The business and affairs of the Corporation shall
be managed by its Board of Directors. The Board of Directors may exercise all
the powers of the Corporation, except such as are by statute or the Articles of
Incorporation or these By-Laws conferred upon or reserved to the stockholders.
The Board of Directors shall keep full and fair accounts of its transactions.
Section 2.02. Number of Directors. The number of directors of the
Corporation shall be three until such number be changed as herein provided. By
vote of a majority of the entire Board of Directors, the number of directors
may be increased or decreased, from time to time, not to exceed fifteen, or be
less than three, directors; but the tenure of office of a director shall not be
affected by any decrease in the number of directors so made by the Board.
Section 2.03. Election of Directors. Until the first annual meeting of
stockholders or until successors or additional directors are duly elected and
qualify, the Board shall consist of the persons named as such in the Articles
of Incorporation. At the first annual meeting of stockholders and at each
annual meeting thereafter, the stockholders shall elect directors to hold
office until the next succeeding annual meeting or until their successors are
elected and qualify. At any meeting of stockholders, duly called and at which
a quorum is present, the stockholders 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.
Section 2.04. Regular Meetings. After each meeting of stockholders at
which a Board of Directors shall have been elected, the Board of Directors so
elected shall meet as soon as practicable for the purpose of organization and
the transaction of other business. No notice of such first meeting shall be
necessary if held immediately after the adjournment, and at the site, of such
meeting of stockholders. Other regular meetings of the Board of Directors
shall be held without notice on such dates and at such places within or without
the State of Maryland as may be designated from time to time by the Board of
Directors.
Section 2.05. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board, the President
or the Secretary of the Corporation, or by a majority of the Board of Directors
by vote at a meeting, or in writing with or without a meeting. Such special
meetings shall be held at such place or places within or without the State of
Maryland as may be designated from time to time by the Board of Directors. In
the absence of such designation such meetings shall be held at such places as
may be designated in the calls.
Section 2.06. Notice of Meetings. Except as provided in Section 2.04,
notice of the place, day and hour of every regular and special meeting shall be
given to each director two days (or more) before the meeting, by delivering the
same to him personally, or by sending the same to him by telegraph, or by
leaving the same at his residence or usual place of business, or, in the
alternative, by mailing such notice three days (or more) before the meeting,
postage prepaid, and addressed to him at his last known business or residence
post office address, according to the records of the Corporation. Unless
required by these By-Laws or by resolution of the Board of Directors, no notice
of any meeting of the Board of Directors need state the business to be
transacted thereat. No notice of any meeting of the Board of Directors need be
given to any director who attends, or to any director who in writing executed
and filed with the records of the meeting either before or after the holding
thereof, waives such notice. Any meeting of the Board of Directors, regular or
special, may adjourn from time to time to reconvene at the same or some other
place, and no notice need be given of any such adjourned meeting other than by
announcement at the adjourned meeting.
Section 2.07. Quorum. At all meetings of the Board of Directors,
one-third of the entire Board of Directors (but in no event fewer than two
directors) shall constitute a quorum for the transaction of business. Except
in cases in which it is by statute, by the Articles of Incorporation or by
these By-Laws otherwise provided, the vote of a majority of such quorum at a
duly constituted meeting shall be sufficient to elect and pass any measure. In
the absence of a quorum, the directors present by majority vote and without
notice other than by announcement at the meeting may adjourn the meeting from
time to time until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might
have been transacted at the meeting as originally notified.
Section 2.08. Vacancies. Any vacancy occurring in the Board of Directors
for any cause other than by reason of an increase in the number of directors
may be filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum. Any vacancy occurring by reason
of an increase in the number of directors may be filled by action of a majority
of the entire Board of Directors; provided, in either case, that immediately
after filling such vacancy at least two-thirds of the directors then holding
office shall have been elected to such office by the stockholders at an annual
or special meeting thereof. If at any time after the first annual meeting of
stockholders of the Corporation a majority of the directors in office shall
consist of directors elected by the Board of Directors, a meeting of the
stockholders shall be called forthwith for the purpose of electing the entire
Board of Directors, and the terms of office of the directors then in office
shall terminate upon the election and qualification of such Board of Directors.
A director elected by the Board of Directors or the stockholders to fill a
vacancy shall be elected to hold office until the next annual meeting of
stockholders or until his successor is elected and qualifies.
Section 2.09. Compensation and Expenses. Directors may, pursuant to
resolution of the Board of Directors, be paid fees for their services, which
fees may consist of an annual fee or retainer and/or a fixed fee for attendance
at meetings. In addition, directors may in the same manner be reimbursed for
expenses incurred in connection with their attendance at meetings or otherwise
in performing their duties as directors. Members of committees may be allowed
like compensation and reimbursement. Nothing herein contained shall preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 2.10. Action by Directors Other than at a Meeting. Any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting, if a written consent
to such action is signed by all members of the Board of Directors or of such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
Section 2.11. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
provided, however, that in the absence or disqualification of any member of
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required.
Section 2.12. Holding of Meetings by Conference Telephone Call. At any
regular or special meeting of the Board of Directors or any committee thereof,
members thereof may participate in such meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this section shall constitute presence in person at such meeting.
ARTICLE III
OFFICERS
Section 3.01. Executive Officers. The Board of Directors shall choose a
President and may choose a Chairman of the Board and a Vice Chairman of the
Board from among the directors, and shall choose a Secretary and a Treasurer
who need not be directors. The Board of Directors shall designate as principal
executive officer of the Corporation either the Chairman of the Board, the Vice
Chairman of the Board, or the President. The Board of Directors may choose an
Executive Vice President, one or more Senior Vice Presidents, one or more Vice
Presidents, one or more Assistant Secretaries and one or more Assistant
Treasurers, none of whom need be a director. Any two or more of the
above-mentioned offices, except those of President and a Vice President, may be
held by the same person, but no officer shall execute, acknowledge or verify
any instrument in more than one capacity if such instrument be required by law,
by the Articles of Incorporation, by the By-Laws or by resolution of the Board
of Directors to be executed by any two or more officers. Each such officer
shall hold office until his successor shall have been duly chosen and
qualified, or until he shall have resigned or shall have been removed. Any
vacancy in any of the above offices may be filled for the unexpired portion of
the term by the Board of Directors at any regular or special meeting.
Section 3.02. Chairman and Vice Chairman of the Board. The Chairman of
the Board, if one be elected, shall preside at all meetings of the Board of
Directors and of the stockholders at which he is present. He shall have and
may exercise such powers as are, from time to time, assigned to him by the
Board of Directors. The Vice Chairman of the Board, if one be elected, shall,
when present and in the absence of the Chairman of the Board, preside at all
meetings of the stockholders and directors, and he shall perform such other
duties as may from time to time be assigned to him by the Board of Directors or
as may be required by law.
Section 3.03. President. In the absence of the Chairman or Vice Chairman
of the Board, the President shall preside at all meetings of the stockholders
and of the Board of Directors at which he is present; and in general, he shall
perform all duties incident to the office of a president of a corporation, and
such other duties, as from time to time, may be assigned to him by the Board of
Directors.
Section 3.04. Vice-Presidents. The Vice-President or Vice-Presidents, at
the request of the President or in his absence or during his inability or
refusal to act, shall perform the duties and exercise the functions of the
President, and when so acting shall have the powers of the President. If there
be more than one Vice-President, the Board of Directors may determine which one
or more of the Vice-Presidents shall perform any of such duties or exercise any
of such functions, or if such determination is not made by the Board of
Directors, the President may make such determination. The Vice-President or
Vice-Presidents shall have such other powers and perform such other duties as
may be assigned to him or them by the Board of Directors or the President.
Section 3.05. Secretary and Assistant Secretaries. The Secretary shall
keep the minutes of the meetings of the stockholders, of the Board of Directors
and of any committees, in books provided for the purpose; he shall see that all
notices are duly given in accordance with the provisions of these By-Laws or as
required by law; he shall be custodian of the records of the Corporation; he
shall see that the corporate seal is affixed to all documents the execution of
which, on behalf of the Corporation, under its seal, is duly authorized, and
when so affixed may attest the same; and in general, he shall perform all
duties incident to the office of a secretary of a corporation, and such other
duties as, from time to time, may be assigned to him by the Board of Directors,
the Chairman of the Board of Directors, or the President.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors or the chief
executive officer shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 3.06. Treasurer and Assistant Treasurers. The Treasurer shall
have charge of and be responsible for all funds, securities, receipts and
disbursements of the Corporation, and shall deposit, or cause to be deposited
in the name of the Corporation, all moneys or other valuable effects in such
banks, trust companies or other depositories as shall, from time to time, be
selected by the Board of Directors in accordance with Section 5.04 of these
By-Laws; he shall render to the President, the Chairman of the Board of
Directors and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation, and in general, he shall perform all
the duties incident to the office of a treasurer of a corporation, and such
other duties as may be assigned to him by the Board of Directors or the
President.
The Assistant Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order determined by the Board of Directors or the chief
executive officer shall, in the absence of the Treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer and shall perform other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 3.07. Subordinate Officers. The Board of Directors may from time
to time appoint such subordinate officers as it may deem desirable. Each such
officer shall hold office for such period and perform such duties as the Board
of Directors or the President may prescribe. The Board of Directors may, from
time to time, authorize any committee or officer to appoint and remove
subordinate officers and prescribe the duties thereof.
Section 3.08. Removal. Any officer or agent of the Corporation may be
removed by the Board of Directors whenever, in its judgment, the best interests
of the Corporation will be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed.
ARTICLE IV
STOCK
Section 4.01. Certificates. Each stockholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
shares of stock owned by him in the Corporation. Such certificates shall be
signed by the President or a Vice-President and counter signed by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and
sealed with the seal of the Corporation or a facsimile of such seal. The
signatures may be either manual or facsimile signatures and the seal may be
either facsimile or any other form of seal. No certificates shall be issued for
fractional shares. Stock certificates shall be in such form, not inconsistent
with law or with the Articles of Incorporation, as shall be approved by the
Board of Directors. In case any officer of the Corporation who has signed any
certificate ceases to be an officer of the Corporation, whether because of
death, resignation or other wise, before such certificate is issued, the
certificate may nevertheless be issued and delivered by the Corporation as if
the officer had not ceased to be such officer as of the date of its issue.
Stock certificates need not be issued except to stockholders who request such
issuance in writing.
Section 4.02. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem necessary or
expedient concerning the issue, transfer and registration of certificates of
stock; and may appoint transfer agents and registrars thereof. The duties of
transfer agent and registrar, if any, may be combined.
Section 4.03. Stock Ledgers. A stock ledger, containing the names and
addresses of the stockholders of the Corporation and the number of shares of
each class held by them respectively, shall be kept by the Transfer Agent of
the Corporation.
Section 4.04. Record Dates. The Board of Directors is hereby empowered
to fix, in advance, a date as the record date for the purpose of determining
stockholders entitled to notice of, or to vote at, any meeting of stockholders,
or stockholders entitled to receive payment of any dividend, capital gains
distribution or the allotment of any rights, or in order to make a
determination of stockholders for any other proper purpose. Such date in any
case shall be not more than sixty days, and in case of a meeting of
stockholders, not less than ten days, prior to the date on which the particular
action, requiring such determination of stockholders, is to be taken.
Section 4.05. Replacement Certificates. The Board of Directors may
direct a new stock certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
ARTICLE V
GENERAL PROVISIONS
Section 5.01. Dividends. Dividends or distributions upon the capital
stock of the Corporation, subject to provisions of the Articles of
Incorporation, if any, may be declared by the Board of Directors at any time
pursuant to law. Dividends or distributions may be paid only in cash or in
shares of the capital stock, subject to the provisions of the Articles of
Incorporation.
Before payment of any dividend or distribution there may be set aside out
of any funds of the Corporation available for dividends or distributions such
sum or sums as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for maintaining
any property of the Corporation, or for such other purpose as the directors
shall think conducive to the interest of the Corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
Section 5.02. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5.03. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 5.04. Custodian. All securities and cash of the Corporation
shall be held by a custodian which shall be a bank or trust company having
(according to its last published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits, provided such a custodian can be found
ready and willing to act. The Corporation shall enter into a written contract
with the custodian regarding the powers, duties and compensation of the
custodian with respect to the cash and securities of the Corporation held by
the custodian. Said contract and all amendments thereto shall be approved by
the Board of Directors of the Corporation. The Corporation shall upon the
resignation or inability to serve of the custodian use its best efforts to
obtain a successor custodian; require that the cash and securities owned by the
Corporation be delivered directly to the successor custodian; and in the event
that no successor custodian can be found, submit to the stockholders, before
permitting delivery of the cash and securities owned by the Corporation to
other than a successor custodian, the question whether the Corporation shall be
liquidated or shall function without a custodian.
Section 5.05. Prohibited Transactions. No officer or director of the
Corporation or of its investment adviser shall deal for or on behalf of the
Corporation with himself, as principal or agent, or with any corporation or
partnership in which he has a financial interest. This prohibition shall not
prevent: (a) officers or directors of the Corporation from having a financial
interest in the Corporation, its principal underwriter or its investment
adviser; (b) the purchase of securities for the portfolio of the Corporation or
the sale of securities owned by the Corporation through a securities dealer,
one or more of whose partners, officers or directors is an officer or director
of the Corporation, provided such transactions are handled in the capacity of
broker only and provided commissions charged do not exceed customary brokerage
charges for such service; or (c) the employment of legal counsel, registrar,
transfer agent, dividend disbursing agent, or custodian having a partner,
officer or director who is an officer or director of the Corporation, provided
only customary fees are charged for services rendered to or for the benefit of
the Corporation.
Section 5.06. Seal. The Board of Directors shall provide a suitable
seal, bearing the name of the Corporation, which shall be in the custody of the
Secretary. The Board of Directors may authorize one or more duplicate seals
and provide for the custody thereof.
Section 5.07. Bonds. The Board of Directors may require any officer,
agent or employee of the Corporation to give a bond to the Corporation,
conditioned upon the faithful discharge of his duties, with one or more
sureties and in such amount as may be satisfactory to the Board of Directors.
The Board of Directors shall, in any event, require the Corporation to provide
and maintain a bond issued by a reputable fidelity insurance company, against
larceny and embezzlement, covering each officer and employee of the Corporation
who may singly, or jointly with others, have access to securities or funds of
the Corporation, either directly or through authority to draw upon such funds,
or to direct generally the disposition of such securities, such bond or bonds
to be in such reasonable amount as a majority of the Board of Directors who are
not such officers or employees of the Corporation shall determine with due
consideration to the value of the aggregate assets of the Corporation to which
any such officer or employee may have access, or in any amount or upon such
terms as the Securities and Exchange Commission may prescribe by order, Rule or
Regulation.
ARTICLE VI
AMENDMENT OF BY-LAWS
The By-Laws of the Corporation may be altered, amended, added to or
repealed by the stockholders or by majority vote of the entire Board of
Directors.
101115
NUMBER SHARES
(Void)
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
SHARES OF THE PAR VALUE OF ONE DOLLAR EACH - ALL OF ONE CLASS
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 876902 10 7
This Certifies that is the owner of
fully-paid and non-assessable Shares of the Capital Stock of The Tax-Exempt
Bond Fund of America, Inc. each of the par value of One Dollar, transferable on
the books of the Corporation by the holder thereof in person or by duly
authorized attorney upon surrender of this certificate properly endorsed. This
certificate is not valid unless countersigned by the Transfer Agent.
Witness the seal of the corporation and the signatures of its duly authorized
officers.
Dated:
/s/ Julie F. Williams /s/ Abner D. Goldstine
Secretary President
COUNTERSIGNED
AMERICAN FUNDS SERVICE COMPANY
TRANSFER AGENT
BY---------------------------
AUTHORIZED SIGNATURE
------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
CERTIFICATE AMERICAN BALANCED FUND, INC.
NUMBER SHARES
ACCOUNT NO. ALPHA CODE DEALER NUMBER TRADE DATE
CHANGE NOTICE: IF THE ABOVE INFORMATION IS INCORRECT OR MISSING,
PLEASE PRINT THE CORRECT INFORMATION BELOW AND RETURN TO:
--------------------------------------------------------------
--------------------------------------------------------------
TAXPAYER I.D. NUMBER------------------------------------------
EXPLANATION OF ABBREVIATIONS
* The following abbreviations, when used in the registration on the face of
this certificate, shall have the meanings assigned below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADM --Administratrix FBO --For the benefit of TTEE --Trustee
--Administrator
COM PROP --Community Property GDN --Guardian U/A --Under Agreement
CUST --Custodian JT TEN --Joint tenants UGMA/ --Gift to minors act in effect in the state
with right of (State) indicated
survivorship
DTD --Dated LIFE TEN --Life tenant UTMA/ --Transfers to minors act in effect in the state
(State) indicated
EST --Estate TR --Trust U/W --Last will and testament
--Of Estate of --Under last will and testament of
--Of will of
--Under the will of
--Of the will of
ET AL --(and) Others TEN COM --Tenants in common
EXEC --Executor TEN ENT --Tenants by the entireties
--Executrix
</TABLE>
Note: Abbreviations refer where appropriate to the singular or plural, male or
female. Other abbreviations may also be used, including U.S. Post Office
Department two-letter state abbreviations.
The Corporation will furnish to any shareholder upon request and without charge
a full statement of the designations, preferences, limitations and relative
rights of the shares of each class authorized to be issued, the variations in
the relative rights and preferences between the shares of each series of shares
of the Corporation so far as the same have been fixed and determined, and the
authority of the Board of Directors to fix and determine the relative rights
and preferences of classes and series of the shares of the Corporation. Such
request may be made to the Secretary of the Corporation.
NOTE: AS STATED IN THE FUND'S ARTICLES OF INCORPORATION, THIS CERTIFICATE
REPRESENTING SHARES OF CAPITAL STOCK OF THE FUND MAY BE REDEEMED WITHOUT THE
CONSENT OR APPROVAL OF THE SHAREHOLDER FOR THE THEN CURRENT NET ASSET VALUE PER
SHARE IF AT SUCH TIME THE SHAREHOLDER OWNS OF RECORD SHARES HAVING AN AGGREGATE
NET ASSET VALUE OF LESS THAN THE MINIMUM INITIAL INVESTMENT AMOUNT.
REQUIREMENTS: The signature(s) on this assignment must correspond exactly with
the name(s) as written upon the face of the certificate in every particular.
Except as described below, in order to redeem shares, your signature must
be guaranteed by a bank, savings, association, credit union, or member firm of
a domestic stock exchange or the National Association of Securities Dealers,
Inc. that is an eligible guarantor prior toobtaining the signature guarantee.
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. However, the fund
reserves the right to require signature guarantee(s) on all redemptions.
For value received, the undersigned hereby sell, assign, and transfer
- --------- shares of capital stock represented by this certificate to:
- ------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
and do hereby irrevocably constitute and appoint -------- attorney to transfer
the said stock on the books of the corporation with full power
of substitution.
Dated: ----------------------
----------------------------------------
Owner
----------------------------------------
Signature of Co-Owner, if any
IMPORTANT: BEFORE SIGNING, PLEASE READ AND COMPLY WITH REQUIREMENTS PRINTED
ABOVE.
Signatures(s) guaranteed by:
INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st of March, 1994, is made
and entered into by and between THE TAX-EXEMPT BOND FUND OF AMERICA, INC., a
Maryland corporation, (hereinafter called the "Fund"), and CAPITAL RESEARCH AND
MANAGEMENT COMPANY, a Delaware corporation, (hereinafter called the "Adviser").
The parties agree as follows:
1.
The Fund hereby employs the Adviser to furnish advice to the Fund with
respect to the investment and reinvestment of the assets of the Fund. The
Adviser hereby accepts such employment and agrees to render the services and to
assume the obligation to the extent herein set forth, for the compensation
herein provided. The Adviser shall, for all purposes herein, be deemed an
independent contractor and not an agent of the Fund.
2.
The Adviser agrees to provide from its own resources and those of its
subsidiary companies supervision of the portfolio of the Fund and, to the
extent authorized by the Board of Directors of the Fund, to determine what
securities or other property shall be purchased or sold by the Fund, giving due
consideration to the policies of the Fund as expressed in the Fund's Articles
of Incorporation, By- Laws, Registration Statement under the Investment Company
Act of l940, as amended (the "l940 Act"), and Prospectus as in use from time to
time, as well as to the factors affecting the Fund's status as a regulated
investment company under the Internal Revenue Code of l954, as amended.
The Adviser shall provide adequate facilities and qualified personnel for
the placement of orders for the purchase, or other acquisition, and sale, or
other disposition, of portfolio securities for the Fund. With respect to such
transactions, the Adviser, subject to such directions as may be furnished from
time to time by the Board of Directors of the Fund, shall endeavor as the
primary objective to obtain the most favorable prices and execution of orders.
Subject to such primary objective, the Adviser may place orders with brokerage
firms which have sold shares of the Fund or which furnish statistical and other
information to the Adviser, taking into account the value and quality of the
brokerage services of such dealers, including the availability and quality of
such statistical and other information. Receipt by the Adviser of any such
statistical and other information and services shall not be deemed to give rise
to any requirement for abatement of the advisory fee payable pursuant to
Section 5 hereof.
3.
The Adviser, at its own expense, shall furnish to the Fund: office space,
furniture, equipment, supplies, telephone and utilities, which may be the same
as occupied or used by the Adviser; the services of qualified personnel for
administering the affairs, managing the investments, and preparing and
maintaining the books of account and records of the Fund; members of the
Adviser's organization to serve without compensation for the Fund as officers
and/or directors of the Fund, if desired by the Fund; daily determination of
net asset value and offering price per share; general purpose forms, supplies,
stationery and postage relating to the obligations of the Adviser hereunder;
and compensation and expenses of all persons whose services are to be furnished
to the Fund pursuant to this Section 3.
4.
Except to the extent expressly assumed by the Adviser herein, the subject
to an expense reimbursement fee agreement described in Section 6 below, the
Fund shall pay all costs and expenses in connection with its operations.
Without limiting the generality of the foregoing, such costs and expenses shall
include the following: compensation paid to the directors of the Fund who are
not affiliated persons of the Adviser and reimbursement of travel expenses
incurred by such Directors of the Fund in connection with attendance at
meetings of the Directors or committees thereof; fees and expenses of the
Fund's custodian, transfer agent, dividend disbursing agent, legal counsel and
independent public accountants; costs of designing, printing, and mailing
reports, prospectuses, proxy statements and notices to Fund shareholders;
special purpose forms and stationery, and postage relating directly to the
business of the Fund; fees and expenses of sale (including registration and
qualification), issuance (including costs of stock certificates) and redemption
of shares; association dues; interest; and taxes.
5.
The Fund shall pay to the Adviser on or before the tenth (10th) day of
each month, as compensation for the services rendered by the Adviser during the
preceding month, the sum of the following amounts:
(a) 0.30% per annum on the first $60 million of the Fund's net
assets; plus 0.21% per annum on the portion of such net assets between $60
million and $1 billion; plus 0.18% per annum on the portion of such net assets
between $1 billion and $3 billion; plus 0.16% on the portion of such net assets
in excess of $3 billion ("Net Asset Portion"), plus
(b) 3% of the first $40 million of annual gross income; plus 2.5% of
such annual gross investment income between $40 million and $100 million; plus
2.25% of such annual gross investment income in excess of $100 million
("Investment Income Portion").
The Net Asset Portion shall be accrued daily at 1/365th of the applicable
annual rates set forth above. The net asset value of the Fund shall be
determined in the manner set forth in the Articles of Incorporation and
prospectus of the Fund as of the close of the New York Stock Exchange on each
day of which said Exchange is open, and in the case of Saturdays, Sundays, and
other days on which said Exchange shall not be open, as at the close of the
last preceding day on which said Exchange shall have been open.
The Investment Income Portion shall be accrued daily. For the purposes
hereof, the Fund's gross investment income shall not reflect any net realized
gains or losses on the sale of portfolio securities but shall include
original-issue discount as defined for Federal income tax purposes.
Upon any termination of this Agreement on a day other than the last day of
the month the fee for the period from the beginning of the month in which
termination occurs to the date of termination shall be prorated according to
the proportion which such period bears to the full month of the Fund.
6.
The Adviser agrees to pay the expenses of the Fund referred to in Section
4 above (with the exclusion of interest, taxes, brokerage costs and
extraordinary expenses such as litigation and acquisitions) for a period not to
exceed the ten year period ending September 30, l989, all subject to
reimbursement by the Fund. To accomplish such reimbursement, the Fund shall
pay the Adviser an expense reimbursement fee which on an annual basis is
equivalent to the difference between the compensation referred to in Section 6
above, and 1% of the average daily net assets of the Fund. Such expense
reimbursement fee agreement shall terminate when either (1) all of such
reimbursable expenses of the Fund which have been paid by the Adviser pursuant
thereto have been reimbursed by the Fund or (2) the ten year period has
expired. Payment of the foregoing fee is subject to the provision that within
thirty days following the close of any fiscal year of the Fund, the Adviser
will pay to the Fund a sum equal to the amount by which the aggregate expenses
of the Fund incurred during such fiscal year, but excluding interest, taxes,
brokerage costs, and extraordinary expenses such as litigation and
acquisitions, exceed the lesser of either 25% of gross income of the Fund for
the preceding year or the sum of (a) 1-1/2% of the average daily net assets of
the preceding year up to and including $30,000,000 and (b) 1% of any excess of
average daily net assets of the preceding year over $30,000,000. The
obligation of the Adviser to reimburse the Fund for expenses incurred for any
year may be terminated or revised at any time by the Adviser to the Fund by
notice in writing from the Adviser to the Fund, provided, however, that
termination or revision of the Adviser's obligation to reimburse for expenses
is not to be effective with respect to the fiscal year within which such notice
is given.
7.
Nothing contained in this Agreement shall be construed to prohibit the
Adviser from performing investment advisory, management, or distribution
services for other investment companies and other persons or companies, or to
prohibit affiliates of the Adviser from engaging in such businesses or in other
related or unrelated businesses.
8.
The Adviser shall have no liability to the Fund, or its shareholders or
creditors, for any error of judgement, mistake of law, or for any loss arising
out of any investment, or for any other act or omission in the performance of
its obligations to the Fund not involving willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder.
9.
This Agreement shall continue in effect until the close of business on
February 29, 1996. It may be renewed from year to year thereafter by mutual
consent, provided that such renewal shall be specifically approved at least
annually by (i) the Board of Directors of the Fund, or by the vote of a
majority (as defined in the l940 Act) of the outstanding voting securities of
the Fund, and (ii) a majority of those directors who are not parties to this
Agreement or interested persons (as defined in the l940 Act) of any such party
cast in person at a meeting called for the purpose of voting on such approval.
Such mutual consent to renewal shall not be deemed to have been given unless
evidenced by a writing signed by both parties hereto.
10.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Fund or by the vote of a majority (as
defined in the l940 Act) of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Adviser, or by the Adviser on like
notice to the Fund. This Agreement shall automatically terminate in the event
of its assignment (as defined in the l940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the day and year first above written.
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
By
Paul G. Haaga, Jr.
Chairman of the Board
By
Julie F. Williams
Secretary
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By
James W. Ratzlaff
Vice Chairman of the Board
By
Steven N. Kearsley
Vice President and Treasurer
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT, between THE TAX-EXEMPT BOND FUND OF
AMERICA, INC., a Maryland corporation (the "Fund"), and AMERICAN FUNDS
DISTRIBUTORS, INC., a California corporation ("AFD");
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended to date (the "1940 Act"), as an open-end investment company and it
is a part of the business of the Fund, and affirmatively in the interest of the
Fund, to offer its shares for sale, either continuously, or from time to time
by means of such arrangements as are determined by its directors to be
appropriate; and
WHEREAS, AFD is engaged in the business of promoting the distribution of
shares of investment companies through securities dealers; and
WHEREAS, the Fund and AFD wish to enter into an Agreement with each other
to promote the distribution of the Fund's shares;
NOW, THEREFORE, the parties agree as follows:
1. (a) AFD shall be the exclusive principal underwriter for the sale of
the shares of the Fund, except as otherwise provided pursuant to the following
subsection (b). The terms "shares of Fund" or "shares" as used herein shall
mean shares of common stock issued by the Fund.
(b) The Fund may, upon sixty (60) days' written notice to AFD, from
time to time designate other principal underwriters of its shares with respect
to areas other than the North American continent, Hawaii, Puerto Rico, and such
countries or other jurisdictions as to which the Fund may have expressly waived
in writing its right to make such designation. In the event of such
designation, the right of AFD under this Agreement to sell shares in the areas
so designated shall terminate, but this Agreement shall remain otherwise in
full effect until terminated in accordance with the other provisions hereof.
2. In the sale of shares of the Fund, AFD shall act as agent of the Fund
except in any transaction in which AFD sells such shares as a dealer to the
public, in which event AFD shall act as principal for its own account.
3. The Fund shall sell shares only through AFD, except that the Fund may,
to the extent permitted by the 1940 Act and the rules and regulations
promulgated thereunder or pursuant thereto, at any time:
(a) issue shares to any corporation, association, trust, partnership or
other organization, or its, or their security holders, beneficiaries or
members, in connection with a merger, consolidation or reorganization to which
the Fund is a party, or in connection with the acquisition of all or
substantially all the property and assets of such corporation, association,
trust, partnership or other organization;
(b) issue shares at net asset value to the holders of shares of capital
stock or beneficial interest of other investment companies served as investment
adviser by any affiliated company or companies of The Capital Group, Inc., to
the extent of all or any portion of amounts received by such stockholders upon
redemption or repurchase of their shares by the issuing corporation;
(c) issue shares at net asset value to its shareholders in connection
with the reinvestment of dividends paid and other distributions made by the
Fund;
(d) issue shares at net asset value to directors, and officers, and
employees of the Fund, its Investment Adviser, any principal underwriter of the
Fund, and their affiliates, including any trust, pension, profit sharing or
other benefit plan established for such persons, and to other persons as
permitted by applicable rules adopted by the Securities and Exchange Commission
(the "Commission") under the 1940 Act, as in effect from time to time or
pursuant to any exemptive Order received by the Fund from the Commission
pursuant to Section 6(c) of the 1940 Act;
(e) issue shares at net asset value to the sponsor organization,
custodian, or depositary of a periodic or single payment plan, or similar plan
for the purchase of shares of the Fund, purchasing for such plan;
(f) issue shares in the course of any other transaction specifically
provided for in the Prospectus of the Fund (as defined in Section 5 hereof) or
upon obtaining the written consent of AFD thereto; and
(g) sell shares outside of the North American continent, Hawaii and
Puerto Rico through such other principal underwriter or principal underwriters
as may be designated from time to time by the Fund, pursuant to Section 1
hereof.
4. AFD shall devote its best efforts to the sale of shares of the Fund
and shares of any other mutual funds served as investment adviser by affiliated
companies of The Capital Group, Inc., for which AFD has been authorized to act
as a principal underwriter for the sale of shares. AFD shall maintain a sales
organization suited to the sale of shares of the Fund and shall use its best
efforts to effect such sales in countries as to which the Fund shall have
expressly waived in writing its right to designate another principal
underwriter pursuant to subsection 1(b) hereof, and shall effect and maintain
appropriate qualification to do so in all those jurisdictions in which it sells
or offers shares for sale and in which qualification is required.
5. Within the United States of America, AFD shall offer and sell shares
only to such dealers as are duly licensed and qualified to sell shares of the
Fund. Shares sold to dealers shall be for resale by such dealers only at the
public offering price set forth in the effective prospectus which is part of
the Fund's Registration Statement in effect under the Securities Act of 1933,
as amended, at the time of such offer or sale (herein the "Prospectus"). AFD
may sell shares to dealers at such discounts from said public offering price
(or subject to such commissions) as are set forth in the Prospectus, and/or in
the Selling Group Agreement between AFD and the dealer, but neither such
discounts nor commissions shall exceed the sales charge or discounts referred
to in the Prospectus. AFD shall not without the consent of the Fund, sell or
offer for sale any shares of the Fund other than as principal underwriter under
this Agreement.
6. In its sales to dealers, it shall be the responsibility of AFD to
insure that such dealers are appropriately qualified to transact business in
securities under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of shares shall be the price
which is equal to the net asset value per share plus such sales charge as may
be provided for in the Prospectus. Net asset value per share shall be
determined by the Fund in the manner and at the time or times set forth in and
subject to the provisions of the Prospectus of the Fund.
8. All orders for shares received by AFD shall, unless rejected by AFD or
the Fund, be accepted by AFD immediately upon receipt and confirmed at an
offering price determined in accordance with the provisions of the Prospectus
and the 1940 Act, and applicable rules in effect thereunder. AFD shall not hold
orders subject to acceptance nor otherwise delay their execution. The
provisions of this Section shall not be construed to restrict the right of the
Fund to withhold shares from sale under Section 16 hereof.
9. The Fund or its transfer agent shall be promptly advised of all orders
received, and shall cause shares to be issued upon payment therefor in New York
or Los Angeles Clearing House Funds.
10. AFD shall adopt and follow procedures as approved by the officers of
the Fund for the confirmation of sales to dealers, the collection of amounts
payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
Commission or the National Association of Securities Dealers, Inc. ("NASD"), as
such requirements may from time to time exist.
11. The compensation for the services of AFD as a principal underwriter
under this Agreement shall be (i) that part of the sales charge which is
retained by AFD after allowance of discounts to dealers as set forth in the
effective prospectus which is part of the Fund's Registration Statement in
effect under the Securities Act of 1933, as amended, and (ii) amounts payable
to AFD as reimbursement of expenses pursuant to the Fund's Plan of Distribution
under Rule 12b-1 under the 1940 Act, payable in arrears as of the 10th day
following each month-end.
12. The Fund agrees to use its best efforts to maintain its registration
as a diversified open-end management investment company under the 1940 Act.
13. The Fund agrees to use its best efforts to maintain an effective
Prospectus under the Securities Act of 1933, as amended, and warrants that such
Prospectus will contain all statements required by and will conform with the
requirements of such Securities Act of 1933 and the rules and regulations
thereunder, and that no part of any such Prospectus, at the time the
Registration Statement of which it is a part is ordered effective, will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading. AFD agrees and warrants that it will not in the sale of shares use
any Prospectus, advertising or sales literature not approved by the Fund or its
officers nor make any untrue statement of a material fact nor omit the stating
of a material fact necessary in order to make the statements made, in the light
of the circumstances under which they are made, not misleading. AFD agrees to
indemnify and hold the Fund harmless from any and all loss, expense, damage and
liability resulting from a breach of the agreements and warranties in this
Section contained, or from the use of any sales literature, information,
statistics or other aid or device employed in connection with the sale of
shares.
14. The expense of each printing of each Prospectus and each revision
thereof or addition thereto deemed necessary by the Fund's officers to meet the
requirements of applicable laws shall be divided between the Fund, AFD and any
other principal underwriter of the shares of the Fund as follows:
(a) the Fund shall pay the type-setting and make-ready charges;
(b) the printing charges shall be prorated between the Fund, AFD, and
any other principal underwriter(s) in accordance with the number of copies each
receives; and
(c) expenses incurred in connection with the foregoing, other than to
meet the requirements of the Securities Act of 1933, as amended, or other
applicable laws, shall be borne by AFD, except in the event such incremental
expenses are incurred at the request of any other principal underwriter(s) in
which case such incremental expenses shall be borne by the principal
underwriter(s) making the request.
15. The Fund agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of its shares for sale under the
securities laws of such states as AFD and the Fund may approve. Any such
qualification may be withheld, terminated or withdrawn by the Fund at any time
in its discretion. The expense of qualification and maintenance of
qualification shall be borne by the Fund, but AFD shall furnish such
information and other material relating to its affairs and activities as may be
required by the Fund or its counsel in connection with such qualifications.
16. The Fund may withhold shares from sale in any state or country
temporarily or permanently if, in the opinion of its counsel such offer or sale
would be contrary to law or if the Directors or the President or any Vice
President of the Fund determines that such offer or sale is not yn the best
interest of the Fund. The Fund will give prompt notice to AFD of any
withholding and will indemnify it against any loss suffered by AFD as a result
of such withholding by reason of non-delivery of shares after a good faith
confirmation by AFD of sales thereof prior to receipt of notice of such
withholding.
17. (a) This Agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Directors of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of the Fund's Plan of
Distribution under rule 12b-1 under the 1940 Act or any agreement related to
such Plan (the "Qualified Directors") or by vote of a majority of the
outstanding voting securities of the Fund on sixty (60) days' written notice to
AFD, or by AFD on like notice to the Fund.
(b) This Agreement may be terminated as to the Fund by either party
upon five (5) days' written notice to the other party in the event that the
Commission has issued an order or obtained an injunction or other court order
suspending effectiveness of the Registration Statement covering the shares of
the Fund.
(c) This Agreement may be terminated as to any series upon five (5)
days' written notice to AFD provided either of the following events has
occurred:
(i) The NASD has expelled AFD or suspended its membership in that
organization;
(ii) the qualification, registration, license or right of AFD to
sell shares of any series in a particular state has been suspended or cancelled
by the State of California or any other state in which sales of the shares of
the Fund or such series during the most recent 12-month period exceeded 10% of
all shares of such series sold by AFD during such period.
18. This Agreement shall not be assignable by either party hereto and in
the event of assignment shall automatically terminate forthwith. The term
"assignment" shall have been the meaning defined in the Investment Company Act
of 1940.
19. No provision of this Agreement shall protect or purport to protect
AFD against any liability to the Fund or holders of its shares for which AFD
would otherwise be liable by reason of willful misfeasance, bad faith, or gross
negligence.
20. This Agreement becomes effective on April 1, 1989. Unless sooner
terminated in accordance with the other provisions hereof, this Agreement shall
continue in effect until October 31, 1989, and shall continue in effect from
year to year thereafter, but only so long as such continuance is specifically
approved at least annually by (i) the vote of a majority of the Qualified
Directors of the Fund cast in person at a meeting called for the purpose of
voting on such approval, and (ii) the vote of either the Board of Directors of
the Fund or a majority (within the meaning of the 1940 Act) of the outstanding
voting securities of the Fund.
21. This Agreement shall be construed under and shall be governed by the
laws of the State of California, and the parties hereto agree that proper venue
of any action with respect hereto shall be Los Angeles County, California.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunto duly authorized, as
of April 1, 1989.
THE TAX-EXEMPT BOND
FUND OF AMERICA, INC. AMERICAN FUNDS DISTRIBUTORS, INC.
By /s/Abner D. Goldstine By /s/E. Graham Holloway
Abner D. Goldstine E. Graham Holloway
President Chairman
By /s/ Julie F. Williams By /s/James R. Zukor
Julie F. Williams James R. Zukor
Secretary Secretary
American Funds Distributors(sm)
American Funds Distributors
333 South Hope Street
Los Angeles, California 90071
Telephone 800/421-9900; ext. 11
SELLING GROUP AGREEMENT
Gentlemen:
We have entered into principal underwriting agreements with each of the Funds
in The American Funds Group (hereafter called the "Companies") under which we
are appointed exclusive agent for the respective Companies for the sale of
their shares. As such agent we offer to sell to you as a member of a Selling
Group, shares of such of the Companies as are qualified for sale in your state,
on the terms set forth below. We are acting as an underwriter within the
meaning of Article 111, Section 26 of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
You are to offer and sell shares only at the regular public price currently
determined by the respective Companies in the manner described in their
offering Prospectuses. This Agreement on your part runs to us and to the
respective Companies and is for the benefit of and enforceable by each. The
offering Prospectuses and this Agreement set forth the terms applicable to
members of the Selling Group and all other representations or documents are
subordinate.
2. On sales of shares of Companies listed in Category I on the attached
Schedule A you will be paid dealer commissions as follows:
<TABLE>
<CAPTION>
SALES DEALER SALES
COMMISSION CHARGE
AS PERCENTAGE OF AS PERCENTAGE OF
THE OFFERING PRICE THE OFFERING PRICE
<S> <C> <C>
Less than $50,000 5.00% 5.75%
$50,000 but less than 3.75% 4.50%
$100,000
$100,000 but less than $250,000 2.75% 3.50%
$250,000 but less than $500,000 2.00% 2.50%
$500,000 but less than S1,000,000 1.60% 2.00%
$1,000,000 or more see below none
</TABLE>
If you initiate and are responsible for sales of shares a) amounting to $1
million or more or b) made at net asset value to retirement plans of
organizations with collective retirement plan assets of $100 million or more,
you will be paid a dealer commission of 1.00% on sales to $2 million, plus
0.80% on amounts over $2 million up to $3 million, plus 0.50% on amounts over
$3 million up to $50 million, plus 0.25% on amounts over $50 million up to $100
million, plus 0. 15% on amounts over $100 million. For each account of a
shareholder of the respective Companies (and accounts related by the fight of
accumulation), only such net asset value sales made over a 12 month period
(commencing from the date of the first such sale) will be considered for
purposes of determinin the level of dealer commissions to be paid during that
period with respect to such account(s). No dealer commissions are paid on any
other sales of shares at net asset value, except that commissions may be paid
to dealers on their sales of fund shares to accounts managed by affiliates of
The Capital Group, Inc. as set forth in this Agreement. Sales of shares of
Washington Mutual Investors Fund below $1 million made in connection with
certain accounts established prior to September 1, 1969 are subject to reduced
dealer commissions and sales charges as described in the Washington Mutual
Investors Fund Prospectus.
The schedule of sales charges above applies to single purchases, concurrent
purchases of two or more of the Companies (except those listed in Category 3 on
the attached Schedule A). and purchases made under a statement of intention and
pursuant to the right of accumulation. both of which are described in the
Prospectuses.
3. On sales of shares of Companies listed in Category 2 on the attached
Schedule A you will be paid the same dealer commissions indicated in paragraph
2 above except as follows:
<TABLE>
<CAPTION>
SALES DEALER SALES
COMMISSION CHARGE
AT PERCENTAGE OF AT PERCENTAGE OF
THE OFFERING PRICE THE OFFERING PRICE
<S> <C> <C>
Less than $25,000 4.00% 4.75%
$25,000 but less than $50,000 3.75% 4.50%
$50,000 but less than $100,000 3.25% 4.00%
</TABLE>
With respect to sales of shares of any tax-exempt fund, the commission schedule
for sales of shares to retirement plans of organizations with assets of $100
million or more is inapplicable.
4. On sales of shares of Companies listed in Category 3 on the attached
Schedule A no dealer commissions
will be paid.
5. We are also authorized to pay you continuing service fees with respect to
the shares of all the Companies to promote selling efforts and to compensate
you for providing certain services for your clients such as processing purchase
and redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the Companies, provided you
meet certain service-related criteria and have executed a "Supplemental Selling
Group Agreement" available from us upon request.
6. Any order by you for the purchase of shares of the respective Companies
through us shall be accepted at the time when it is received by us (or any
clearinghouse agency that we may designate from time to time), and at the
offering and sale price next determined, unless rejected by us or the
respective Companies. In addition to the right to reject any order, the
Companies have reserved the right to withhold shares from sale temporarily or
permanently. We will not accept any order from you which is placed on a
conditional basis or subject to any delay or contingency prior to execution.
The procedure relating to the handling of orders shall be subject to
instructions which we shall forward from time to time to all members of the
Selling Group. The shares purchased will be issued by the respective Companies
only against receipt of the purchase price, in collected New York or Los
Angeles Clearging House funds subject to deduction of all commissions on such
sale (reallowance of any commissions to which you are entitled on purchases at
net asset value will be paid through our direct purchase commission system).
If payment for the shares purchased is not received within seven days after the
date of confirmation the sale may be canceled forthwith, by us or by the
respective Companies, without any responsibility or liability on our part or on
the part of the Companies, and we and/or the respective Companies may hold you
responsible for any loss, expense, liability or damage, including loss of
profit suffered by us and/or the respective Companies resulting from your delay
or failure to make payment as aforesaid.
7. You are obliged to date and time stamp all orders received by you and
promptly to transmit all orders to us in time to provide for processing at the
price next determined after receipt by you, in accordance with the
Prospectuses. You are not to withhold placing with us orders received from any
customers for the purchase of shares so as to profit yourself as a result of
such withholding. You shall not purchase shares through us except for the
purpose of covering purchase orders already received by you, or for your bona
fide investment.
8. If any share is repurchased by any of the respective Companies or is
tendered thereto for redemption within seven business days after confirmation
by us of the original purchase order from you for such security you shall
forthwith refund to us the full commissions paid to vou on the original sale.
9. You shall not, if acting as principal, purchase any share of any of the
respective Companies from a record holder at a price lower than the net asset
value next determined by or for the respective Companies' shares. You shall,
however. be permitted to sell any shares for the account of a shareholder of
the respective
Companies at the net asset value currently quoted by or for the respective
Companies' shares, and may charge a fair service fee for handling the
transaction provided you disclose the fee to the record owner.
10. We shall furnish you without charge reasonable quantities of offering
Prospectuses, with any supplements currently in effect, and copies of current
shareholder reports of the respective Companies, and sales materials issued by
us from time to time. In the purchase of shares through us, you are entitled
to rely only on the information contained in the offering Prospectus(es). You
may not publish any advertisement or distribute sales literature or other
written material to the public which makes reference to us or any of the
Companies (except material which we furnished to you) without our prior written
approval.
11. This Agreement is in all respects subject to statements regarding the sale
and repurchase or redemption of shares made in the offering Prospectuses of the
respective Companies, and to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., which shall control and override any
provision to the contrary in this Agreement.
12. You shall make available shares of the respective Companies only through
us. In no transaction (whether of purchase or sale) shall you have any
authority to act as agent for, partner of, or participant in a joint venture
with us or with the respective Companies or any other entity having, either a
Selling Group Agreement or other Agreement with us.
13. We act solely as agent for the Companies, and are not responsible for
qualifying the Companies or their shares for sale IN any jurisdiction. Upon
written request we will provide you with a list of the jurisdictions in which
the respective Companies or their shares are qualified for sale. We also are
not responsible for the issuance, form, validity, enforceability or value of
shares of the Companies.
14. You represent that you are a properly registered or licensed broker or
dealer under applicable federal and state securities laws and regulations and a
member in good standing of the National Association of Securities Dealers,
Inc., and agree to notify us immediately if you cease to be so registered or
licensed or a member in good standing of that Association. (The provisions of
the preceding sentence do not apply to a broker or dealer located in a foreign
country and doing business outside the jurisdiction of the United States.)
15. Either of us may cancel this Agreement at any time by written notice to the
other.
16. All communications to us should be sent to the above address. Any notice
to you shall be duly given if
mailed or telegraphed to you at the address specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (I) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed in accordance with
the laws of the State of California.
Accepted: Very truly yours,
- ----------------
Firm AMERICAN FUNDS DISTRIBUTORS, INC.
By------------- By /s/ Mark Freeman
Officer or Partner
--------------
Print Name of Officer or Partner
Address:-----
Date:--------
(06/96)
SCHEDULE A
SEPTEMBER 26, 1994
(SUPERSEDES SCHEDULE A DATED
OCTOBER 5, 1993)
CATEGORY 1
AMCAP Fund
American Balanced Fund
American Mutual Fund
Capital Income Builder
Capital World Growth and Income Fund
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
SMALLCAP World Fund
Washington Mutual Investors Fund
CATEGORY 2
American High-Income Trust
American High-Income Municipal Bond Fund
Bond Fund of America
Capital World Bond Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
Tax-Exempt Bond Fund of America
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Eempt Fund of Virginia
U.S. Government Securities Fund
CATEGORY 3
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
American Funds Distributors(sm)
American Funds Distributors
333 South Hope Street
Los Angeles, California 90071
Telephone 800/421-9900; ext. 11
HOLD HARMLESS AGREEMENT
WHEREAS, (the "Employer") is eligible to establish a 403(b) custodial account
for its employees pursuant to Section 403(b)(7)(A) of the Internal Revenue Code
("Code"); and
WHEREAS, Section 403(b)(7) of the Code provides that amounts paid by an
eligible employer to a custodial account which satisfies the requirements of
Section 401(f)(2) of the Code shall be treated as amounts contributed by the
Employer for an annuity contract (as described in Section 403(b) of the Code)
for the employee if the amounts are to be paid to provide a retirement benefit
for that employee and are to be invested in shares of regulated investment
companies to be held in that custodial account; and
WHEREAS, the Employer desires to make available to its employees custodial
accounts eligible to comply with Section 403(b)(7) of the Code; and
WHEREAS, the Employer is willing to permit its employees to select AMCAP Fund,
Inc., American Balanced 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, EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Inter-mediate Bond Fund of America, The Investment Company of America,
The New Economy Fund, New Perspective Fund, Inc., SMALLCAP World Fund, Inc.,
U.S. Government Securities Fund, The U.S. Treasury Money Fund of America, and
Washington Mutual Investors Fund, Inc., each of which is a regulated investment
company advised by Capital Research and Management Company ("Investment
Companies"); and
WHEREAS, American Funds Distributors, Inc. is the principal underwriter for
each of the Investment Companies; and
WHEREAS, the Investment Companies are regulated investment companies within the
meaning of Sections 403(b)(7)(C) and 851(a) of the Code; and
WHEREAS, the Investment Companies are described as regulated investment
companies in their current Prospectuses declared effective under the Securities
Act of 1933; and
WHEREAS, the Investment Companies are authorized for sale in all 50 states; and
WHEREAS, Capital Guardian Trust Company, a bank, shall be the custodian, within
the meaning of Section 401(f)(2), of the custodial accounts; and
WHEREAS, the Investment Companies are offered to the public by independent
broker-dealers;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. The Investment Companies are eligible investments for 403(b) custodial
accounts.
2. If any of such Investment Companies should no ton,,er be a regulated
investment company, or permitted to be offered for sale under the securities
laws of the United States or any state, American Funds Distributors, Inc. will
inform the Employer and such Investment Companies will immediately cease
accepting investments from the employees.
3. American Funds Distributors, Inc. shall comply with all pertinent written
directives regarding the solicitation of employees and the purchase of
investment company shares.
4. Capital Research and Management Company, the Investment Companies and
American Funds Distributors, Inc. are not and shall not be regarded as the
agent or employee of the Employer, of the Board of Education of the Employer,
or any Board member individually, or of any officer, agent or employee of any
of the foregoing, or of any legal successor of any of the foregoing, or of any
combination thereof.
Neither the Employer, the Board, any Board members individually, the officers,
agents and employees of any of the foregoing, the legal successors of any of
the foregoing, nor any combination thereof are or shall be regarded as the
agents or employees of Capital Research and Management Company, the Investment
Companies or American Funds Distributors, Inc.
5. Payments for the purchase of shares of the Investment Companies shall be
sent to Capital Guardian Trust Company, at the address indicated on the 403(b)
account application or to such other address as may be designated in writing to
the Employer.
6. Any notice to the Employer shall be in duplicate and sent to:
- -------------------------------------------------------------
- -------------------------------------------------------------
Notices to the Investment Companies or American Funds Distributors, Inc. shall
be sent to 135 South State College Boulevard, Brea, CA 92621, Attention: Dealer
Support Department.
7. American Funds Distributors, Inc. or any Investment Company reserves the
right upon 30 days' written notice to the Employer, to discontinue making such
shares available for purchase by the Employer or the employees of the Employer.
Such termination shall in no manner affect any rights of the Employer incurred
prior to such termination.
8. The Employer reserves the right upon 30 days' written notice to American
Funds Distributors, Inc. or any Investment Company, to terminate this agreement
or any other agreement in which this agreement might be or is incorporated, but
such termination shall in no manner affect any rights of the Employer incurred
prior to such termination.
9. No alteration or variation of the terms of this agreement shall be valid
unless made in writing and signed by the
parties hereto.
10. American Funds Distributors, Inc. hereby agrees to hold Employer harmless
for any loss sustained by Employer
by virtue of the breach of this agreement by American Funds Distributors, Inc.
11. This agreement supersedes and replaces any and all such agreements
heretofore executed by the parties.
AMERICAN FUNDS DISTRIBUTORS, INC.
Print Name of Employer
By /s/ Mark F. Freeman
By
Title
Date
[American Funds Distributors(SM) logo]
American Funds Distributors
- ------------------------------------------------------------------------------
- --------------------------------------
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
BANK SELLING GROUP AGREEMENT
Gentlemen:
We have entered into principal underwriting agreements with each of the Funds
in The American Funds Group (hereafter called the "Companies") under which we
are appointed exclusive agent for the respective Companies for the sale of
their shares. You have indicated that you wish to act as agent for your
customers in connection with the purchase, sale and redemption of shares of
such Companies as are qualified for sale in your state. We agree to honor your
request, subject to the terms set forth below.
1. In placing orders for the purchase and sale of shares of the Companies,
you will be acting as agent for your customers. We shall execute transactions
for each of your customers only upon your authorization, at the regular public
price currently determined by the respective Companies in the manner described
in their offering Prospectuses. This Agreement on your part runs to us and to
the respective Companies and is for the benefit of and enforceable by each.
The offering Prospectuses and this Agreement set forth the terms applicable to
sales of shares of the Companies through you and all other representations or
documents are subordinate.
2. On each order for shares of Companies listed in Category 1 on the attached
Schedule A that is accepted by us, you will be entitled to receive the
applicable commission as set forth below:
<TABLE>
<CAPTION>
Purchases Commission as Sales Charge as
Percentage of Percentage of
Offering Price Offering Price
<S> <C> <C>
Less than $50,000 5.00% 5.75%
$50,000 but less than $100,000 3.75% 4.50%
$100,000 but less than $250,000 2.75% 3.50%
$250,000 but less than $500,000 2.00% 2.50%
$500,000 but less than $1,000,000 1.60% 2.00%
$1,000,000 or more see below none
</TABLE>
For purchases a) amounting to $1 million or more or b) made at net asset value
to retirement plans of organizations with collective retirement plan assets of
$100 million or more, you will be paid a commission of 1.00% on sales to $2
million, plus 0.80% on amounts over $2 million up to $3 million, plus 0.50% on
amounts over $3 million up to $50 million, plus 0.25% on amounts over $50
million up to $100 million, plus 0.15% on amounts over $100 million. For each
account of a shareholder of the respective Companies (and accounts related by
the right of accumulation), only such net asset value sales made over a 12
month period (commencing from the date of the first such sale) will be
considered for purposes of determining the level of commissions to be paid
during that period with respect to such account(s). No commissions are paid on
any other sales of shares at net asset value, except that commissions may be
paid on sales of fund shares to accounts managed by affiliates of The Capital
Group, Inc. as set forth in this agreement. Sales of shares of Washington
Mutual Investors Fund below $1 million made in connection with certain accounts
established before September 1, 1969 are subject to reduced commissions and
sales charges as described in the Washington Mutual Investors Fund Prospectus.
The schedule of sales charges above applies to single purchases, concurrent
purchases of two or more of the Companies (except those listed in Category 3 on
the attached Schedule A), and purchases made under a statement of intention and
pursuant to the right of accumulation, both of which are described in the
Prospectuses.
3. On sales of shares of Companies listed in Category 2 on the attached
Schedule A you will be paid the same commissions indicated in paragraph 2 above
except as follows:
<TABLE>
<CAPTION>
Purchases Commission as Sale
Percentage of Charge
Offering Price as Percentage of
Offering Price
<S> <C> <C>
Less than $25,000 4.00% 4.75%
$25,000 but less than $50,000 3.75% 4.50%
$50,000 but less than $100,000 3.25% 4.00%
</TABLE>
With respect to sales of shares of any tax-exempt fund, the commission
schedule for sales of shares to retirement plans of organizations with assets
of $100 million or more is inapplicable.
4. On sales of shares of Companies listed in Category 3 on the attached
Schedule A no commission will be paid.
5. We are also authorized to pay you continuing service fees with respect to
the shares of all the Companies to compensate you for providing certain
services for your clients such as processing purchase and redemption
transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the Companies, provided you meet
certain service-related criteria and have executed a "Supplemental Selling
Group Agreement" available from us upon request.
6. Any order by you for the purchase of shares of the respective Companies
through us shall be accepted at the time when it is received by us (or any
clearinghouse agency that we may designate from time to time), and at the
offering and sale price next determined, unless rejected by us or the
respective Companies. In addition to the right to reject any order, the
Companies have reserved the right to withhold shares from sale temporarily or
permanently. We will not accept any order from you which is placed on a
conditional basis or subject to any delay or contingency prior to execution.
The procedure relating to the handling of orders shall be subject to
instructions which we shall forward from time to time to you. The shares
purchased will be issued by the respective Companies only against receipt of
the purchase price, in collected New York or Los Angeles Clearing House funds
subject to deduction of all commissions on such sale (reallowance of any
commissions to which you are entitled on purchases at net asset value will be
paid through our direct purchase commission system). If payment for the shares
purchased is not received within seven days after the date of confirmation the
sale may be cancelled forthwith, by us or by the respective Companies, without
any responsibility or liability on our part or on the part of the Companies,
and we and/or the respective Companies may hold you responsible for any loss,
expense, liability or damage, including loss of profit suffered by us and/or
the respective Companies resulting from your delay or failure to make payment
as aforesaid.
7. You are obliged to date and time stamp all orders received by you and
promptly to transmit all orders to us in time to provide for processing at the
price next determined after receipt by you, in accordance with the
Prospectuses. You are not to withhold placing with us orders received from any
customers for the purchase of shares so as to profit yourself as a result of
such withholding. You shall not purchase shares through us except for the
purpose of covering purchase orders already received by you, or for your bona
fide investment.
8. If any share is repurchased by any of the respective Companies or is
tendered thereto for redemption within seven business days after confirmation
by us of the original purchase order from you for such security you shall
forthwith refund to us the full commissions paid to you on the original sale.
9. You shall not, if acting as principal, purchase any share of any of the
respective Companies from a record holder at a price lower than the net asset
value next determined by or for the respective Companies' shares. You shall,
however, be permitted to sell any shares for the account of a shareholder of
the respective Companies at the net asset value currently quoted by or for the
respective Companies' shares, and may charge a fair service fee for handling
the transaction provided you disclose the fee to the record owner.
10. We shall furnish you without charge reasonable quantities of offering
Prospectuses, with any supplements currently in effect, and copies of current
shareholder reports of the respective Companies, and sales materials issued by
us from time to time. In the purchase of shares through us, you are entitled
to rely only on the information contained in the offering Prospectus(es). You
may not publish any advertisement or distribute sales literature or other
written material to the public which makes reference to us or any of the
Companies (except material which we furnished to you) without prior written
approval.
11. This Agreement is in all respects subject to statements regarding the
sale and repurchase or redemption of shares made in offering Prospectuses of
the respective Companies, which shall control and override any provision to the
contrary in this Agreement.
12. You shall make available shares of the respective Companies only through
us. In no transaction (whether of purchase or sale) shall you have any
authority to act as agent for, partner of, or participant in a joint venture
with us or with the respective Companies or any other entity having either a
Selling Group Agreement or other Agreement with us.
13. We act solely as agent for the Companies, and are not responsible for
qualifying the Companies or their shares for sale in any jurisdiction. Upon
written request we will provide you with a list of the jurisdictions in which
the respective Companies or their shares are qualified for sale. We also are
not responsible for the issuance, form, validity, enforceability or value of
shares of the Companies.
14. You represent that you are (a) properly registered or licensed broker or
dealer under applicable federal and state securities laws and regulations and a
member in good standing of the National Association of Securities Dealers,
Inc., or (b) a "bank" as defined in Section 3(a)(6) of the Securities Exchange
Act of 1934 (or other financial institution) and not otherwise required to
register as a broker or dealer under such Act or any state laws. You agree to
notify us immediately in writing if this representation ceases to be true. You
also agree that, if you are a bank or other financial institution as set forth
above, you will maintain adequate records with respect to your customers and
their transactions, and that such transactions will be without recourse against
you by your customers. We recognize that, in addition to applicable provisions
of state and federal securities laws, you may be subject to the provisions of
the Glass-Steagall Act and other laws governing, among other things, the
conduct of activities by federal and state chartered and supervised financial
institutions and their affiliated organizations. Because you will be the only
entity having a direct relationship with the customer in connection with
securities purchases hereunder, you will be responsible in that relationship
for insuring compliance with all laws and regulations, including those of all
applicable federal and state regulatory authorities and bodies having
jurisdiction over you or your customers to the extent applicable to securities
purchases hereunder.
15. Either of us may cancel this Agreement at any time by written notice to
the other.
16. All communications to us should be sent to the above address. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (i) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed in accordance with
the laws of the State of California.
Very truly yours,
AMERICAN FUNDS DISTRIBUTORS, INC.
By: /s/ Mark Freeman
Accepted:
________________________________________
Firm
By _____________________________________
Officer or Partner
________________________________________
Print Name of Officer or Partner
Address: ________________________________
Date: __________________________________
SCHEDULE A
October 5, 1993
(supersedes Schedule A dated
February 1, 1991)
Category 1
AMCAP Fund
American Balanced Fund
American Mutual Fund
Capital Income Builder
Capital World Growth and Income Fund
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
SMALLCAP World Fund
Washington Mutual Investors Fund
Category 2
American High-Income Trust
Bond Fund of America
Capital World Bond Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
Tax-Exempt Bond Fund of America
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Exempt Fund of Virginia
U.S. Government Securities Fund
Category 3
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
[American Funds Distributors(SM) logo]
American Funds Distributors
- ------------------------------------------------------------------------------
- --------------------------------------
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
SUPPLEMENTAL SELLING GROUP AGREEMENT
Gentlemen:
You have entered into a Selling Group Agreement with us with respect to each
of the Funds in The American Funds Group (hereafter called the Companies). We
are authorized to pay you certain service fees each quarter in connection with
your sales of shares of the Companies, subject to the terms set forth below
which will be revised by us from time-to-time. your participation in this
service fee program will be evaluated at specific time intervals. Initial
qualification does not assure continued participation and this Agreement may be
amended or terminated by us at any time as indicated below. The offering
Prospectuses and this Agreement set forth the terms applicable to service fees
and all other representations and documents are subordinate.
1. You have met the minimum aggregate assets requirement set forth on the
attached Schedule 1.
2. You agree to cooperate as requested with programs that we provide to
enhance shareholder service. You also agree to assume an active role in
providing shareholder services such as processing purchase and redemption
transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the Companies. Redemption levels of
shareholder accounts assigned to you will be considered in evaluating your
continued participation in this service fee program.
3. You agree to support our marketing efforts by granting reasonable requests
for visits to your offices by our wholesalers and, to the extent applicable, by
including all Companies covered by this Agreement on your "approved" list.
4. You agree to assign an individual broker to each shareholder account on
your books and to reassign the account should that broker leave your firm. You
agree to instruct each such broker to regularly contact shareholders having
accounts so assigned.
5. You agree to pass through to your brokers a share of the service fees paid
to you pursuant to this Agreement.
6. You acknowledge that (i) all service fee payments are subject to the
limitations contained in each Company's Plan of Distribution and may be varied
or discontinued at any time, (ii) in order to receive a service fee for a
particular quarter, the fee must amount to at least $100, and (iii) with
respect to shares of the Companies listed in Categories A and B, no service
fees will be paid on shares sold at net asset value (except on shares
attributable to sales (i) amounting to $1 million or more, (ii) made to
retirement plans of organizations with collective retirement plan assets of
$100 million or more or (iii) made to accounts managed by affiliates of The
Capital Group, Inc. which you initiated and for which you were responsible).
7. On shares of Companies listed in Category A on the attached Schedule 2
you will be paid a service fee each quarter based on the aggregate net asset
value of each account assigned to you (including accounts entitled to the right
of accumulation) as of the last day of the quarter for which payment is being
made at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares Acquired Through
June 30, 1988 0.15%
All Shares Acquired After
June 30, 1988 0.25% (accrual
of fee commencing after
after such shares are
held 12 months)
8. On shares of Companies listed in Category B on the attached Schedule 2 you
will be paid a service fee each quarter based on the aggregate net asset value
of each account assigned to you (including accounts entitled to the right of
accumulation) as of the last day of the quarter for which payment is being made
at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares 0.25% (accrual of fee
commencing after such
shares are held 12
months
9. On shares of Companies listed in Category C on the attached Schedule 2 you
will be paid a service fee each quarter based on the aggregate net asset value
of each account assigned to you (including accounts entitled to the right of
accumulation) as of the last day of the quarter for which payment is being made
at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares 0.15% (accrual of fee
commencing after such
shares are held 12
months
10. Either of us may cancel this Agreement at any time by written notice to
the other.
11. All communications to us should be sent to the above address. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (i) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed with the laws of
the State of California.
Very truly yours,
AMERICAN FUNDS DISTRIBUTORS, INC.
By: /s/ Mark Freeman
Accepted:
________________________________________
Firm
By _____________________________________
Officer or Partner
________________________________________
Print Name of Officer or Partner
Address: ________________________________
Date: __________________________________
SCHEDULE 1
SEPTEMBER 1, 1988
Your eligibility is conditioned on verification by us of accounts of shares of
the Companies assigned to you having an aggregate net asset value amounting to
at least $750,000.
---------------------
SCHEDULE 2
September 26, 1994
(supersedes Schedule 2 dated
October 5, 1993)
Category A
AMCAP Fund
American Balanced Fund
American Mutual Fund
Bond Fund of America
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
Tax-Exempt Bond Fund of America
Washington Mutual Investors Fund
Category B
American High-Income Municipal Bond Fund
American High-Income Trust
Capital Income Builder
Capital World Bond Fund
Capital World Growth and Income Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
SMALLCAP World Fund
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Exempt Fund of Virginia
U.S. Government Securities Fund
Category C
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
American Funds Distributors (SM)
AMERICAN FUNDS DISTRIBUTORS
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
ADDENDUM TO SELLING GROUP AGREEMENT
FOR THE STATE OF___________________
This Addendum to the SELLING GROUP AGREEMENT ("Agreement") among AMERICAN
FUNDS DISTRIBUTORS, INC. ("AFD"), THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
("LNL"), and the broker-dealer firm identified below ("Dealer") is effective
upon execution by all parties.
AFD, LNL and Dealer hereby agree that LNL shall pay all compensation due any
agents of the Dealer for business transacted on behalf of LNL directly to, and
in the name of a compensation manager appointed by Dealer, such compensation
manager being a duly licensed insurance agent in the state referenced above.
Dealer shall appoint its compensation manager in writing, signed by an
officer or partner of Dealer who has the authority to bind Dealer. LNL shall
direct all pavments for business transacted by agents of Dealer to the named
compensation manager until such time as Dealer notifies LNL, in writing, that
another compensation manager has been appointed.
It is agreed that payment of compensation payable by LNL to the agents of
Dealer shall be the responsibility of the compensation manager and shall not be
the responsibility of LNL. Furthermore, Dealer represents and warrants that
all monies received from LNL shall be distributed by the compensation manager
only to duly licensed agents appointed with LNL in accordance with the
Agreement and all applicable laws of the above referenced state.
It is further agreed that Dealer shall indemnify and hold harmless LNL, AFD,
and any of their affiliates, their respective officers, directors, employees or
agents ("Indemnified Party") from any and all claims, and demands or causes of
action that arise out of the compensation manager's negligence, or failure to
properly perform the responsibilities set forth in this Addendum or the
Agreement. Dealer, at its own cost, shall defend any legal proceeding that may
be brought against an Indemnified Party on any such claim or demand in respect
to which such Indemnified Party is indemnified and held harmless hereunder, and
shall satisfy any judgment that may be rendered against such Indemnified Party
with respect to any such claim or demand. Dealer shall notify LNL and AFD
promptly upon receipt of any such claim or demand which it receives.
Dealer agrees that this Addendum constitutes written consent by Dealer to
allow LNL to pay the compensation to the compensation manager as required by
Rule 3060 of the Rules of the NASD.
Any party to this Addendum may cancel this Addendum at any time upon written
notice to all other parties, effective upon receipt.
Three originals of the Addendum should be executed. Two of the originals
should be returned to AFD.
In WITNESS WHEREOF, the undersigned have executed this Addendum to the
Selling Group Agreement on the date written below.
AMERICAN FUNDS DISTRIBUTORS, INC. THE LINCOLN NATIONAL LIFE
133 South Hope Street INSURANCE COMPANY
Los Angeles, CA 90071 1300 South Clinton Street
Fort Wayne, IN 46801
By_______________________________ By________________________
_________________________________
(Name of Broker-Dealer Firm)
By_______________________________
Print Name_______________________
Title____________________________
Date_____________________________
Please state the name and the tax identification number of the compensation
manager who is licensed in THE above referenced state with The Lincoln National
Life Insurance Company.
Compensation Manager ____________________________________
Print Name
____________________________________
Signature
Social Security No. ____________________________________
9/96
FORM OF GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective _______________ and is between THE CHASE
MANHATTAN BANK (the "Bank") and [fund name] (the "Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account")
for any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same or evidencing or representing any other
rights or interests therein and other similar property whether certificated or
uncertificated as may be received by the Bank or its Subcustodian (as defined
in Section 3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account")
for any and all cash in any currency received by the Bank or its Subcustodian
for the account of the Customer, which cash shall not be subject to withdrawal
by draft or check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the
same class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3
(or their securities depositories), such arrangement must be authorized by a
written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets
in the Accounts in accounts which the Bank has established with one or more of
its branches or Subcustodians. The Bank and Subcustodians are authorized to
hold any of the Securities in their account with any securities depository in
which they participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
4. Use of Subcustodian.
(a) The Bank will identify such Assets on its books as belonging to
the Customer.
(b) A Subcustodian will hold such Assets together with assets
belonging to other customers of the Bank in accounts identified on such
Subcustodian's books as special custody accounts for the exclusive benefit of
customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its
discretion, may advance the Customer such excess amount which shall be deemed a
loan payable on demand, bearing interest at the rate customarily charged by the
Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit Account,
with interest, dividends, redemptions or any other amount due, the Customer
will promptly return any such amount upon oral or written notification: (i)
that such amount has not been received in the ordinary course of business or
(ii) that such amount was incorrectly credited. If the Customer does not
promptly return any amount upon such notification, the Bank shall be entitled,
upon oral or written notification to the Customer, to reverse such credit by
debiting the Deposit Account for the amount previously credited. The Bank or
its Subcustodian shall have no duty or obligation to institute legal
proceedings, file a claim or a proof of claim in any insolvency proceeding or
take any other action with respect to the collection of such amount, but may
act for the Customer upon Instructions after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be
made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the credits and debits
of the particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items
which call for payment upon presentation, to the extent that the Bank or
Subcustodian is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any transfers
of Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to any Bank
statement within sixty (60) days of receipt, the Customer shall be deemed to
have approved such statement. In such event, or where the Customer has
otherwise approved any such statement, the Bank shall, to the extent permitted
by law, be released, relieved and discharged with respect to all matters set
forth in such statement or reasonably implied therefrom as though it had been
settled by the decree of a court of competent jurisdiction in an action where
the Customer and all persons having or claiming an interest in the Customer or
the Customer's Accounts were parties.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase
plans and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.
When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received
which bears an expiration date, the Bank will endeavor to obtain Instructions
from the Customer or its Authorized Person, but if Instructions are not
received in time for the Bank to take timely action, or actual notice of such
Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to credit
the Deposit Account with the proceeds or take any other action it deems, in
good faith, to be appropriate in which case it shall be held harmless for any
such action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing.
Such proxies shall be executed in the appropriate nominee name relating to
Securities in the Custody Account registered in the name of such nominee but
without indicating the manner in which such proxies are to be voted; and where
bearer Securities are involved, proxies will be delivered in accordance with
Instructions.
9. Nominees.
Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as the
case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer
under this Agreement. Such persons shall continue to be Authorized Persons
until such time as the Bank receives Instructions from the Customer or its
designated agent that any such employee or agent is no longer an Authorized
Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold
the Bank harmless for the failure of an Authorized Person to send such
confirmation in writing, the failure of such confirmation to conform to the
telephone instructions received or the Bank's failure to produce such
confirmation at any subsequent time. The Bank may electronically record any
Instructions given by telephone, and any other telephone discussions with
respect to the Custody Account. The Customer shall be responsible for
safeguarding any testkeys, identification codes or other security devices which
the Bank shall make available to the Customer or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this Agreement as
follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be liable
to the Customer for any loss which shall occur as the result of the failure of
a Subcustodian to exercise reasonable care with respect to the safekeeping of
such Assets to the same extent that the Bank would be liable to the Customer if
the Bank were holding such Assets in New York. In the event of any loss to the
Customer by reason of the failure of the Bank or its Subcustodian to utilize
reasonable care, the Bank shall be liable to the Customer only to the extent of
the Customer's direct damages, to be determined based on the market value of
the property which is the subject of the loss at the date of discovery of such
loss and without reference to any special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission, default or
for the solvency of any broker or agent which it or a Subcustodian appoints
unless such appointment was made negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise within the scope of this Agreement if such act or
omission was in good faith, without negligence. In performing its obligations
under this Agreement, the Bank may rely on the genuineness of any document
which it believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income
from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice
of counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for
any loss which results from: 1) the general risk of investing, or 2) investing
or holding Assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear fusion,
fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer or
an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or
the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default
in the payment of principal or income of any security other than as provided in
Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this Agreement;
(v) review or reconcile trade confirmations received from brokers.
The Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations against
Instructions issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any
of the activities listed herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision
of this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration
of the Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions, including
standing instructions, may be issued with respect to such contracts but the
Bank may establish rules or limitations concerning any foreign exchange
facility made available. In all cases where the Bank, its subsidiaries,
affiliates or Subcustodians enter into a foreign exchange contract related to
Accounts, the terms and conditions of the then current foreign exchange
contract of the Bank, its subsidiary, affiliate or Subcustodian and, to the
extent not inconsistent, this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it
is a resident of the United States and agrees to notify the Bank of any changes
in residency. The Bank may rely upon this certification or the certification
of such other facts as may be required to administer the Bank's obligations
under this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's
independent public accountant reasonable access to the records of the Bank
relating to the Assets as is required in connection with their examination of
books and records pertaining to the Customer's affairs. Subject to
restrictions under applicable law, the Bank shall also obtain an undertaking to
permit the Customer's independent public accountants reasonable access to the
records of any Subcustodian which has physical possession of any Assets as may
be required in connection with the examination of the Customer's books and
records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are (Check one):
Employee Benefit Plan or other assets subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange
Commission ("SEC") rules and regulations;
Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, and the following Rider(s) [Check applicable rider(s)]:
ERISA
X MUTUAL FUND
X SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no
failure or delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or partial
exercise of any power or right preclude any other or further exercise, or the
exercise of any other power or right. No waiver by a party
of any provision of this Agreement, or waiver of any breach or default, is
effective unless in writing and signed by the party against whom the waiver is
to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses
or such other addresses as may subsequently be given to the other party in
writing:
Bank: The Chase Manhattan Bank
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
Customer: Capital Research and Management Company
135 South State College Blvd.
Brea, CA 92821
or telex:
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the Bank
shall deliver the Assets in the Accounts. If notice of termination is given by
the Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver
the Assets to the persons so specified, after deducting any amounts which the
Bank determines in good faith to be owed to it under Section 13. If within
sixty (60) days following receipt of a notice of termination by the Bank, the
Bank does not receive Instructions from the Customer specifying the names of
the persons to whom the Bank shall deliver the Assets, the Bank, at its
election, may deliver the Assets to a bank or trust company doing business in
the State of New York to be held and disposed of pursuant to the
provisions of this Agreement, or to Authorized Persons, or may continue to hold
the Assets until Instructions are provided to the Bank.
CUSTOMER
By:____________________________________________
Title:
THE CHASE MANHATTAN BANK
By:____________________________________________
Title:
SSA/AOA02F60.WP5-052693/020497
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally came
, to me known, who being by me duly sworn, did
depose and say that he/she resides in at
;
that he/she is of
, the entity described in and which executed the foregoing
instrument; that he/she knows the seal of said entity, that the seal affixed to
said instrument is such seal, that it was so affixed by order of said entity,
and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of ,19 ,
before me personally came , to me known, who being by me
duly sworn, did depose and say that he/she resides in
at
; that he/she is a Vice
President of THE CHASE MANHATTAN BANK, the corporation described in and which
executed the foregoing instrument; that he/she knows the seal of said
corporation, that the seal affixed to said instrument is such corporate seal,
that it was so affixed by order of the Board of Directors of said corporation,
and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank and
[fund name]
effective _________________
Customer represents that the Assets being placed in the Bank's custody are
subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except to the extent that the Bank has specifically agreed to comply with
a condition of a rule, regulation, interpretation promulgated by or under the
authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository, which are further
defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a country other
than the United States that is regulated as such by that country's government
or an agency thereof and that has shareholders' equity in excess of $200
million in U.S. currency (or a foreign currency equivalent thereof), (ii) a
majority owned direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of a country
other than the United States and that has shareholders' equity in excess of
$100 million in U.S. currency (or a foreign currency equivalent thereof)(iii) a
banking institution or trust company incorporated or organized under the laws
of a country other than the United States or a majority owned direct or
indirect subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the United
States which has such other qualifications as shall be specified in
Instructions and approved by the Bank; or (iv) any other entity that shall have
been so qualified by exemptive order, rule or other appropriate action of the
SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of a
country other than the United States, which operates (i) the central system for
handling securities or equivalent book-entries in that country, or (ii) a
transnational system for the central handling of securities or equivalent
book-entries.
The Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, and further
represents that its Board has determined that the use of each Subcustodian and
the terms of each subcustody agreement are consistent with the best interests
of the Fund(s) and its (their) shareholders. The Bank will supply the Customer
with any amendment to Schedule A for approval. The Customer has supplied or
will supply the Bank with certified copies of its Board of Directors
resolution(s) with respect to the foregoing prior to placing Assets with any
Subcustodian so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to
be made and Customer shall be solely responsible to assure that Instructions
are in accord with any limitations or restrictions applicable to the Customer
by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed;
(j) For the purpose of redeeming in kind shares of the Customer
against delivery to the Bank, its Subcustodian or the Customer's transfer agent
of such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due
other than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a statement of the
purpose for which the delivery or payment is to be made, the amount of the
payment or specific Securities to be delivered, the name of the person or
persons to whom delivery or payment is to be made, and a certification that the
purpose is a proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
Section 12. Standard of Care; Liabilities.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion,
after due inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified U.S. bank, each eligible foreign custodian
and each eligible foreign securities depository holding the Customer's
Securities pursuant to this Agreement afford protection for such Securities at
least equal to that afforded by the Bank's established procedures with respect
to similar securities held by the Bank and its securities depositories in New
York.
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement. The
Bank shall endeavor to obtain and furnish the Customer with such similar
reports as it may reasonably request with respect to each Subcustodian and
securities depository holding the Customer's assets.
Global Custody Agreement
With: [fund name]
Dated: __________________
Special Terms and Conditions
1. Add the following new paragraph to the end of Section 1:
"The Bank shall be accountable under the terms of this agreement to the
Customer for all Assets held in the accounts and shall take prompt and
appropriate action to remedy any discrepancies with respect to such Assets."
2. Add to the end of Section 6 (b) (i):
"; provided however that prior to taking action, the Bank will use every
reasonable effort to give Customer written notice of any such reversal which
may include back valuation."
3. Amend the second sentence of the second paragraph of Section 7 to read:
"Unless the Customer sends the Bank a written exception or objection to
certain bank statements as shall be mutually agreed upon in writing within 180
days of receipt,..."
4. Amend the first paragraph of Section 8 as follows:
"Whenever the Bank,...("Corporate Actions"), the Bank will give the
Customer prompt notice of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a Corporate Action
in time to notify its customers.
5. In the first sentence of paragraph 13, after "legal fees", insert
"incurred on behalf of the Customer".
6. Add the following new sentence to the end of Section 14 (c):
"The Bank shall not unreasonably refuse to furnish to the Customer such
reports (or portions thereof) of the Bank's external auditors as they relate
directly to the Bank's system of internal accounting controls applicable to the
Bank's duties under this Agreement. The Bank shall endeavor to obtain and
furnish the Customer with such similar reports as the Customer may reasonably
request with respect to each Subcustodian holding Assets of the Customer.
Expenses of the Bank and any Subcustodians under this provision shall be paid
by the Customer."
7. Amend the last paragraph of Section 3 of the Mutual Fund Rider to read:
"The Customer represents that its Board of Directors will approve each of
the Subcustodians listed in Schedule A to this Agreement before Assets are
held by such Subcustodian and the form of the subcustody agreements between
the Bank and each Subcustodian, and further represents that its Board will
determine that the use of such Subcustodian and the terms of each subcustody
agreement are consistent with the best interests of the customer's fund(s) and
its (their) shareholders prior to placing Assets with any such Subcustodian.
The Bank will supply the Customer with any amendment to Schedule A for
approval within such reasonable period of time as agreed to by the Bank and the
Customer. Upon request, the Customer has supplied or will supply the Bank with
certified copies of its Board of Directors resolutions with respect to the
foregoing prior to placing Assets with any Subcustodian so approved."
8. Add as a new section to the end of Section 3 of the Mutual Fund Rider:
"The Bank shall furnish annually to the Customer information concerning
Subcustodians employed by the Bank. Such information shall be similar in kind
and scope to that furnished to the Customer in connection with the initial
approval of the subcustodian by the Customer's Board of Directors. In
addition, the Bank will promptly inform the Customer in the event that the
Bank learns of a material adverse change in the financial condition of a
Subcustodian or is notified by a foreign banking institution employed as a
Subcustodian that there appears to be a substantial likelihood that its
shareholders's equity as required by Rule 17f-5 or any order thereunder. With
regard to the foregoing paragraphs, the Bank shall not be deemed to have
assumed any fiduciary duties imposed upon Customer by law.
The Bank will supply periodically, as mutually agreed upon, a statement in
respect of any Securities and cash, including indentification of the foreign
entities having custody of the Securities and cash and descriptions thereof."
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. 23 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated September 30, 1997, relating to the financial
statements and per share data and ratios appearing in the August 31, 1997
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 28, 1997
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
333 South Hope Street, Los Angeles, California 90071
Telephone (213) 486-9200
September 3, 1979
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071
Re: Investment Letter
Gentlemen:
The Tax-Exempt Bond Fund of America, Inc. a Maryland corporation, (the
"Fund"), hereby offers to sell to Capital Research and Management Company
10,000 shares of its Capital Stock, par value $1 per share (the "Shares") at a
price of $10.00 per share upon the following terms and conditions:
You agree to pay to the Fund the Aggregate Purchase Price of $100,000
against delivery of a statement confirming the registration of the 10,000
Shares in your name.
You represent to the Fund that you are purchasing the Shares for your own
account for investment purposes and not with the present intention of redeeming
or reselling the Shares and that the purchase price of such Shares is in
payment for an equity interest and does not represent a loan or temporary
advance by you to the Fund.
You understand that you are obligated to pay certain expenses incurred in
connection with the organization of the Fund, its qualification to do business
as a foreign corporation in the State of California, and its registration as an
investment company under the Investment Company Act of 1940. You agree that
you will not redeem any of the Shares while any portion of such organizational
expenses has not been paid.
Very truly yours,
THE TAX-EXEMPT BOND FUND OF
AMERICA, INC.
By
Thomas E. Terry, Vice President
Confirmed and agreed to September 3, 1979
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By
James R. Zukor
PLAN OF DISTRIBUTION
OF
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
WHEREAS, The Tax-Exempt Bond Fund of America, Inc. (the "Fund") is a
Maryland corporation which offers shares of common stock;
WHEREAS, American Funds Distributors, Inc. ("AFD") will serve as
distributor of the shares of common stock of the Fund, and the Fund and AFD are
parties to a principal underwriting agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to
authorize the Fund to bear expenses of distribution of its shares, including
reimbursement of AFD for its expenses in the promotion of the sale of shares of
the Fund, pursuant to the Agreement;
WHEREAS, the Board of Directors of the Fund has determined that there is a
reasonable likelihood that this Plan will benefit the Fund and its
shareholders:
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. The Fund may expend pursuant to this Plan amounts not to exceed .25 of
1% of the average daily net assets of the Fund per annum.
2. Subject to the limit in paragraph 1, the Fund shall pay, or reimburse
AFD, for amounts to finance any activity which is primarily intended to result
in the sale of shares of the Fund including, but not limited to, commissions or
other payments to dealers, and salaries and other expenses relating to selling
or servicing efforts; provided, (i) that the Board of Directors of the Fund
shall have approved categories of expenses for which payment or reimbursement
shall be made pursuant to this paragraph 2, and (ii) that reimbursement shall
be made in accordance with the terms of the Agreement.
3. This Plan shall not take effect until it has been approved by vote of
a majority of the outstanding voting securities of the Fund (as defined in the
Investment Company Act of 1940 (the "1940 Act")) and by the Board of Directors
as provided in paragraph 4.
4. This Plan shall not take effect until it has been approved, together
with any related agreement, by votes of the majority of both (i) the Board of
Directors of the Fund and (ii) those Directors of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of this Plan or any
agreement related to it (the "Independent Directors"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
5. At least quarterly, the Board of Directors shall be provided by any
person authorized to direct the disposition of monies paid or payable by the
Fund pursuant to this Plan or any related agreement, and the Board shall review
a written report of the amounts expended pursuant to the Plan and the purposes
for which such expenditures were made.
6. This Plan may be terminated as to the Fund at any time by vote of a
majority of the Independent Directors, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund. Unless
sooner terminated in accordance with this provision, this Plan shall continue
in effect until May 31, 1990. It may thereafter be renewed from year to year
in the manner provided for in paragraph 4 hereof.
7. Any agreement related to this Plan shall be in writing, and shall
provide:
A. that such agreement may be terminated as to the Fund at any time,
without payment of any penalty, by vote of a majority of the Independent
Directors or by a vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund, on not more than sixty (60) days' written
notice to any other party to the agreement; and
B. that such agreement shall terminate automatically in the event of
its assignment.
8. This Plan may not be amended to increase materially the maximum amount
of fee or other distribution expenses provided for in paragraph 1 hereof with
respect to the Fund unless such amendment is approved by the voting securities
of the Fund in the manner provided in paragraph 3 hereof, and no material
amendment to this Plan shall be made unless approved in the manner provided for
in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of
Directors of the Fund who are not "interested persons" of the Fund (as defined
in the 1940 Act) shall be committed to the discretion of the Directors who are
not interested persons.
10. The Fund shall preserve copies of this Plan and any related agreement
and all reports made pursuant to paragraph 5 hereof for a period of not less
than six (6) years from the date of this Plan, or such agreement or reports, as
the case may be, the first two (2) years of which such records shall be stored
in an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its
officers thereunto duly authorized, as of August 17, 1989.
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
By /s/ James W. Ratzlaff
James W. Ratzlaff,
Chairman of the Board
By /s/ Julie F. Williams
Julie F. Williams,
Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-1-1996
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 1,462,874
<INVESTMENTS-AT-VALUE> 1,575,143
<RECEIVABLES> 26,505
<ASSETS-OTHER> 84
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,601,732
<PAYABLE-FOR-SECURITIES> 3,689
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,944
<TOTAL-LIABILITIES> 8,633
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,347,447
<SHARES-COMMON-STOCK> 129,790,898
<SHARES-COMMON-PRIOR> 124,436,740
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,576
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 112,269
<NET-ASSETS> 1,593,099
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 90,918
<OTHER-INCOME> 0
<EXPENSES-NET> 10,395
<NET-INVESTMENT-INCOME> 80,523
<REALIZED-GAINS-CURRENT> 3,847
<APPREC-INCREASE-CURRENT> 52,749
<NET-CHANGE-FROM-OPS> 56,596
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 80,789
<DISTRIBUTIONS-OF-GAINS> 4,359
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,390,763
<NUMBER-OF-SHARES-REDEEMED> 4,336,074
<SHARES-REINVESTED> 19,372,679
<NET-CHANGE-IN-ASSETS> 117,137
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,337
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,567
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,395
<AVERAGE-NET-ASSETS> 1,527,163
<PER-SHARE-NAV-BEGIN> 11.86
<PER-SHARE-NII> .64
<PER-SHARE-GAIN-APPREC> .45
<PER-SHARE-DIVIDEND> .64
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.27
<EXPENSE-RATIO> .007
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>